Pharmacy News: Shoppers Drug upped, Canadian Tire cut
Shoppers Drug upped, Canadian Tire cut
Fourth quarter earnings from two of Canada’s biggest retailers left Desjardins Securities analyst Keith Howlett with much different viewpoints.
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For Canadian Tire Corp., which failed to see weather-related strength in same-store sales at its Canadian Tire and Mark’s Work Wearhouse stores, he downgraded the stock to Hold from Buy.
Mr. Howlett also cut his price target to $69 from $73, noting that the cyclical earnings recovery is proving less robust than anticipated.
“We remain unconvinced that management’s strategy will drive meaningful EPS growth,” the analyst told clients.
Shoppers Drug Mart Corp. was a different story, with fourth quarter EPS of 79¢ coming in ahead of consensus of 75¢. The company also hiked its dividend by 11.1% to 25¢ per quarter and announced a share buyback of as much as 8.7 million shares.
The strong quarterly operating results and management’s confidence has Mr. Howlett believing that Shoppers will again be increasing quarterly EPS by the third quarter of 2011.
The analyst also expects that the retail pharmacy industry will begin to consolidate more rapidly into the hands of the largest players in the second half of 2011, “as more independent pharmacies and small chains reach their tolerance for financial pain.”
He upgraded his recommendation on Shoppers shares to Buy from Hold and raised his price target to $43 from $39.
Radical reform needed in pharmaceutical industry
A research centre funded by the Economic and Social Research Council (ESRC) has shown that radical reform of the drugs industry regulatory system must be an important part of the solution to ensure a productive and profitable pharmaceutical sector, both globally and in the UK.
Researchers from the ESRC’s Innogen centre, in Edinburgh, UK, have studied the innovation models in the pharmaceutical industry and how the industry has been able to remain sustainable for so long.
The results of their research show that the lengthy and expensive regulatory system that now applies to most products for the life sciences is causing innovation failure.
Regulation has a large impact on the kinds of product that are developed by any industry sector: it is designed to ensure that products are safe, effective and of high quality.
Innogen’s research demonstrates that the impacts of regulation in pharmaceuticals are especially far reaching.
They determine overall company strategies; which types of companies succeed; and ultimately the structure and dynamism of the sector as a whole.
Under current circumstances, regulation prevents the development of the radically innovative technologies that could provide opportunities for the sector to become more effective in developing innovative products.
Innogen research has predicted that the industry is approaching a tipping point in the not too distant future.
Professor Joyce Tait said: “We do not need less regulation, but smarter regulation that can deliver expected standards of safety and efficacy, is flexible enough to respond to new scientific discoveries and can do so more efficiently than our current systems within a shorter time frame.”
Innogen research also shows that policymakers and governments need an understanding of all the major causes and relevant options available.
Radical regulatory reform for the life science industries needs to be a priority in discussions regarding the future of the industry.
Reform could provide the lever to profitably unleash the creativity that has been so effectively generated from public funding of basic science, leading to something closer to the innovative performance that we have seen in information and communication technologies over the past twenty years.
Monitor Clipper Buys Minority Stake in ScriptSave
Private equity shop Monitor Clipper Partners has acquired a minority interest in ScriptSave. Tuscon-based ScriptSave provides customized prescription drug benefit products for consumers, which are delivered through retail pharmacies, health insurance companies and employers. McColl Partners LLC, an independent investment banking firm specializing in middle-market companies, served as financial advisor to ScriptSave. Monitor Clipper Partners is based in Cambridge, Mass.
PRESS RELEASE:
Today, ScriptSave announced that Monitor Clipper Partners (MCP) has purchased a minority interest in the company. MCP, a private equity investment firm, has a strategic relationship with the Monitor Group, a leading global strategy consulting firm.
Commenting on the transaction, Lori Bryant, President and CEO of ScriptSave, said, “ScriptSave is pleased by the confidence that Monitor Clipper Partners has in our business and we look forward to the expertise, insight and industry relationships that MCP brings to us. We are excited to work with MCP to bring even greater value to our clients.”
Adam Doctoroff, Partner, MCP, added that “the capabilities and historical success of ScriptSave were key factors in our decision to invest in the company’s future. We believe that ScriptSave’s leadership role in working with pharmacy retailers across the country to provide consumers with real value and savings is an unparalleled platform for growth. We look forward to working with the Company’s management team to continue to enhance their industry-leading offerings.”
McColl Partners LLC, an independent investment banking firm specializing in the needs of management and owners of middle-market companies, served as financial advisor to ScriptSave.
About ScriptSave – Founded in 1994, ScriptSave pioneered the U.S. unfunded drug benefit market and has saved consumers over $2.5 billion in health care costs. The company provides customized prescription drug benefit solutions for consumers; delivered through retail pharmacies, health insurance companies, employers and PBMs. ScriptSave is headquartered in Tucson, Arizona. For more information about ScriptSave, visit www.scriptsave.com. For inquiries on this release, contact Lori Bryant at lbryant@scriptsave.com or 520-888-8070.
About Monitor Clipper Partners – Monitor Clipper Partners is a Cambridge, MA-based independent private equity firm formed in 1998. MCP has invested in over 35 businesses in North America and Western Europe over the past decade and has a close strategic relationship with the Monitor Group, a leading international strategy consulting firm. MCP targets growth-oriented businesses with strong management teams and currently manages over US$2.0 billion in capital.