SIAL (MM)

As per industry reports, Sigma Aldrich Corporation (SIAL), a global lab chemical and life science company, announced its intention to open a distribution center and packaging facility in Bengaluru, India and has spent $5 million on it. The company plans to keep inventory valued at $13 million at the distribution centre.

The company is actively expanding its presence in the emerging markets. The prospects of India are considered promising by the company and thus the expansion. The India operations, Sigma Aldrich Chemicals Pvt Ltd. had set up its advanced facility for research and manufacture in Bengaluru which started in August 2006.

The current strength of the Indian operations is 250 and Sigma Aldrich Chemicals at Benagluru has evolved to meet the global requirements in the last one and a half years. The Indian unit has been delivering good double digit growth for the company.

Sigma Aldrich is focused on expansion and recently completed the acquisition of BioReliance Holdings Inc., a leading provider of global biopharmaceutical testing services, from Avista Capital Partners for $350 million in cash. The addition of BioReliance's industry-leading QA/QC testing services to Sigma’s product portfolio will enable Sigma to build better and more customized products. 

The acquisition will extend Sigma’s reach into the promising new market of biologic drugs. Sigma-Aldrich expects the acquisition to be modestly accretive to its earnings per share in 2012.

Apart from acquisitions, in order to boost its growth Sigma-Aldrich plans to increase its focus on marketing, business development and R&D, while continuing with its efforts to improve process and operations management. Rising costs remain a key concern for Sigma and the company continues with its efforts to cut costs.

Sigma-Aldrich faces stiff competition from Bayer AG (BAYRY) and privately held companies Brenntag AG and VWR International, LLC. We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Sigma and a long-term Neutral recommendation.

 
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