CELESIO, WHICH owns Unicare and Cahill May Roberts in Ireland, yesterday reduced the value of its Irish pharmacies by €85 million as part of a €274 million goodwill writedown.

The German-based drug distributor and retailer has blamed the Government’s decision to reduce payments for dispensing drugs to medical card holders.

“As the economic situation in Ireland is particularly tense, pharmacies’ earnings are even more burdened in the non-prescriptive segment,” the company said in a statement.

“Therefore, Celesio expects a significant decline in operating earnings in Ireland and has reduced the carrying amount of goodwill of Celesio’s Irish pharmacies accordingly.”

The announcement comes just months after Celesio wrote down the value of its pharmacies in the Netherlands, Belgium, Ireland and Italy by €287 million to reflect higher business risks.

Celesio said the latest writedowns were mainly due to unfavourable regulatory changes and affect drug retail outlets in Ireland, the Netherlands, and Italy.

“In Ireland, the Netherlands and Italy, where we don’t have critical mass in the pharmacy business, we are not in a position to react well to regulatory changes,” said chief executive Fritz Oesterle.

Mr Oesterle said the company was considering its options in these markets, adding that expansion options were limited because virtually no pharmacy has been put up for sale in any of the countries over the last two years.

The statement said “it is anticipated and accepted that many pharmacies will be closed” in the Irish market.

Despite the writedowns the group raised its outlook for full-year core earnings to €625 million from slightly more than €600 million, citing solid demand at its drug wholesale business. Its shares closed up 1 cent at €18.53.

Unicare, which operates 72 pharmacies in Dublin, Laois, Westmeath, Cork, Limerick, Wexford, Waterford, Kildare and Kilkenny, was acquired by Celesio for €157 million in 2001.