United Drug chief says outlook 'encouraging'

HEALTH SERVICES provider United Drug expects its profits this year to be in line with 2009 levels. This is in spite of a €2 million hit that the company will sustain as a result of cuts to medicine prices implemented in Ireland earlier this month.

After a successful first quarter’s trading, the outlook for the coming financial year is “encouraging”, chairman Ronnie Kells told shareholders at yesterday’s annual general meeting in Dublin’s Shelbourne Hotel.

The group, based in Dublin, expects to generate pre-tax profits for the year to September 30th, 2010, “broadly in line” with last year, during which it turned a profit of almost €40 million.

Due to a new agreement brought into effect on February 1st, the price of off-patent drugs has fallen by 40 per cent. After the agm, chief executive Liam FitzGerald said this would hit United Drug’s profits by €2 million.

“The only reason we’re able to maintain the guidance we have . . . is because we’re doing well in other parts of the world,” Mr Fitz-Gerald added.

In addition to the Irish market, United Drug operates in Britain, the US, Belgium, Sweden and the Netherlands. “The internationalisation and the diversification of the company has allowed us to mitigate the impact of price decreases.”

United Drug has no immediate plans to scale back on its pharmaceuticals wholesale business in Ireland as a result of the change to the drugs price regime, but Mr FitzGerald said that as a consequence, it was investing in other jurisdictions.

The group’s medical and scientific business performed in line with expectations, while its contract sales and marketing services division traded strongly, with profits for the first quarter ahead of the same period last year.

Profits at its packaging and speciality division were also “well ahead” of the first quarter of 2009, the group said.

Mr FitzGerald also said the group was in preliminary acquisitions discussions with five or six companies.

United Drug also announced yesterday that Kieran McGowan, former chief executive of IDA Ireland, retired from its board on February 8th. Mr Kells described him as an “exceptionally able” non-executive director who had served the company well for more than 10 years.