PROFITS in all divisions of pharmaceutical and consumer products group United Drug are ahead of last year, chairman Mr Martin Rafferty told shareholders at yesterday's annual general meeting.

The favourable economic conditions in both the Republic and Northern Ireland should mean United Drug will have another successful year, he added.

However, Mr Jerry Liston, chief executive, speaking after the meeting, warned that any worsening of the situation in Northern Ireland would affect the business. Almost one third of the company's profits come from Northern Ireland.

Health spending is buoyant in Ireland, said Mr Liston. He expects it to remain that way for at least two years. "The market is growing at about 11 per cent this year," he said.

Drug prices are also unlikely to fall, according to Mr Liston.

The company's latest acquisitions - Novapath Supplies and Vector Scientific - have performed well and have met their "every tough budgets" so far, according to Mr Liston. He said the company was not planning any immediate acquisitions.

Profits in the medical division are 2.5 times the level of last year. "The agency business in particular is very strong and is expected to contribute up to 20 per cent of the group's profits this year. The core business of wholesaling is continuing to be very tough," Mr Liston said.

"We will have to become the most cost-effective to survive," he added. United Drug has 25 per cent of the wholesale market in the South and 55 per cent in the North, compared to Cahill May Roberts' 36 per cent and 45 per cent respectively.

Mr Liston also called for a return to parity against sterling.

United Drug reported pre-tax profits of £5.05 million for the year to September 30th, 1995. The meeting authorised a full-year dividend payment of 5.55p per share.