Profits at a company that secured support from the home secretary, Priti Patel, as it lobbied ministers for UK government contracts to supply personal protective equipment, have soared after it won £216m in taxpayer-funded business during the pandemic.
Revenues at Pharmaceuticals Direct Limited jumped from £38m to £166m in the year to the end of March 2021, with profits rising eightfold, from £1.6m to £13m, according to accounts filed this week at Companies House.
The company won two PPE contracts during the period, worth a combined £131m. It paid a £420,000 dividend to its parent company, Pharmadent Holdings, which is ultimately owned by Bemal Patel (no relation to the home secretary).
Last year, Labour accused Priti Patel of a “flagrant breach” of the ministerial code, which she denied, after letters emerged showing that she intervened with Michael Gove on behalf of the company, which was represented by a former adviser of hers.
Documents showed that in May 2020, Patel attempted to help the firm secure a PPE deal worth £20m.
Her efforts failed after the then health secretary, Matt Hancock, said the masks were “not suitable for the NHS”, according to disclosure in a legal case brought by the Good Law Project campaign group.
Samir Jassal was named as Patel’s “suppliers’ contact” at PDL in contract documents. Jassal is a former unpaid adviser to Patel, has stood as a Conservative candidate at two general elections, and has met Boris Johnson and David Cameron.
At the time, a spokesperson for Patel said: “The home secretary rightly followed up representations made to her about the vital supply of PPE. During a time of national crisis, failure to do so would have been a dereliction of duty.” She has denied Labour’s suggestion that her intervention was improper or represented a breach of the ministerial code.
The two contracts that PDL subsequently won are worth a combined £131m, accounting for more than the entire increase in revenue at the company last year, which was £128m.
PDL, which has 25 employees, according to the Companies House filings, has since won a third contract, worth £85m, to provide lateral flow tests, taking its total income from Covid-19 work to £216m. That contract runs from February to August this year.
Disclosure from the government – in response to a pre-action letter from the Good Law Project – revealed a letter that Patel wrote to Gove in May last year. The Daily Mail, which first reported on the documents, said the possible deal was worth £20m.
In the letter, Patel expressed disappointment that the government no longer required supplies of KN95 masks from PDL, saying: “They have committed stock and secured supply, exposing them to considerable financial risk and pressures.”
“The late stage in which the government has decided not to use them has caused these problems,” she wrote on 3 May last year. Patel went on to say she would be “most grateful” if Hancock could review the matter urgently and urged him to “work with the company to distribute and supply these masks”.
Hancock wrote back 10 days later to say that “KN95 face masks are Chinese standards” and that UK officials had concluded that they were “not suitable for use in the NHS”.
Patel later contacted procurement officials, documents show, to advise that PDL was able to source higher-quality PPE products. The company went on to win its first pandemic-related contract, worth £28.8m.
PDL told the Guardian it had “decades of experience as a well-established supplier in the healthcare sector, with an exemplary record of successful procurement and delivery.
“It is precisely the kind of proven and reliable organisation that the country needs to respond to the ongoing challenges posed by the pandemic. It did not have to respond to the government’s call to arms at the very height of the emergency. PDL could well have chosen to continue with its already very successful business and left the national emergency to be dealt with by other, much less capable and less experienced contenders.”
It said its most recent contract with the government reflected “the many years of proven reliability and experience that PDL has in successfully supplying the NHS”.
PDL’s website describes itself as a “family-run” business, founded in 1999 and specialising in “procurement, storage and distribution of branded and generic pharmaceuticals and healthcare products”. It has three large warehouse units in Chessington, Surrey.
