Floods in Queensland, Australia have caused thousands of people to leave their homes. Sigma Pharmaceuticals has warehouses in the region, one of which, in Toowoomba, experienced minimal flooding.
All Sigma warehouses have remained operational but road closures impacted on deliveries to customers. To ensure supplies reach their destinations Sigma has been working with its logistics team and significantly rerouting road haulage.
“Once the floods have subsided, we will be looking for ways we can sensibly assist with the recovery effort. Together with our staff, we will also be making a direct financial contribution to the relief fund”, said Mark Hooper, CEO of Sigma, at an extraordinary general shareholder meeting.
Sale to Aspen
The AU$900m (US$890m) sale of the pharmaceutical business to South Africa-based Aspen was the main issue at the shareholder meeting. At the meeting Sigma shareholders voted in favour of the deal, clearing the way for ownership to pass to Aspen on January 31 2011.
Sigma cited three main factors motivating the deal. Sale of the business allows Sigma to: reduce bank debt and improve financial flexibility; consider capital management initiatives, such as a special dividend following the deal; and retain full ownership of wholesale and retail operations.
Aspen will acquire five manufacturing sites, expand its portfolio of branded, generic and over-the-counter products, and establish a platform for growth in Asia Pacific. Also, Aspen will outsource Australian distribution of its generic products to Sigma.
Losing Pfizer
Securing the logistics deal with Aspen comes after Pfizer, which accounts for 10 to 15 per cent of annual wholesaling revenues at Sigma, chose to distribute directly to Australian pharmacies. Sigma is now implementing initiatives to recover the loss in earnings caused by Pfizer’s decision.
Australian reforms to generic medicine pricing will also have a negative impact on revenues, said Hooper. Work to address inefficiencies within Sigma and the changing industry environment is underway, said Hooper, but it will take time for the benefits of these efforts to be realised.
Sigma shares closed up 2.27 per cent today, the first full day trading since the sale to Aspen was approved.