Shoppers' move into specialty pharmacy market

From the Financial Post:
Shoppers Drug Mart Corp.'s decision to move into the specialty pharmacy market this week was well received by analysts.

The acquisition of Calea HealthAccess, which distributes and administers drugs to patients with complex medical conditions such as cancer and HIV, provides Shoppers with better knowledge of a fast-growing specialty pharmacy segment," Scotia Capital analyst Ryan Balgopal said in a note to clients. With growth rates in the mid-teens, entering the sector "is complementary to [Shoppers'] existing businesses and allows it to leverage its scale." Mr. Balgopal reiterated his rating of sector outperform on the shares and his one year price target of $67.50.

While the acquisition is not material from a financial reporting perspective, Shoppers' entry into the $3-billion a year specialty pharmacy business in Canada seems to follow a trend occurring among U.S. counterparts such as CVS and Walgreens, said Desjardins Securities analyst Keith Howlett. "Both drug retailers and wholesalers in the U.S. appear to want to move to a new business paradigm with higher margins, based upon services which make more healthcare more efficient for patients and players," he wrote in a note to clients. He reiterated his buy recommendation and his $60 price target on the shares. "In a sea of retailing despair, Shoppers is one of a select few that will grow earnings per share in the second quarter of 2008." ...more