Elmo de Alwis last week celebrated his 33rd year at Sigma Pharmaceuticals, a company that began life back in 1912 when two Melbourne pharmacists got together to form one the country’s first pharmaceutical and pharmacy groups.

But as Sigma prepares to celebrate its 100th birthday the man who has been greatly responsible for radically reshaping the company beyond its simple manufacturing and pharmacy base won’t be at the helm. Instead he will most likely be at the beach or on an extended holiday.

Mr de Alwis told BusinessDay in an interview this afternoon that he told Sigma chairman John Stocker he would resign, believing his exit would remove some of the external pressure on the company as its directors and management team act to save the company from extinction.

”I have put a lot of thought into the options, in terms of the issues the company has. At the end of the day the performance of the company is my responsibility,” he said.

”I feel that part of leadership is about that when things go wrong you have got to step up and say I’m responsible.

”I decided that Sigma would probably be better off in terms of restoring confidence in the business, with new leadership looking at industry or regulation issues with a fresh set of eyes.”

The pressure that has mounted since Mr de Alwis unveiled Sigma’s almost half a billion dollars in goodwill write-downs this month has turned from bearable to unbearable, and with it Mr de Alwis’s determination to see the job through of turning round the company has wilted.

Mr de Alwis said he felt he could withstand the initial investor and market onslaught that was triggered by Sigma’s full-year net loss of $389 million, unveiled just two weeks ago, which included goodwill impairments of $424.23 million.

But in the following days, and especially in the last week, the background noise grew from a low hum to a deafening roar.

”It’s the market, it’s the things you read; they influence you,” Mr de Alwis said today.

”I felt it didn’t look like people were comfortable to say that’s fine – let’s just keep going.”

Dealmaking legacy

Although there is a lot Mr de Alwis can be proud of over his 33 years at Sigma, the achievements are likely to be overshadowed by the effects of his deal-making, namely the $2.2 billion merger with Arrow Pharmaceuticals in 2005 and the purchase Herron for $123 million in May 2003.

Both acquisitions made perfect sense at the time. Herron was a leading brand of headache tablets that was boasted of its Australian heritage and was quick to remind consumers of the fact in a series of battles with the leading imported brands.

Herron also had a growing portfolio of well-being and lifestyle pills, which proved popular among stressed, tired and vitamin-deprived consumers – in other words, a broad market.

Arrow Pharmaceuticals was a leader in the generic drugs space, a sector that was booking double-digit growth as governments realised the savings to be made from replacing expensive branded drugs with cheaper generics.

But both have proved illusory; generics margins have been slashed and Herron has lost market share in the crucial grocery channels.

”If the world looked at Sigma and its future as the way I look at it, I think things would probably have been different,” Mr De Alwis said.

Now the question for the board is will they follow their CEO into the wilderness.

Chairman John Stocker looks the most vulnerable at this stage and it’s difficult to argue that Mr de Alwis alone should carry the can on this one.

egreenblat@theage.com.au

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