Drug price cut hits Alliance Unichem

Pharmacy group Alliance UniChem today said its growth in the UK had slowed more than expected as it prepared for its landmark merger with Boots.

Pharmacy group Alliance UniChem today said its growth in the UK had slowed more than expected as it prepared for its landmark merger with Boots.

Alliance said sales at its UK pharmacies, which include the Moss chain, had not risen as fast as it had hoped because of the impact of a 7% cut in drugs prices at the start of this year.

Pressure was also being felt in its wholesale business where sales in key markets including the UK and Spain since June were still lagging behind earlier expectations.

But the company, based at Weybridge in Surrey, said the impact of the lower drugs prices will have worked its way through the system by the end of the year.

In terms of its wholesale business, Alliance UniChem said: “We expect the UK market to return to growth in 2006.”

Lower medicines prices were agreed in November last year between pharmaceuticals firms and the Government, which was anxious to reduce the NHS drugs bill by around £1.8bn (€2.65bn) over the next five years.

Alliance saw sales come under pressure at the start of the year as healthcare providers took advantage of the sudden surge in medicine supplies to replenish stocks cheaply. Its wholesale business was also squeezed by price cuts in Spain in March which made imports more attractive.

Alliance announced in October that it is merging with retailer Boots to create a pharmacy giant with 2,600 stores in the UK and £13bn (€19.1bn) of sales.

The new company – to be called Alliance Boots – will become the largest drugs retailer and wholesaler in the UK as well as have a network across 10 other European countries.

Effectively doubling in size to be worth around £7bn (€10.3bn), the business will have more purchasing power to secure better terms from suppliers and lower prices to compete with supermarkets.

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