PHARMACY AND medical care distributor United Drug yesterday said it was too early to say how Health Service Executive plans to cut wholesale prices paid to pharmacists would hit its business.

The HSE is reducing wholesale prices paid to pharmacies under the community drugs scheme to bring the cost into line with European norms. Answering shareholders' questions at the company's agm in Dublin yesterday, United Drug chairman Ronnie Kells said it was too early to say what the impact of the HSE move would be. "But I believe we will be able to manage that impact," he added.

After the meeting, United Drug chief executive Liam Fitzgerald said he did not believe wholesale pharmacy margins were too high. "We do not understand where that came from," Mr Fitzgerald said.

He added that the price cut will not result in it changing any previous guidance given to shareholders regarding United Drug's performance. The HSE move will result in an 8 per cent price cut for patients and will shave about €100 million a year off the authority's costs.

In a statement yesterday, Mr Kells said that earlier this month, United Drug revealed that overall performance in the first quarter of its financial year was ahead of the corresponding period in 2006.

"I am pleased to confirm that this trend has continued through January," he said.

"We continue to see opportunities to expand our business through both acquisition and organically, and we have a strong balance sheet allowing us to fund such opportunities," Mr Kells added.

It also emerged at the meeting that the group recently agreed with the Pensions Board that it would place €2 million in its pension fund to deal with a deficit. It operates two schemes, one for staff in the Republic and one for those in the North. According to its annual report, the combined net liability of both schemes was €5.3 million on September 30th.