Irish pharma wholesaler United Drug is understood to be interested in supplying pharmacies hit by the collapse of the Independent Pharmacy Ownership Scheme (IPOS) which was set up to enable pharmacists own their business.

IPOS was backed by Irish-owned drug distributor Uniphar. With IPOS in liquidation, United Drug, the country's largest wholesaler, will be free to talk to the individual pharmacies about supplying them with medicines.

IPOS backed around 150 pharmacies across the country, allowing chemists to buy their own business by providing financing and other services. Uniphar helped finance the pharmacies but took a large write-down on its investment in its last financial accounts in 2008.

An IPOS creditors' meeting is due to be held this week. Kieran Wallace of KPMG will be installed as liquidator to IPOS.

Pharmacists are seeing their margins being squeezed as the government looks to cut the cost of prescription drugs. United Drug chief executive Liam Fitzgerald said last week that his company faces a €2m profits hit following the government's decision to cut the price of some off-patent medicines by 40%.

"Our margins are impacted by these changes. We have a fixed cost that provides a service which in our view is a public service," FitzGerald said.

"We make less than 2% margins on our wholesale business. The total profit generated by our industry is about €30m, which is miniscule"

He said that the Irish market is too small to support three suppliers. United Drug, Uniphar and Cahill May Roberts control drug wholesaling in Ireland.

FitzGerald said United Drug had made a presentation to health minister Mary Harney about the cost pressures it faces.

"We are not investing in Ireland at this point in time because we are getting negative returns. But we understand that the government needs to cut the price of drugs. The consequences are that we are investing in jurisdictions outside of Ireland at the moment. We can't continue to take ongoing hits to our revenue line and maintain the same service," he said.