United Drug reports small rise in revenue

HEALTHCARE SERVICES group United Drug has reported a fractional rise in revenues last year, but reported a strengthened balance sheet.

The firm’s chief executive Liam FitzGerald said the group had overcome challenges to deliver a “solid” set of results.

United Drug has been hit by a number of regulatory changes over the year, including a reduction in the price of pharmaceutical products with the implementation in February of a new agreement between the Health Service Executive and the pharmaceutical industry.

As a result of the deal, many off-patent products were reduced in cost by about 40 per cent.

Meanwhile, a reduction in the reimbursement price of generic products was introduced in September. In Northern Ireland, a government-imposed price reduction of 1.9 per cent was introduced in January.

Combined with a number of other changes, including a rise in prescription costs, the measures cost the company about €60 million in revenues.

The company said revenues in the 12 months to the end of September came to €1.73 billion, an increase of 0.5 per cent on the previous year.

Profit at the pretax level of €54.4 million was 2.5 per cent ahead of the previous year before taking account of €13.9 million in exceptional costs largely related to redundancies in a company restructuring programme.

The company maintains that adjusted figures for profit and earnings per share give a more accurate picture of performance. On this basis, it reported pretax profits of €67.6 million – a difference of €13 million.

Revenue at the group’s pharma wholesale business was only 1 per cent lower in Ireland and revenues rose in Northern Ireland.

The US performance was also encouraging, with analysts at company broker Davy noting the success in the medical affairs unit.

UNITED DRUG 2010 RESULTS:

Revenue: €1.73 billion (+0.5%)

Pretax profit: €54.4 million (+2.5%)*

Earnings per share: 18.67 cent (+31.3%)

Dividend per share: 8.4 cent per share (+5%)

* before exceptional costs in 2009 associated with restructuring

SUMMARY

Despite tougher conditions in the healthcare market, United Drug grew its group revenues and pretax profits in the year to the end of September.

Over the year, it also managed to reduce its net debt by €53 million to €109 million.