United Drug outlines 5-year growth plan

United Drug aims to double its earnings over the next five years, while increasing the growing internationalisation of its business.

The Dublin-headquartered healthcare services group — which has spent around $140m on international acquisitions this summer — has seen its annual profit contribution from its Irish operations recede from 50% to approximately 25% in the past six years and US contribution go from zero to 30% in the same timeframe.

In 2007 the company was mainly focused on Ireland and Britain, however, North America and continental Europe are now growing parts of the business.

At an investor day in London, last Friday, United’s management — led by chief executive Liam FitzGerald — said the group’s strategic ambitions include doubling the size of the group over the coming five years, “through performance-led growth” and “combining our services, internationally, around the needs of life science companies”.

Management added that it wanted to “increase the pace of the internationalisation of the group” and will aim to enter emerging geographical markets, “as well as established ones”.

Davy Stockbrokers, yesterday called the five-year growth plan “ambitious“, but said acquisition activity will help — potentially providing half of the momentum needed to double the business — and that United Drug is, overall, “returning to a growth cycle”.

“It’s an ambitious target, but the return of organic growth and some recent acquisitions — bringing scale to several of its non-Irish operations — provide an encouraging platform to achieve this,” according to Davy’s Jack Gorman.

“The recent acquisitions of Pharmexx, Bilcare, DSA and Synopia are building material positions for United Drug in respective markets in sales and marketing services and now in contract packaging,” he said.

“The opportunity for supply chain outsourcing to increase its share in the pharma industry is apparent.

“Whether United Drug can participate in this growth depends on its competitive positioning and also on operational and commercial execution.

“Scale is being developed and acquired to deliver on the competitive positioning. Execution is key for United over the next 12 months — in particular, integration of the two recent major acquisitions, Pharmexx and Bilcare,” Mr Gorman added.

United’s management also used its investor day to push its FTSE-inclusion plan — it confirmed earlier this month its intentions to de-list from the Iseq in favour of a sole listing in London from early October — noting its change from “an Irish-centric distributor to an international healthcare services group, headquartered in Ireland”.

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