In recent years United Drug has placed more importance on its packaging services unit as it looks to offset the impact of austerity measures in its native Ireland. Last year the packaging and speciality division posted double-digit growth and the upwards trend has continued into 2012.
“[The packaging and specialty division] reported revenues and profit for the period ahead of last year with positive development in the US due to the gain of more customers”, Ingeborg Øie, equity analyst, at Jefferies & Company, wrote in a note to investors.
Future growth will be supported by a four-year, €30m ($40m) packaging services deal with ‘a leading pharmaceutical company’. United Drug said the deal will begin generating revenues in the coming months.
The duration of the deal fits with a trend predicted by United Drug in November when it said: “[We are seeing] increased interest from big pharmaceutical and generic companies looking to enter into strategic packaging relationships.”
It is unclear where the bulk of the work will be done but, in general, United Drug is seeing strongest demand for packaging services in the US. In Europe the market is “more fragmented”, United Drug said, and its operations are “at an earlier stage in its development”.
United Drug is working to bring its European operations to the same stage as its US division. In the meantime Europe facilities are benefiting from US-based clients placing work in the region. This is making better use of capacity while the pipeline of European business develops.