Pharmacy chain expects dip in earnings

THE company which owns the Unicare pharmacy chain has written down the value of its Irish assets by €85 million and expects a significant decline in operating earnings this year.

Unicare is owned by German pharmaceutical group, Celesio and operates around 60 chemist shops in Ireland.

In a statement yesterday it said: “The Irish government has drastically lowered reimbursement prices for prescription medicines as well as pharmacies’ remuneration at mid-year 2009.

“This caused a massive dispute with the pharmacists. At the same time it is anticipated and accepted that many pharmacies will be closed.”

It expects a significant decline in operating earnings in Ireland this year and is “considering all options”, which could include closing some of its stores here.

This is the second time this year Celesio, which also owns wholesale and distribution business Cahill May Roberts has written down the book value of pharmacies in its smaller European markets. It is understood to be looking to exit some countries.

The overall write-downs of €274m affect drug retail outlets in the Netherlands and Italy, as well as Ireland.

Celesio also lifted its outlook for 2009 earnings before interest, taxes, depreciation and amortisation (EBITDA) to €625m from slightly more than €600m previously, citing solid demand at its drug wholesale business.

Chief executive, Fritz Oesterle said: “In Ireland, the Netherlands and Italy, where we don’t have critical mass in the pharmacy business, we are not in a position to react well to regulatory changes.”

He added that expansion options were limited in these markets because virtually no pharmacy has been put up for sale in any of the countries over the last two years.

Celesio also delayed a goal to have 500 franchise partners for its DocMorris pharmacy brand in Germany by 2015 from 2011 previously, the CEO said, citing flaws in the strategy to attract new pharmacists.

In May, Celesio saw its expansion plans for Germany shot down by Europe’s highest court, which upheld German legislation preventing non-pharmacists and chain operators from setting up shop there.

Plans to bring the franchise business model to other European markets were still on track, Mr Oesterle said.