UDG Healthcare sells off £300m drugs business

Shares at Dublin-based UDG Healthcare soared as it agreed to sell two units of its business to the parent company of Lloyds Pharmacy for €407.5m in a bid to reshape its structure.

McKesson owns LloydsPharmacy, the largest pharmacy chain in the country, with over 93 branches and almost 1,000 employees.

UDG also announced that its long-time chief executive, Liam FitzGerald, is to retire next year.

The funds will be used to repay €142m in bank debt and further the expansion of its healthcare consultancy business. McAtamney is now UDG’s chief operating officer.

UDG, which traces its roots to a co-operative called the United Drug Chemical Co in Ireland, has been facing pressure from the recent consolidation in the global drug wholesaling market as its drug distribution is limited to the island.

UDG’s total revenue rose 5pc in its last financial year to €2.1bn, while adjusted operating profit rose 9pc to €102.6m.

Following the sale of its MASTA business and United Drug supply chain in Ireland and Northern Ireland, the company will be left with healthcare services, healthcare communications and packaging services units.

Less than a year ago, Mr Ralph said that UDG remained committee to its drug distribution business.

Speaking yesterday, Mr Ralph said that UDG will also be in a net cash position after it uses some of the proceeds from the sale to pay down debt.

The disposal, which is expected to be completed by the end of March next year, is subject to shareholder approval at an EGM on October 13 and regulatory approval. The acquired operations will be reported as part of McKesson’s worldwide Pharmaceutical Distribution and Services business under the leadership of Marc Owen, Chairman of the Management Board at Celesio AG, the European business within McKesson’s Distribution Solutions segment. Both the UDG and Sainsbury’s acquisitions are expected to close in the first half of calendar year 2016.