We continue to make good progress in Health with sales up 0.6% to £936m.
Within our dispensing business we saw volume growth of 5.1% which continues the strong performance we have seen in recent results.
Reported sales growth was however much lower at 0.3% reflecting significant price deflation. Firstly PPRS has reduced the price of branded medicines by 7%. This has reduced our sales income and, given the mix of medicines dispensed, it deflated dispensing sales by 4.7% in the half year. PPRS is the means by which government controls the cost of branded drugs and it impacts both the reimbursement we receive and the cost of drugs we buy. The impact on profit is therefore small. PPRS is designed to operate for 5 years and will become comparable from 1st February 2006. Dispensing sales growth was also deflated by 1.2% in the first half as a result of price reductions to generic medicines which annualised on 1st September this year.
H1 also saw the first impact of the new pharmacy contract which moves some funding from the reimbursement of generic medicines to fees for services. The impact of this change was neutral in the half in line with our expectations for the year.
Within the over the counter business, healthcare sales were up 1% with good growth in vitamins and supplements offset by weaker hayfever sales.
LINK: We also made good progress in Beauty, our second key business.
