Sigma on mission to further diversify

PHARMACIES supplier and drugs wholesaler Sigma Healthcare says it will be more aggressive in seeking acquisitions that will help reduce its reliance on government payments.

Sigma, the owner of pharmacy brands Amcal, Guardian and Chemist King, yesterday reported a 3.5 per cent lift in net profit to $55.1 million in the year to January 31, due to fewer one-off costs than in the prior year.

Underlying earnings before interest and tax (EBIT) fell 10 per cent to $90.3 million, in line with its guidance, reflecting an expected decline in sales of low-margin hepatitis C medication, soft consumer sentiment, and the exit of some pharmacies in Queensland that were not complying with Amcal store branding requirements.

Sigma chief executive Mark Hooper says the company is working hard to ensure it can grow and diversify its earnings.

“We are also very focused on being more aggressive on an M&A (merger and acquisition) front,” he said.

“We’re looking for opportunities along the supply chain where it’s ideally servicesbased income that doesn’t rely on the government to pay us money.”

Sigma has appointed Goldman Sachs as financial adviser to assist with potential acquisitions.

Historically, much of Sigma’s business has involved supplying drugs under the federal government’s Pharmaceutical Benefits Scheme and receiving payment from the government.

But frequent changes to the PBS as the government seeks to cut costs has made supplying drugs to the PBS less profitable for drug wholesalers.

Last year, as part of its diversification strategy, Sigma acquired Medication Packaging Systems (MPS), Australia’s largest provider of dose administration services to the aged care sector and community pharmacy patients.

“MPS is a great example: it’s a service for patients both in an aged care and community setting,” Mr Hooper said.