B-MS outsources manufacture of products in 5 year deal

By Nick Taylor

- Last updated on GMT

Related tags: Bristol-myers squibb, Clopidogrel

Bristol-Myers Squibb (B-MS) has outsourced the manufacture of some of its products to Sigma Pharmaceuticals, an Australia-based company that also bought a facility from the big pharma for A$60m ($51.7m).

The five year manufacturing contract is part of deal that sees a B-MS facility in Victoria, Australia and the rights to make and distribute 15 of its products in Australia and New Zealand transferred to Sigma Pharmaceuticals.

Australia-based Sigma has entered into similar contracts with GlaxoSmithKline, Sanofi-Aventis and Bayer. The company anticipates generating revenues of A$17m from the B-MS contract and intends to retain all 140 staff employed at the Victoria facility.

As part of the deal Sigma has gained the rights to make and distribute 15 B-MS products, including Lipostat (pravastatin), in Australia and New Zealand. The products are generic, generally niche and have annual sales of $33m.

Funding the buy and cutting debt

Sigma is raising A$297m from shareholders to fund the acquisition and help cut its debt, which is currently A$227m. To achieve this Sigma has halted trading and is offering shareholders one new share at a 16 per cent discount for every three that they own.

The release of news about the B-MS was accompanied by preliminary results for the first six months of 2009. Over this period net profit rose by 4.9 per cent A$32.2m, underpinned by a 3.5 per cent increase in sales.

For the first half of 2009 total sales were A$1.54bn, which in coming financial results will be supplemented by the B-MS contract manufacture revenues and sales of the 15 products.

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