UPDATE 1-Australia's Sigma says year profit to rise

(Adds company comment, updates shares)

SYDNEY, March 25 (Reuters) - Australian drug manufacturer and distributor Sigma Pharmaceuticals Ltd (SIP.AX: Quote, Profile, Research, Stock Buzz) met its annual earnings forecast and said net profit would rise at least 7 percent this year, sending its shares up 5 percent.

The company said net profit would be in a range of A$83 million to A$88 million ($76 million to $80 million) this year, up from A$77.2 million in the 12 months to Jan. 31, while earnings before interest and tax (EBIT) would rise as much as 18 percent.

"The improved operating performance achieved in the second half 2007/08 is expected to continue in 2008/09," said Sigma Chief Executive Elmo de Alwis.

Underlying net profit was A$90.2 million in the 12 months to Jan. 31, compared with the company's own forecast, given in September, for A$88-A$93 million. The underlying figure excludes restructuring costs and interest expenses on a share buy-back.

Sigma said a stronger second half for its pharmaceutical division had helped it meet its guidance.

The company's shares had dropped more than 40 percent since early July when it cut its profit forecast due to the impact of regulatory changes. It cut the forecast again in September.

Sigma has said it was not being adequately compensated for government-mandated price reductions under a scheme designed to ensure access to all government-subsidised medicines at affordable prices.

The company also faces increased competition from other suppliers of generic drugs seeking to gain market share with rebates and larger discounts.