The CEO of Shoppers Drug Mart, Jurgen Schreiber, has recently announced that Shoppers will begin to export both private-label generic and store-brand drugs to countries outside of Canada. This, as revealed in a Globe and Mail article comes in response to Ontario’s recent drug reform, prohibiting $750 million worth of allowances to pharmacies that were previously collected from suppliers to sell their generic drugs. Schreiber threatened to boycott this reform by decreasing hours of operation and suspend services offered by the pharmacy. However, Shoppers still experienced a significant loss: $12 million worth of profit in the sixteen weeks leading up to October 16th. While the legislation permits Shoppers from selling store-brand drugs overseas, the drug store chain has already signed a contract to sell private-label generic drugs to an international company.
The proposal has significant implications for inventory management. If Shoppers is going to be successful in providing overseas companies with drug products, they are going to have to reevaluate their supply chain. The distributional channel of Shoppers, responsible for providing consumers with the drugs delivered to them by the suppliers and manufacturers, will now become two-pronged: the first link being between the manufacturer and Shoppers and the second link being between Shoppers and its international counterpart. Despite the increase in profit that will come from the sales of these drugs, Shoppers will undoubtedly experience severe transportation/logistical costs in transporting the drugs overseas. If the corporation can be innovative and find a way to deliver without incurring exorbitant expenses, Shoppers will reduce the amount of time drugs spend in inventory increase its inventory turnover ratio, and consequently benefit from the decrease in operational costs.
http://www.theglobeandmail.com/globe-investor/squeezed-by-drug-reform-shoppers-turns-to-export-market/article1793577/
http://www1.shoppersdrugmart.ca/en/Home.aspx
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