United Drug, the healthcare products group, expects a "very significant contribution" from a contract it has signed, chief executive, Mr Jerry Liston, has told The Irish Times.
Announcing interim results showing a 30 per cent rise in pre-tax profit to £5.72 million (€7.26 million), he said the group's healthcare company, United Drug Distributors, will distribute a major company's products in the UK from July. The company is Warner Lambert, according to industry sources.
He did not quantify the impact but the full benefits will not be felt until 1999/ 2000. United Drug will be paid a fee for the products distributed. It already distributes Warner Lambert products in the Republic and Northern Ireland. The latest results for the six months ended March 31st 1999 were assisted by a profit of £570,000 on the disposal of surplus profits. Excluding this indicates an underlying profit growth of 16.9 per cent, somewhat ahead of the 16 per cent increase in sales to £234 million.
Growth is continuing at about the same level as in the first half, said Mr Liston. While the market is very competitive, the aim is to continue to increase its market share, he added.
The group benefited from the 10 per cent growth in the pharmaceutical retail market in the Republic. United Drug Wholesale increased sales by 20 per cent to retail pharmacies while growth to hospital pharmacies was a higher 24 per cent.
In Northern Ireland, Sangers increased its sales to retail pharmacies by 10 per cent. Mr Liston noted this was ahead of the retail market growth of 6 per cent. He said operating profits were "ahead of expectation".
Sangers acquired Bradbury Surgical in February. Mr Liston said while this was a small acquisition, it is "strategically important". The expansion of the group's Northern Ireland business has necessitated additional investment in warehousing and, as a result, it has relocated its agency distribution and medical and scientific businesses in Belfast to a new warehouse and offices of 25,000 sq ft in Maryland Business Park, close to its existing Belfast operations.
United Drug Distributors increased sales from existing products but also had the benefit from new products. This subsidiary, Mr Liston said, "is perfectly positioned" to benefit from the trend of out-sourcing non-core distribution and back office administration activities to external partners. UniDrug, its joint venture with Alliance UniChem, recorded a profit of £126,000 compared to a loss of £202,000. This has been described as a very solid performance for a company that was established from a greenfield start-up over two years ago.
Reflecting real growth, the group's earnings per share went up from 13.13p (16.67 cents) to 17.83p (22.64 cents). The interim dividend is being raised 12 per cent to 3.7p (4.698 cents).
