Australia’s Sigma Pharmaceuticals is buying the rights to a number of drugs and a manufacturing plant from Bristol-Myers Squibb for A$60 million (about $51.4 million) in cash.

The deal includes the right to produce, distribute and market 15 brands in Australia and New Zealand, including the cholesterol drug Pravachol (pravastatin) and a “modern pharmaceutical manufacturing plant” in Noble Park, Victoria. Sigma and B-MS have also entered into a five-year manufacturing agreement, by which the Melbourne-based company will produce certain drugs for distribution outside Australia.

Sigma says that the acquired brand portfolio has annual sales of around A$33 million and the contracting manufacturing part of the deal is worth A$17 million. The company noted that the Noble Park plant was purchased at below-replacement cost and the acquisition will add A$15m-A$17m to Sigma's earnings before interest, tax, depreciation and amortisation in the year ending January 31, 2011.

Chief executive Elmo de Alwis said the acquired drugs are “well-recognised originator brands with established positions in large market segments”. He added that the deal will help Sigma build on similar acquisitions of portfolios from GlaxoSmithKline, Wyeth and Abbott Laboratories. The firm also has contract manufacturing deals in place with GSK, Sanofi-Aventis and Bayer.

A$297 million fundraising
To help the B-MS buy, Sigma also announced an equity offering designed to raise A$297 million. It has launched a one-for-three renounceable entitlement offer at A$1.02 per share, representing a 16% discount on its September 4 closing price. Following the acquisition and offering, Sigma’s net debt to net-debt plus equity gearing will fall to 29%, from 41%.

The company also unveiled preliminary fiscal first-half results which show that net profit climbed 4.9% to A$32.2 million, while revenues were up 3.5% to A$1.54 billion. Mr de Alwis said that the figures were pleasing and demonstrated the group’s ability to “weather the poor economic environment of the past 12 months”.