Competitors, critics agree: Barry Sherman will be tough to replace at Apotex
Described as a fierce competitor, aggressive in fighting Canadian patents and disqualifying them.
TORONTO — Rivals and critics of Canada’s largest drug maker believe that Apotex Inc. will have a tough time replacing Barry Sherman, its fiercely competitive chairman and founder.
The 75-year-old billionaire and his wife Honey were found dead in their Toronto home last Friday.
“He was a force by himself. Is it possible to replace Barry Sherman? Not in 24 hours,” said Morris Goodman, 86, who founded Pharmascience Inc. in Montreal in 1983 and has competed with Sherman ever since.
“He was a fierce competitor in the marketplace. And he was more aggressive in fighting Canadian patents and disqualifying them than I was.”
Court records show that Apotex under Sherman launched hundreds of lawsuits against competitors, including pharmaceutical giants such as Pfizer Inc. and Merck & Co., to overturn patent protection for their medicines, as well as against government regulators who made decisions it disagreed with.
Spokesman Jordan Berman said that privately held Apotex would not answer questions about its future or grant interviews this week out of respect for employees and the Sherman family. The funeral is scheduled for Thursday.
Apotex has grown to employ more than 10,000 people around the world, with annual revenue of more than $2 billion from sales of about 300 prescription medicines, according to its website.
But while it boasts of providing Canadians with affordable medicines, University of Ottawa law professor Amir Attaran said his research shows that Apotex drugs are often sold in Canada for much higher prices than in other parts of the world.
“The company has got huge challenges,” he said on Tuesday. “Barry’s management was so integral to the way the company ran.
“He’s often portrayed as having launched generic products to save Canadians money. That is abject B.S. because the prices he charged for his generics in Canada are far above what he charged in other countries.”
Apotex declined comment on the allegations.
Last spring, a study published in the Canadian Medical Association Journal reported that Canada had the second-highest medication costs to treat certain common conditions in 2015 compared to nine other affluent countries with universal health-care systems.
Lead author Steven Morgan, a professor at the University of British Columbia’s Public School of Health, said prices in Canada for generic drugs like those made by Apotex are among the highest in the world.
“And one of the reasons he did that so intensely is the first generic into the market under our pricing regime actually is the one that’s going to secure the most profit from that market.”
Under provincial rules, he said, prices for generic drugs fall as more versions arrive in the market _ the first generic provides the most profit for retailers who contract to buy the drug, as well as the manufacturer.
In addition to Apotex’s numerous legal battles, Sherman himself filed lawsuits against the federal government over his tax bill and against the contractors who built his house, records show.
Members of Sherman’s extended family also used the court system against him.
In September, a judge threw out a long-running lawsuit brought by Sherman’s cousins who claimed he owed them up to 20 per cent of Apotex. The cousins argue Sherman is obligated to pay them due to an option in an agreement inked when Sherman bought his uncle’s pharmaceutical business, Empire Laboratories Ltd., in 1967.
An appeal has been filed with the Ontario Court of Appeal, the cousins’ lawyer confirms.
Goodman remembers being Sherman’s boss after his employer at the time, California-based ICN Pharmaceuticals, bought Empire from Sherman in the early 1970s. After about six months, he was ordered to fire Sherman and reluctantly did so.
“I fired him. He would tell me later that was the best thing that ever happened to him,” said Goodman. “He says, ‘Don’t worry about it, Morris, I was planning to quit anyhow.’ And he started Apotex (in 1974).
“So we stayed competitors and more or less friends. He was a very competitive guy.”
Goodman said times are tough in the generic drug industry these days, pointing out the largest company in the world, Teva Pharmaceutical Industries Ltd. of Israel, announced earlier this month it would cut 14,000 jobs, more than a quarter of its workforce, to save $3 billion in annual costs by the end of 2019.
Teva hasn’t said how the cuts might affect its 1,100 staff in Canada.
Pharmascience is also looking at reducing its 1,500 staff and cutting back on research done in its home city of Montreal, although the numbers haven’t been finalized, Goodman said.
“We are cutting some staff. We are cutting some of our R&D as well,” he said. “We have to create more efficiencies.”
He said Pharmascience, a private company, has annual revenue of about $700 million.
A recent report by Research and Markets said the global industry is suffering from diminishing prices and profit margins.
“The rapid growth of the generic industry has come with a number of challenges, such as heavy competition, including from authorized generics and government-mandated price cuts,” it stated.