SIGMA HEALTHCARE LIMITED — M&A Activity 2005

Aug 21, 2005

SIGMA armw Merger Proposal

22 August 2005

Mr Paul Duchen Musiki Managing DirectorArrow Pharmaceuticals Ltd Million

Mr Elmo de Alwis Managing Director Sigma Company Ltd

1980 - Johann Stein, Amerikaansk politiker ( Speakers

Thansaction Highlights

• Enfield of the Set of Australia's largest pharmaceutical companies
• EXECUTE: 19 Combining 2 highly successful and complementary bushasses
• Provides extensive suite of pharmaceutical products and services
• E Arrow are proven leaders in generics one of the 2 largest in Australia
• Sigma is largest Australian-owned prescriptions and OTC pharmaceutical company
• Enhanced scale and liquidity for investors

• Merged group to be owned: = 2/3rd by Sigma shareholders • 1/3rd by Arrow shareholders

Merger Tlemns

· Merger ratio of 4.485 Arrow shares to one Sigma Sirika

Sigma shareholders to receive 28 cents per share fully franked special dividend

. Both companies will pay an interim dividend in line with existing policy

Merger Terms (cont.)

• E Merged company to be named Sigma Pharmaceuticals Limited
• Board to comprise:
  • Dr John Stocker AO Chairman IIIII
  • . 4 Sigma (including Chair) and 2 Arrow (including David Duchen) non-executives
• Key management: - Elmo de Alwis - Managing Director
  • Paul Duchen General Manager, Generics
  • No changes in senior management of either company
• E Key Arrow shareholders maintaining substantial ongoing shareholding - alignment of interests

• Merger ratio consistent with relative market values since Arrow's ASX listing and the

• Scrip based merger means Sigma and Arrow

shareholders share merger benefits

Sigma L'Arrow

· Merger ratio also reflects current relative net income

Benefits for Sigmann

• Provides scale entry into the high growth generics market
• Arrow's team are proven leaders in generics and remain fully committed to the business: The committed of the business:
  • DR-going significant shareholding and strategional controls and strategies and strategies and strategies and strategies and strategies and strategies and strategies and strategies and strategies and strategies and strateg
  • Service agreements
  • Arrow Group IP licence
• Extends Sigma's pharmaceuticals offering i.e. OTC, ethical, wholesale, retail, manufacturing and now generics
• Raw materials sourcing
• Continues increased earnings contribution from Pharmaceuticals and all and all and all and all all and all all all all all all all all all al
• Strong position in generics market with estimated 36% information in the following
• Exclusive Australian access to a pipeline of generics

Egneriks for Arrow

Expanded market potential through Sigma's pharmacy relationships and banner groups

EXAMPT Comprehensive service provider to Pharmacists

Adds low cost pharmaceutical manufacturing Capability 1989 - Johann Stoff, Amerikaansk politik († 1908)

EXAMPLEMENTARY businesses with minimal overlap

• Move to ASX100 company

Leverage off Sigma's OTC business

Beneilis of Merged Group

• Divensified business with sustainable growth
• Australia's only truly integrated pharmaceutical COMPANY
• Management teams with proven track record
• Ability to leverage relationships in pharmacy
• · Increased utilisation of Sigma's manufacturing facilities
• Combined marketleap, circa $2,2bn(l) im index position and liquidity

(1) Based on closing share prices on 19 August 2005

(1) Share price appreciation assuming reinvestment of dividends and all all all all all all all all all al (2) Excludes Arrow IPO premium and annual continuum and an

Oomplementery PhammerBushess

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- Distribution synergies

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• Currently $700m + market IIIII
• Only 18% market share in Australia compares to 50% + in other OECD countries
  • . Australia likely to move towards international levels with forthcoming patent expiries
• = 50 drugs coming off patent by 2010: - $1.7bn p.a. market potential • Generics should attain 40 - 50% market share

Sovernment seeking generics growth Entry Spends approx. $6.6bn p.a. on PBS - Generics achieving above average growth in

• · David Duchen started in Generics in 1968 and founded Alphapharm in 1982
• Paul Duchen was General Manager at Alphapharm from 1993
• * Management team left to start Arrow early 2000
  • BO ex-Alphapharm employees (majority sales)
  • Vast medical, pharmacy and generics experien and looned to

