RUNCORN-BASED Phoenix Healthcare Distribution is growing again as it overcomes the loss of a major contract with Pfizer.

The pharmaceutical wholesaler, which supplies pharmacies, GPs and hospitals, edged closer to the £1bn turnover mark after sales increased 1.4% to £962.4m in the year to January, 2009. Accounts just lodged at Companies House – more than four months after the deadline – showed pre-tax profit slipped by £1m to £25.3m in the same period.

Phoenix had seen sales plummet by nearly £37m a year earlier as organic sales growth failed to fill the gap left by drug giant Pfizer’s decision to switch to a model known as direct to pharmacy.

This is where manufacturers enter into contracts for certain select wholesalers to deliver product on their behalf to pharmacies and dispensing doctors for a fee per pack of product.

While sales have suffered, the firm has continued to improve its gross margin, which has increased by 1.3 percentage points to 8.7% in the last two years. This change is largely attributed to the loss of the Pfizer business.

The directors’ report highlighted the competition concerns that surround the direct to pharmacy model, which has been subject to a review by the Office of Fair Trading. It said: “This reduces the wholesalers’ ability to compete with competitors on the basis of service and discounts offered to customers, and it also reduces customer choice.”

Phoenix employs 1,500 people at its 15 depots across the UK, and is part of the group that includes pharmacy chains Rowlands and Numark.

Its parent company is the £19bn- turnover German Phoenix Pharmahandel Group, which has more than 23,000 employees in 24 countries.