3rd Apr 2008 07:00
United Drug 2008 First Half Trading Update UDG.I UDG.L United Drug plc ("UD" or the "Group"), a leading international provider ofservices to healthcare manufacturers and pharmaceutical retailers, today issuedthe following Trading Update for the six months to 31 March 2008 being the firsthalf of the 2008 financial year. The Group will announce results for the periodon 6 May 2008. Period in Review United Drug experienced good trading conditions and revenue growth in each ofits four divisions in the six months to 31 March 2008. Operating profit andearnings for the period are expected to show double digit growth over the sameperiod last year, in line with expectations. This strong performance is despite a significant weakening in the value ofsterling against the euro. The deterioration in the sterling exchange raterelative to the euro does not impact on group cash flows but does reduce thevalue of sterling profits, when translated to euro for reporting purposes. Pharma Wholesale The Group's Pharma Wholesale business in the Republic of Ireland continues toshow excellent progress in a market that has experienced considerable changeover the last year. A new agreement on drug prices, resulting in a reduction inthe price of off-patent drugs and medicines, took effect on 1 March 2007. Witheffect from 1 March 2008 the Irish Health Service Executive (HSE) hassignificantly reduced the reimbursement price it pays to community pharmacy forany medicines it funds under various HSE schemes. An Independent Body has now been set up to review the level of dispensing feespaid to pharmacists. This Body has been asked to issue its recommendation by theend of May 2008 and subject to Government approval, a revised dispensing feewill be paid to pharmacists, backdated to 1 March 2008. An increased dispensingfee should help offset some of the impact on pharmacists from the reduction inthe reimbursement price of medicines. Consumption of medicines in the Republic of Ireland continues to grow strongly,and with new business won the Group has further increased its market share inthis growing market. In the Northern Ireland Pharma Wholesale business we have seen a continuation ofthe move by pharmaceutical manufacturers to a Direct-to-Pharmacy (DTP)distribution model. Under DTP the manufacturer appoints a limited number ofwholesalers to act as their distribution agent in the territory. The Group'sSangers business in Northern Ireland is involved in all DTP arrangements in themarket. These arrangements change our revenue model, as we now charge afee-for-service rather than buying and re-selling the product. Our profitabilityhas not been affected by this market evolution and indeed this change has helpedus to continue to increase our market share and further improve our cash flowsin the growing Northern Ireland market. Craig & Hayward, the UK specials distributors acquired during 2007, hasperformed very well during the period, ahead of our expectations. When combinedwith the Republic of Ireland and Northern Ireland wholesale businesses, theGroup's total Pharma Wholesale division will report very good growth in theperiod when compared with the same period last year. Supply Chain Services In the manufacturer facing businesses, the Supply Chain Services division hasmade considerable progress in the period. The Group's core distributionbusinesses in the UK and Ireland have performed very well during the period andwe continue to expand the range of services offered to manufacturer clients. The Group's growing pharma packaging business now incorporates operations in theUK, Holland and Belgium. These businesses continue to perform ahead of ourexpectations and provide us with a strong platform to further develop thisservice for existing and prospective clients. Other businesses within thisdivision also performed well in the period, and combined will result in theSupply Chain Services division reporting very strong growth for the period. Medical & Scientific The Group's Medical & Scientific division operates in both the Irish and UKmarkets. The division has significantly increased its presence in the Irishmarket during the period through the acquisition of JVA, a leading analyticalchemistry distributor. The businesses, both in Ireland and the UK, will report good growth over thesame period last year although the timing of some capital equipment sales willbe different than originally forecast resulting in more of these sales nowfalling into the second half of the year. Particularly strong performances inthe period have been recorded in the UK by Pyramed and Endoscopy UK and as aresult the full amount of the Pyramed earn-out has been paid-out ahead ofschedule. Contract Sales & Marketing Services The Contract Sales Outsourcing division has significantly broadened its serviceoffering over the last six months and to better reflect the increased serviceoffering to healthcare clients the division is being renamed the Contract Sales& Marketing Services division. The broadening of the service offering and the geographic reach has beenenhanced by the acquisition of Alliance Healthcare in Pennsylvania in the UnitedStates and Procon in Yorkshire in the United Kingdom during the period. Thesebusinesses compliment our market leading and growing contract sales andmarketing operations in the UK and Ireland and will allow us provide additionalvalue-added services to clients in existing and new markets. The division willreport a strong outcome for the period, well ahead of the same period last year. Outlook United Drug expects the strength of current trading to continue into the secondhalf of the financial year. Full year profits and earnings may be impacted bythe continuing weakness in the value of sterling relative to the euro, effectingthe translation of profits, but nonetheless are expected to show double digitgrowth over the 2007 results. The Group remains positive about the fundamentals of its core markets and itsposition within those markets, despite the ongoing challenge presented byGovernment regulation impacting on limited parts of the business. The Groupcontinues to see opportunities to expand the business, both organically andthrough acquisition, and has a very strong balance sheet and positive internallygenerated cash flows to support these growth objectives. About United Drug plc United Drug is a leading international provider of services to healthcaremanufacturers and pharmaceutical retailers, with operations in the UK, Ireland,Holland, Belgium and the USA. The Company has a long-term track record ofdelivering double-digit profit, earnings and dividend growth. Over the last 20years pre-tax profits have grown at a compound annual rate of 21%. The Company operates across four divisions, Pharma Wholesale, Supply ChainServices, Medical & Scientific and Contract Sales & Marketing Services. United Drug is the largest pharmaceutical wholesaler in the island of Ireland.It is the market leader in contract distribution outsourcing (pre-wholesaling)in Ireland and has achieved the No. 1 position in the UK through its jointventure business UniDrug Distribution (UDG). The Company also providesdistribution related services in the areas of pharmaceutical contract packagingand speciality distribution in the UK, Holland and Belgium. Through its Medical & Scientific division, United Drug provides sales &marketing and technical service solutions, including contract distributionservices to Medical & Scientific equipment & consumable manufacturers, with amarket leading position in Ireland and an emerging presence in the UK. United Drug is also a leading provider of contract sales outsourcing and relatedmarketing services to pharmaceutical manufacturers in the UK and Ireland andalso provides these services in the US market. \* TInvestors and analysts Media------------------------------------------- ----------------------------------------Mark Kenny or Jonathan Neilan Pauline McAlesterK Capital Source Murray ConsultantsTel: +353 1 631 5500 Tel: +353 1 498 0300Email: [email protected] Email: pmcalester@murrayconsult.ie------------------------------------------- ----------------------------------------\* T Copyright Business Wire 2008Related Shares:
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