Weight-loss drugs shaping up to be a boon for grocers’ pharmacy units

The useful part

While discount stores have been a bright spot recently for major grocery chains, other units within their empires have been quietly seeing a sales boom: their pharmacies. The popularity of Ozempic and other GLP-1 drugs, traditionally used to manage Type 2 diabetes, has exploded in recent years thanks to their weight-loss side effects. As cheaper, generic versions become more widely available, uptake is only expected to rise further.

How it works

• Metro Inc.'s outgoing chief executive, Eric La Flèche, struck a similar note during its earnings call last month.
• Semaglutides, or GLP-1s as they're sometimes called, are the active ingredient in drugs like Ozempic.
• For grocers that have pharmacy units, signs of that growth are already noticeable in their financial reports.
• Ltd., which owns Shoppers Drug Mart and Pharmaprix, reported a roughly 40 per cent surge in GLP-1 sales in each of its last two quarters.
• It's still very early, but the initial indications are encouraging," Per Bank, chief executive of Loblaw, told analysts on an earnings call in July.

What to take from it

Loblaw executives are projecting double-digit growth for GLP-1 sales in 2027. "Demand fundamentals remain strong with early evidence of increased patient adoption and higher prescription volumes," he said. Loblaw reported its drug retail same-store sales grew 4.6 per cent in its latest quarter, while Metro's pharmacy same-store sales were up 4.8 per cent.

Example or evidence

• "As generic supply continues to build, we expect ongoing expansion of the GLP-1 category to drive low-teens volume and contribution growth," La Flèche told analysts.

Details worth keeping

"We are beginning to see the impact of GLP-1 drugs going generic. Both outpaced same-store sales metrics for food. The gains were driven by the prescriptions category.