Drug manufacturer and distributor Sigma Pharmaceuticals Ltd stands to face an estimated $200 million in damage claims from shareholders over its yearly loss and allegations of violation of continuous disclosure obligations.

Tom Tarasewics, vice president of U.S.-based litigation funder Comprehensive Legal Funding said Australian institutional shareholders in Sigma has hired his company in possible legal actions and damages claims against the pharmaceutical company. The shareholders expressed concern over the extended halt of the firm's trading and end-year adjustments it is scheduled to release for its 2010 accounts.

The law firm Slater & Gordon was tasked to make its initial inquiry into Sigma's financial affairs and have yet to finalise its investigation. However, Tarasewicz expressed confidence that based on initial reports, the shareholder's case appeared strong.

Sigma's financial woes began when it reported a $390 million loss last year and with the sudden resignation lf its long-time chief executive Elmo de Alwis last week.

The loss was being attributed to the non-cash goodwill impairment, including Sigma's generic business that costs $375.1 million and the $49.1 million allocated to its Hebron brand for a total of $424.23 million.

The shareholders are planning to file a class action against Sigma to question its financial health as well as the company's failure to inform investors when its $297 million capital raising was struck. Investors are also angry over the possible violation of Sigma's continuous disclosure obligations under existing stock exchange rules.