United Drug reports weak packaging but strong contract sales biz

By Nick Taylor

- Last updated on GMT

Related tags: Marketing

United Drug’s contract packaging business is expected to report a significant dip in profits but strong performance in the sales division helped push up its share price.

The wholesale pharma company’s fortunes reflect the current state of the industry; the contract sales division is benefiting from layoffs at in-house teams and the packaging business is suffering, possibly because of cuts in client’s budgets.

Several US packaging shipments have been delayed and a key UK client has reduced their order, resulting in expected profits “being well below those reported in the same period last year​”.

Despite these difficulties United Drug says Sharp, the US contract packaging business that it acquired in July, is continuing to win new contracts and maintain business with existing clients.

In addition although the UK packaging business was negatively affected by a key client’s cut-backs the rest of the European operation is trading “in line with expectations​”.

Contract sales boosted by pharma’s scythe

In the six months up to the end of March United Drug signed new sales deals with NAPP Pharmaceuticals, Lundbeck and Novartis, the latter of which has laid-off a significant number of its sales team in the past few years.

Pharma’s search for cheaper, more-flexible ways of marketing their drugs has created an opportunity for contract sales teams, which United Drug appears to be capitalising on.

The company has broadened its offering in recent years by adding marketing services to its sales offering and believes this has helped the division perform “well ahead of the prior year​”.

Overall United Drug, which also includes a healthcare supply chain division, is predicting that profits before exceptional costs will be below those reported in the same period of 2008.

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