You probably have read my previous post which might give you...

You probably have read my previous post which might give you some information.

In my mind you have to be buying Sigma as a substantially long term investment although over the last year its ups and downs have been so predictable that I have been trading a little as well.

There are going to be cost savings for the govt in the new June 2010 agreement but I believe it will be Pharmacists (see Pharmacy Guild Press Releases) and the General Public that will bear the brunt of any funding cuts. I hear that the full line wholesalers have negotiated a retention of the CSO (Community Service Agreement)Pool which helps offsets costs associated with holding and distribution of high cost special items (e.g. cold chain, cytotoxics) and other logistic costs with respect to distribution to remote areas. Margins will be held at current levels I feel as the govt has already screwed the wholesalers mercilessly in the previous agreements. Last time they made a serious blue by allowing non-full line wholesalers to dip into the CSO Pool. That has been already remedied.

The bottom line however is that our population is ageing rapidly and any of the solid healthcare companies are worth looking at. I think Sigma is positioning itself on the back of substantial debt and equity capital to be real leader in the healthcare field. I don't think their debt burden is that much of a worry in this type of forever blue chip industry. It has good and even greater potential with its vertical integration from manufacturing -> distribution -> retail groups. AND if Pharmacy ownership rules are relaxed they will probably want to have a piece of that action as well.

The recent aquisition was to add high class manufacturing capacity and some products as well..........they got it for a song in my opinion.

Hold for 10 years at least and I think you will be smiling at the end. Thats my thoughts anyway haka.

Look at it all closely though and don't be scared to talk to a range of people in the know (even your local Guardian Pharmacist might have some idea about how Sigma is going)