PHARMACEUTICAL COMPANY United Drug has warned that sterling's weakness may have an impact on profits in the second half of its fiscal year but it remains on course to deliver double-digit growth in earnings.

The company said in a trading update yesterday that it would deliver double-digit growth in operating profits and earnings in the six months to March, the first half of its fiscal year. This was in line with expectations, it said.

"United Drug expects the strength of current trading to continue into the second half of the financial year," it said.

"United Drug experienced good trading conditions and revenue growth in each of its four divisions in the six months to March 31st, 2008. This strong performance is despite a significant weakening in the value of sterling against the euro. The deterioration in the sterling exchange rate relative to the euro does not impact on group cash flows but does reduce the value of sterling profits."

United Drug said it remained positive about the fundamentals of its core markets. This was in spite of the "ongoing challenge" presented by new regulations, which last month reduced the price that the Health Service Executive pays to community pharmacies for medicines it funds.

"An independent body has now been set up to review the level of dispensing fees paid to pharmacists. This body has been asked to issue its recommendation by the end of May 2008 and, subject to Government approval, a revised dispensing fee will be paid to pharmacists, backdated to March 1st, 2008," the update said.

"An increased dispensing fee should help offset some of the impact on pharmacists from the reduction in the reimbursement price of medicines."

Shares in United Drug closed up two cent at €3.70 on the Dublin market last night.