Pharmaceutical wholesale giant Sigma Healthcare has snapped up dose administration services provider Medication Packaging Systems (MPS) for $18.5 million.
The deal, announced to shareholders this morning, is expected to be completed by 30 September and will see Sigma continue existing operations while weighing up its offer for expansion.
The move comes as the company reports a 8.7 per cent decline in underlying earnings before interest and tax (EBIT) to $44.2 million for the half ended 31 July, as weak retail conditions weigh and the loss of stockists Chempro group weigh on sales.
Revenue declined 6.1 per cent on a total-basis to $2.02 billion, with the MPS acquisition expected to begin benefiting sales to the tune of $50 million in 2019.
“Sigma has a very clear strategy focused on delivering broader healthcare solutions, so MPS is a natural and compelling addition. It is the market leader in dose administration services, a service that has an increasingly important role in health management,” said Sigma CEO and managing director Mark Hooper.
MPS is Australia’s largest provider of dose administration services to the aged care sector and community pharmacies in Australia. It has a 20 per cent market share and provides medication management systems as well as individual medication sachet doses at one of the three TGA-approved facilities.
“The current market share of MPS is almost three times that of its nearest competitor. So we see tremendous opportunity to not only take a leading position in the dose administration market, but to achieve further growth in what remains a very fragmented market,” added Hooper.
The pharmaceutical supplier has lifted half-year net profit by 17.4 per cent to $27.8 million, with growth impacted by challenging industry conditions, according to AAP. Sigma’s sales revenue for the six months to July 31 has declined by six per cent to $2.02 billion. The company has maintained a fully franked interim dividend of 2.5 cents per share.
“We have achieved a sustained period of above market growth over the past few weeks. So whilst the current year was influenced by some unexpected events, these are being addressed. This has intensified our focused on our strategy and business development pipeline, including today’s announcement of the acquisition of MPS. It also reinforces our belief that we are on the right track and can return to growth in FY19 and beyond,” said Hooper.
“The challenges that arose during the year are now being actively addressed. Our focus is firmly set on growing the pipeline of new members that will build momentum into FY19 and building on the momentum, we are starting to see in our hospital services and third party logistics business.”
Sigma expects full-year underlying EBIT to be $90 million.
