UPDATE 1-Shoppers Drug cuts store hours in SW Ontario

* Chops hours and drug delivery in London, Ontario

* Says will assess operations in other regions

TORONTO, April 12 (Reuters) - Shoppers Drug Mart SC.TO said on Monday that it will cut hours of operation at seven of its stores in southwestern Ontario, and charge for home delivery, as Canada's biggest drugstore chain braces for a provincial plan to slash prices on generic prescription drugs.

The company, which has almost 1,200 stores across the country, also said it would review its operations, “market by market” across the province.

Shoppers said the reductions would eliminate about 170 hours of health care and pharmacy services in the London, Ontario, area.

Last week, the Ontario government unveiled sweeping changes to the way pharmacies are compensated for generic drugs they dispense, effectively lowering revenue from filling medical prescriptions.

Ontario is eliminating the practice of generic manufacturers paying drugstores for filling prescriptions with their products. In return the government will allow pharmacies a small increase in the dispensing fee they can charge customers. Even so, the higher fee is much less than what they would have reaped from the allowances.

What consumers pay for the drugs, aside from the dispensing fee, will also shrink substantially under the Ontario plan.

$1=$1.00 Canadian Reporting by Scott Anderson; editing by Rob Wilson