United Drug stays solid

United Drug, the drug wholesaler and pharmaceutical services company, lifted full-year pre-tax profits 5 per cent in spite of currency headwinds faced by its UK business and weaker spending by hospitals.

Ireland’s largest drug wholesaler saw profits rise from €55.7m to €58.5m in the year to September 30.

Revenues rose 6 per cent from €1.58bn to €1.68bn, with operating up 17 per cent from €66.6m to €78.2m.

Liam Fitzgerald, chief executive, said the weakness of sterling reduced the euro value of its UK profits by €4m. In constant currency terms, operating profits were up 24 per cent.

“This performance highlights the defensive nature of our business and the operating leverage within the business as we continue to develop higher margin services,” he said.

The supply chain services arm, which provides logistics, packaging and other specialist services to the big drug groups, lifted operating profits by a quarter.

The higher margin contract sales and marketing services division increased profits 35 per cent, exploiting the trend among drug companies to outsource their non-core activities such as sales and marketing.

The drug wholesaling unit saw profits rise a more modest 2 per cent, held back by uncertainty over drug pricing policy in Ireland.

Volumes of medicines used in Ireland continued to grow, but it “did slow somewhat” in the second half. Sales were also hit by the uncertainty ahead of the court decision requiring the government to reimburse retail pharmacies for the officially imposed cut in drug prices.

A final dividend of 5.7 cents lifts the full-year pay-out 10 per cent to 8 per cent. This will be paid out of earnings per share of 21.8 cents, up 4 per cent from 20.9 cents last year.

Net debt stands at €159.3m, in spite of spending $100m on a drug packaging company in the US.

United Drug shares on Friday closed down 10.6 per cent, or 28½ cents, at €2.40.

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