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Noah Zivitz

Managing Editor, BNN Bloomberg

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The Trudeau Liberals and federal NDP's shared ambition for a national pharmacare program could shave at least two per cent off annual earnings for owners of some top pharmacy chains, according to an analyst.

Vishal Shreedhar, who covers the consumer discretionary and consumer staples sectors for National Bank of Canada Financial Markets, cautioned in a report to clients there's "heightened uncertainty" about the ultimate impact of a pharmacare program that's already years in the making.

Despite that uncertainty, Shreedhar noted Loblaw Companies Ltd. and Metro Inc. have the most at stake in his coverage universe since they respectively own Shoppers Drug Mart and Jean Coutu.

"We believe the impacts are manageable, particularly since the price reductions could be phased in over many years and dispensing fees do not appear to be targeted. In addition, we would anticipate accelerated prescription count growth and potentially improved store traffic as offsetting factors,"  he wrote in the report.

Shreedhar pointed to a 2019 report by the Advisory Council on the Implementation of National Pharmacare that forecast pharmacare would cut spending on prescription drugs by $4.8 billion in 2027. Based on that, he estimates Loblaw's earnings per share in that year could be cut by two to seven per cent, while Metro could see its EPS shrink two to six per cent.

Representatives for Loblaw didn't immediately respond Wednesday to a request for comment about the impact of a pharmacare program. A spokesperson for Metro declined to comment.