Pharmacy U

Katz Group Canada’s CEO thrills to change



Frank Scorpiniti became COO of Katz Group Canada/Rexall in April 2011 and CEO less than a year later, in February.

By Jane Auster

In that short time, Katz announced a $920 million deal to sell its banner pharmacy business, Drug Trading Co., and its franchise pharmacy operation, Medicine Shoppe Canada, to McKesson Corp. The transaction, involving more than 1,000 pharmacies, closed in late March 2012.

And on the same day Katz announced the deal with McKesson, the company also revealed it had acquired Dell Pharmacies, an 18-store chain operating in Hamilton, Ontario.

Blink, and the entire pharmacy landscape had changed by the time the 43-year-old Scorpiniti took the reins of the company.

He started in pharmacy at 16 because he wanted to earn the money to buy a car. It was a part-time job…but he never left. Oh, and he got the car.  Did you expect this pace of change when you joined Katz Group Canada?

FS: I certainly am no stranger to a rapidly changing retail environment, having spent 20 years in US pharmacy retail. The pace of change here is pretty similar. Did I expect it when I joined Katz? Yes I did. It’s what makes retail so fun. You never know what your next opportunity will be and what your challenges are. We have a fantastic team here, so we’re ready for the challenges. We’re pretty darn excited. Do you see the Duane Reade experience as similar to Rexall?

I view pharmacy as a business first, and I believe that a healthy business is best positioned to provide the customer and patient with the best experience.



FS: The Duane Reade story was a fantastic story of a brand reinvention and reinvigoration. We reinvigorated the brands, the stores, the employees and most importantly our customers. I think we’re in a completely different environment here. Rexall is a brand with very strong brand resonance with our consumer, and that was not necessarily the case when we began our journey in New York. We serve a more diverse geography at Rexall, but some of the core issues are the same, and the process is the same: different customers, different geography, but a similar process of understanding customer needs. What about the regulatory framework?

FS: Margin pressure has been playing out south of the border for 20+ years. In US retail we needed to continually improve our quality and drive costs out of the system. That kind of mindset is beginning to enter here.

The payer group in Canada is very narrow, and government sets the reimbursement rate. There’s a much broader payer system in the US, and things don’t all move at the same time. Structural change and the reimbursement dynamic happen much more quickly here than in the US, but the team here is diverse and able to rise to this challenge.

I would be remiss if I didn’t share with you that government in Canada and in the various provinces have already begun to recognize that retail pharmacy provides valuable service to patients, delivers against costs, and takes pressure off the healthcare system. For example, prescribing for minor ailments in Saskatchewan. Some of the things we can address in community pharmacy, with virtually no wait time. Only retail pharmacy with our thousands of points of care can offer that service. Government is beginning to remunerate for these services here, but very rarely in the US. Before your years at Duane Reade, you held positions at West Coast regional pharmacy chain Longs Drug Store. How does developing strategies for a national chain like Rexall differ from creating programs for regional and local chains?

FS: I always go back to what’s similar. We grow our brand and we grow our business one customer and one patient at a time through our enthusiasm and the service we provide to our patients and customers in our stores. Nationally, there’s certainly a broader scope dealing with government and reimbursement, and a more diverse geography and community, but all retail is local.

We have communities with different needs. The PATH customer in downtown Toronto is looking for a different experience, geared to the day at the office. Rural customers require a different offering, completely different products, and they’ll take an hour on their Saturday shopping trip. Our store managers are juggling those differences and really know those local needs. We have a base retail platform that’s well prescribed, but managers also have the autonomy to add certain sets of merchandise to their stores, offer delivery to some patients, reach out and have community events in their very large parking lots in the rural areas. Rural stores might be merchandised with more convenience food offerings, larger sized products that might go into the back of their car on the way home. How do you think coming from a background as a pharmacist versus more of a businessperson colours the way you view pharmacy operations?

FS: I view pharmacy as a business first, and I believe that a healthy business is best positioned to provide the customer and patient with the best experience. Coming from a pharmacy background gives me an added tool: I understand what pharmacists are doing, I understand the rewards of serving people in the community, and I understand the “why” of the way they practise their business. I can communicate with our pharmacists in their language. I have the great fortune in having been able to come from the front store and journey to the corporate side. How will you help Rexall continue to differentiate itself from the competition?

FS: Our customers give us great credit for our authority in pharmacy and wellness offerings and solutions in care in frontshop. We will continue to accentuate and build on that, to give our customers a feel-good experience every day. At the same time we recognize our need to broaden our focus on the frontshop. We’ll make appropriate acquisitions, as we drive our brand focus and growth into the future, and leverage that core of health and wellness to grow.

A first fast step into where we’re headed is in the PATH system in downtown Toronto’s Richmond-Adelaide Centre. We’re not naming a new store, but it is part of our future and our evolution of the store concept, the evolution of the box and creating the brand. Stay tuned. Where do you see retail pharmacy heading?

FS: The Canadian healthcare landscape is evolving, and the age wave is coming in a big way. There is no better community access to healthcare than community pharmacy. This is not a Rexall, Shoppers, or Loblaws thing, this is a professional practice mission that we, as an industry, are best positioned to provide convenient, low-cost, effective, high-quality healthcare to our communities. We are collaborating with government, we endeavour to collaborate even more, we believe we have we something of real value to offer and are excited by what the future holds for our profession.