California-based Watson Pharmaceuticals Ltd is considering a bid for Sigma Pharmaceuticals Ltd's generics business, Fairfax media reports. Watson, a specialty healthcare company, has been looking at the $600 million division after Sigma experienced a series of profit downgrades, Fairfax reported.

Sigma is currently fielding more bids for its Herron drugs arm and Orphan Australia drugs business, as it seeks an improved bid from South Africa's Aspen Pharmacare.

The company is battling to pay off $100 million in debt by March under pressure from its lenders after it broke its loan covenants, reporting a loss for the year to January 2010. The first $40 million is due in September.