United Drug profits in line with budget

IRISH healthcare services group, United Drug, has said that trading across its businesses has been good in the first quarter of its financial year and market share has been gained, despite the well-touted cuts in medicine prices.

United Drug’s fiscal year runs until the end of September and as part of a trading update for the time since then — issued ahead of the group’s annual general meeting in Dublin, yesterday — management said profits are currently “in line with budget” and “well ahead of what was a slow first quarter in 2009”.

“Overall profits in the Healthcare Supply Chain division are ahead of last year. Our wholesale businesses in the Republic and Northern Ireland have maintained their market leading positions in markets that are still experiencing volume growth.”

Management added the new drug pricing regime in the Republic, which came into effect at the beginning of this month — seeing a 40% price cut in over 300 drugs for which there is a generic already on the market — will result in group pre-tax profits for the year to the end of next September being “broadly in line” with the prior year, on a constant currency basis.

For its last financial year, United saw a 5% fall in pre-tax profits to €39.1m.

United’s chairman, Ronnie Kells told shareholders at the AGM the medicines price reduction “is a hit” which cannot be avoided, but the company will work around it.

“The Irish wholesale division is a significant portion of our business and it will impact profitability but we will adjust to that and look at ways to reduce our cost base,” he said. In terms of expansion, group chief executive Liam FitzGerald said the company remained open to growing through acquisition, saying that increasing United’s presence in the homecare services market — an area it entered through a British-based joint venture with US giant, Medco Health Solutions, last year — in continental Europe was on the cards and the company is currently in preliminary takeover talks with “five or six” companies.