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Target divests Rx files in Canada.

TORONTO -- Loblaw Cos. has emerged the winner in the competition to purchase the prescription files from 95 Zellers pharmacies located in stores whose leases are being purchased by Target Corp. The purchase price was $35 million. The transaction does not include files from the stores in British Columbia and Quebec that are also part of Target's deal with Zellers.

Target recently announced that it would not seek to retain the pharmacy operations in the stores whose leases it was acquiring but would start afresh in the pharmacy business when the stores reopen. It is assumed the patient files belonging to the British Columbia and Quebec stores included in the Target purchase will also eventually be sold.

Separately, Metro Ontario Inc. is acquiring the pharmacy business from seven locations in the Zellers pharmacy network in Ontario.

Metro Ontario has promised a seamless transition for Zellers pharmacy customers. Two pharmacies in Brampton along with single stores in London, Mississauga, Sudbury and Collingwood are involved in the transaction.

The stores involved in the Loblaws purchases are expected to be closed for some nine months for renovation before reopening under the Target banner.

It is estimated that if Loblaws were able to retain the patronage of all the customers whose files it has purchased, it would raise its share of the national pharmacy business it does from 6% to 7%. It now has some 500 pharmacies located in the stores it operates under 17 banners across the country. The likelihood is, of course, that there will he some leakage, but the company's move represents another step in its strategy to emphasise the health-related aspects of its business.

"Our goal is to be the No. 1 nutrition and health destination in Canada. We feed more Canadians than any other grocery retailer in Canada, and with this comes the responsibility to help them make healthier food and lifestyle choices. Our pharmacy business plays an important role in this effort," said Loblaws senior vice president of health and wellness Michael Lovsin. "This purchase offers an unprecedented opportunity for the continued growth of our pharmacy business."

Loblaws banner stores are home to more than 100 medical clinics, 100 optical stores and 60 Good Life Fitness facilities. The stores offer a range of healthy products including more than 300 natural value products, and the corporate brand, President's Choice Blue Menu, is dedicated health-related products. The company is also Canada's largest seller of fresh food of all types.

Loblaws is working with Zellers to create opportunities for Zellers pharmacists and technicians to join the Loblaws pharmacy team.

"We are pleased that Loblaws will be taking on a majority of our prescription files. Its industry-leading health management programs and the proximity of Loblaws pharmacy locations to our own will benefit our patients," said Zellers general merchandise manager for pharmacy Lori Fasano. "We will work closely with Loblaws to ensure a smooth transition plan and minimize any inconvenience to our customers."

There will be 99 pharmacies remaining in the Zellers chain after the Loblaws transaction, and Zellers has assured its patients that it will continue to provide them with care and maintain the privacy of their personal information in accordance with applicable legislation. Loblaws has made similar commitments to privacy for the files it is acquiring.
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Title Annotation:RX/News
Publication:Chain Drug Review
Geographic Code:1CANA
Date:Apr 23, 2012
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