United Drug agrees new UK homecare joint venture deal

HEALTHCARE SERVICES group United Drug has formed a joint-venture with US-based Medco Health Solutions to provide British patients with home-based pharmacy care services.

The 50/50 partnership will operate under the name of Medco Health Solutions UK and will offer prescription drug-dispensing and home delivery and on-site nursing for the administration of medicines.

According to United Drug, the homecare pharmacy market in the UK accounts for approximately £1 billion (€1.16 billion) of the National Health Service’s spending on drugs and is growing significantly year-on-year.

United Drug distributes medicines and equipment to hospitals and pharmacies in the Republic, the UK and the US.

Chief executive Liam Fitzgerald said its distribution expertise would complement Medco’s clinical expertise and financial resources.

United Drug has been running pilot projects in home-based pharmacy care services in the UK and these will transfer to the new joint-venture when it becomes operational later this year.

Davy analyst Barry Gallagher said the start-up costs were believed to be no more than £5 million (€5.8 million) with investment due to start at the end of United Drug’s financial year in September.

The size and quality of the partner meant the deal appeared “a smart move” for United Drug.

“Medco’s muscle, aligned with United Drug’s capabilities, should help the new entity enter the market in a meaningful way,” he said.

Medco has a market capitalisation of $25 billion (€17.6 billion) and employs 20,000 people.

John Driscoll, Medco’s new markets president, said the company’s homecare pharmacy services had a track record of providing quality and convenient care.

Shares in United Drug closed up over 4 per cent at €1.93 in Dublin giving the company a market capitalisation of €453 million. The stock has declined 13 per cent this year.