Arrow's Business Model Muller E Many customers and employees are shareholders E 3 inter-related parts of business: 1 Private preseription muuttu THE CENTER CENT 1 Branced (promoted) · Directidistribution network

Amow's ProductuRange Base - Sigma's generics portfolio: - 14 products, 23 SKUs * Licence - Australian & international companies: - 31 products, 65 SKUs - Many first-to-market | | | | | | | | | | | | | | | | | | | • Utilising established relationships • R&D pipeline - Arrow Group: - 1B products, 28 SKUs

- 41 products approved - 18 submissions under evaluation (TGA) • 38 products currently under development

Annow's Generics Markett Position

Arrow has achieved rapid growth in market share to be the clear #2 in Generics in just 4 years

Arrow's Generics Pipeline

• Product development to be provided under Theory Controller exclusive Australian IP Licence with Arrow Group
  • International company and currently 38% shareholder in Arrow
• * Access to research lab in Melbourne 59 scientists and technicians
• Delivery of at least 60 new generic drugs over next Ľ ENTERN
• Proven track record
• Arrow also has established relationships with major drug companies as further source of licensed Cenerics

Merger Strattectv

En Arrow to continue its current business strategy and operations within Sigma group

Entimary reason for merger is growth, not little operational integration: En Estimated cost synergies approx. $2-3mipa

. Ability to draw on combined management strength and industry experience

Elistory of strong relationship with pharmacy

(1) Australian Ethical Sales moving annual turnover at June 2005 (source: IMS)

Leading Australian-OwnedPharmaceuticals Company

(1) Australian Popular Sales moving annual turnover at June 2005 (source: IMS)

Financial Outrcomes

Pro-forma FY06(1) Sales $2.4bn+

• BE Pro-forma FY06(1) BBITDA $180m+ COMPANYERS
• Broadly EPS neutral in first full year (pre amortisation and merger costs)
• Conservative capital structure million
• Pro forma debt of c. $350m at end of 2005 calendar year, implies
  • 1.9x debt / EBITDA
  • 4.0-5.0x interest cover
  • - 25% debt / book capitalisation

52.2b combined market cap(2) - circa. ASX #80 (1) Pro-forma year ending 31 January 2006, assuming merger had occurred on Educient 2005 (2) Based on closing share prices on 19 August 2005

Weigen In denen it ilonimi

• Sigma scheme of amangement
• Sigma Scheme meeting and Arrow shareholder meeting on merger related matters expected in November Montana
• Implementation agreement executed
• E Conditions detailed in ASX announcement
• . Aim is to complete the merger by year end

Key Arrow Shareholder's Agreements

E Arrow Group, Duchens and associates agreed to Sharte restrictions

Provides for reduction in initial combined shareholding to 17.5%, subject to certain conditions

- Ongoing sale and voting limitations

Long term non-compete arrangements 73

Summary

- Creation of one of Australia's largest pharmaceutical companies

• Combining 2 highly successful and complementary bushasses
• Provides extensive suite of pharmaceutical products and services
• E Arrow are proven leaders in generics one of the 2 largest in Australia
• Sigma is largest Australian-owned prescriptic and OTC pharmaceutical company
• Enhanced scale and liquidity for investors

************************************** e de la composiciónComposición

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Impontantikona

In making an investment decision, investors must rely on their own examination of the merged group, including the merits and risks involved in the transaction which will be set out in detail in the Explanatory Memorandum to be sent to Sigma security holders. Investors should consult with their own professional advisors in connection with any investment decision. In a consequence of the consequence of the consequence of the consequence of the consequence of the consequence of the consequence of the consequence of the consequence of the consequence of the conse

This presentation has been prepared in good faith but no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation (any of which may change without notice). To the maximum extent permitted by law, Sigma Company Limited and Arrow Pharmaceuticals Limited, their directors, officers, employees and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence on their part) for any direct or indirect loss or damage which may be suffered by any recipient through use or reliance on anything contained in or omitted from this presentation. The contraction of the contraction of the contraction of the contraction of the contraction

Prospective financial and market information has been based on current expectations about future events and is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations described in such with prospective financial and market information. These factors, including the risks and assumptions, will be set out in detail in the Explanatory Memorandum for the proposed merger. Deviations are both normal and to be expected.

This presentation is not a prospectus or an offer of securities for subscription or sale in any iurisdiction. And the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contract of the contra