More than a decade after Loblaw Cos. Ltd. bought Shoppers Drug Mart Corp., the company’s ambitions have grown far beyond owning Canada’s largest drugstore chain. Today, we feature a report on how Loblaw is expanding its reach into the health care space – and drawing criticism from proponents of Canada’s long-prized publicly funded model.
Up top
- Mining our business: BHP Group Ltd.’s proposed acquisition of 50 per cent of Filo Corp. is among the first deals to be scrutinized by Ottawa under tougher Canadian takeover rules aimed at protecting the domestic critical minerals industry from foreign incursion.
- Minding the gap: British Chancellor Rachel Reeves brought a pitch to Bay Street this week, saying in an interview with The Globe: “Britain is open for business.”
- Space race: Stocks in MDA Space Ltd. were lifting off on stronger-than-expected earnings. It’s the latest in a string of wins as the company seeks to position itself as a key player in the space industry.
- Truck stops here: Pride Group Holdings Inc., once a fast-growing Canadian trucking conglomerate, is set to be wound down after efforts to restructure its $1.6-billion debt load failed.
In focus
Patients, profits and public scrutiny
Galen Weston, executive chairman of Loblaw, shakes hands with Holger Kluge, Shoppers Drug Mart board of directors chair, at a news conference in July 2013 announcing Loblaw’s acquisition of Shoppers.Philip Cheung/The Globe and Mail
🔎 An excerpt from the Report on Business weekend cover story by Susan Krashinsky Robertson and Chris Hannay.
At first glance, this Shoppers Drug Mart in Burlington, Ont., looks similar to one you might see anywhere in Canada. Located in a neighbourhood plaza next to takeout joints and an indoor golf facility, it stocks all the usual toiletries, cosmetics and snacks. But head to the back of the store, and you will find yourself in a waiting area, with cushy seating, three consultation rooms and a reception desk where a “care co-ordinator” in a sharp blazer stands ready to greet visitors.
“Welcome to Shoppers Health,” a nearby sign says. “Let us help you with your health care needs.”
This clinic offers travel vaccinations, cholesterol screening and consultations with pharmacists – by walk-in or appointment – on a number of conditions, including urinary tract infections, pink eye, skin rashes and acid reflux.
Renovated last year, this location represents what Loblaw Cos. Ltd. is aiming to build in many more stores. Internally at the company, locations like it are referred to as the “future of pharmacy.”
More than a decade after Loblaw bought Shoppers Drug Mart Corp., the company’s ambitions have grown far beyond owning Canada’s largest drugstore chain.
Loblaw’s reach into the health care sphere has expanded significantly since that 2014 deal – investing in businesses including telemedicine, medical record-keeping software and physiotherapy clinics. The grocery giant, along with many other private enterprises, is attempting to seize opportunities to fill a growing gap in the Canadian medical system.
“There’s a lack of access to physicians,” Shoppers president Jeff Leger said. “One in five Canadians don’t have access to a primary-care provider. There’s lots of great solutions, but they take time to mature, and get more doctors. So people are turning to pharmacists and other professionals to help fill those gaps.”
But the rise of private players in Canada’s health care system has led to clashes with proponents of the country’s publicly funded model, and critics question whether a corporate behemoth such as Loblaw should be permitted to play a larger role in that system. Its health business has already been a source of controversy.
Hundreds of Loblaw’s own pharmacists have told the country’s largest pharmacy regulator that they have felt pressure to put the bottom line ahead of patient care. The company faced a public outcry earlier this year when it struck a deal with Manulife Financial Corp., Canada’s largest insurer, to exclusively deliver some specialty drugs – after which Manulife walked the deal back.
Loblaw has worked to rebuild trust with Canadians as the country’s largest grocer after more than two years when it drew the ire of many consumers feeling the pain of once-in-a-generation inflation in food prices. Now, Loblaw will also have to prove to patients that it can be trusted as their health care provider.
Read the full story here.
Charted
The only thing we have to fear?
The most-watched gauge of investor anxiety is the CBOE Volatility Index, or VIX, and it flashed red in spectacular fashion this week as stock prices plunged, Jason Kirby writes.
Investors have their pick of factors to blame for the stomach-churning ride their portfolios took in recent days, from unnerving U.S. jobs data to bursting tech bubbles to the implosion of complex currency bets. But as calm returns, markets remain on edge over what comes next. Read the full version of this week’s Decoder here.
Perspectives
Konrad Yakabuski on Air Canada’s train push: “Air Canada’s membership in the Cadence consortium, which is led by Caisse de dépôt et placement du Québec and AtkinsRéalis, signals the airline’s longer-term bet on bringing European-style intermodal travel to Canada, providing its customers with easy access to rail connections on to their final destination, instead of flying there.”
Rita Trichur on the Trans Mountain expansion: “As the world’s fourth-largest crude oil producer, Canada should build on this success. The Trans Mountain pipeline expansion should mark the beginning – not end – of Canada’s energy aspirations.”
Tim Kiladze on tumbling commodities: “Should the commodity rout drag on, Canadians will have to pay attention, because the country’s resource-heavy stock market and economy will be at the centre of any fallout. Slumping commodity prices will also dampen the prospects for merger activity, which only recently came back to life.”
The biz quiz
A question for you
Billionaire investor Warren Buffett added to investors’ anxiety this week by announcing he had dumped roughly half of one of his biggest holdings. What did he sell so enthusiastically?Nati Harnik/The Associated Press
The Globe and Mail’s business and investing news quiz lands on Fridays. Join Ian McGugan and Globe staff each week to test your knowledge of the stories making the headlines.
It was a wild, wild week in markets. Japan’s Nikkei Stock Average was one of the major victims. It plunged 12.4 per cent on Monday, its biggest one-day decline since:
- 2017
- 2007
- 1997
- 1987
Think you got it right? Find the full quiz and results here.
The outlook
On our radar and reading list
The big picture: Statistics Canada releases its July employment report. Markets will be chewing over China’s latest producer and consumer price inflation figures as those same stats are reported today by Germany and Italy. Earnings include Constellation Software Inc., AtkinsRéalis Group Inc., Filo Mining Corp., Evergy, Inc.
In the boardroom: Meet the man using shareholder activism to hold Canada’s biggest companies accountable for climate pledges.
At the drive-through: The corporate owner of Tim Hortons saw growing profit in its most recent quarter even as consumers pull back on their spending on fast-food offerings.
On the wine rack: The Thomas Haden Church vehicle Sideways, which also starred Paul Giamatti, is often blamed for crushing the merlot market. But the cool kids are drinking it again, according to recent reports.
Morning markets
Global markets steadied, with Asian and European shares taking their cue from a Wall Street bounce back yesterday after U.S. jobs data eased recession concerns. North American futures pointed higher.
Major indexes have regained much of the ground lost in the global selloff earlier in the week.
The pan-European STOXX 600 was up 0.61 per cent in morning trading. Britain’s FTSE 100 rose 0.45 per cent, Germany’s DAX gained 0.3 per cent and France’s CAC 40 climbed 0.47 per cent.
In Asia, Japan’s Nikkei closed 0.56 per cent higher, while Hong Kong’s Hang Seng advanced 1.17 per cent.
The Canadian dollar traded at 72.80 U.S. cents.