News from The Globe and Mail
Sherman wouldn't let go of Apotex, but his heirs may be a different story
Friday, December 29, 2017
In Barry Sherman's wide circle of business associates, everyone is spending the holidays telling stories about the workobsessed founder of generic drug maker Apotex Inc.
One of Mr. Sherman's former lawyers tells a tale of the first time he introduced his wife to the famously litigious billionaire, at a charity event. Mr. Sherman's first words to the woman he had just met: "Can you believe what those judges did to us last week?" Most every story, and most every tribute to him at last week's memorial service for the 75-year-old and his wife, Honey Sherman, painted a picture of a driven, socially awkward entrepreneur.
Mr. Sherman worked tirelessly in laboratories, formulating generic drugs to challenge brand-name rivals. He was equally dogged in using lawsuits to defend the business.
As Apotex prepares for life after the unexpected death of its founder, it is becoming clear that the privately owned company wove its founder's costconscious and combative approach into its corporate culture.
What is far less clear is whether the heirs to the Sherman fortune plan to continue owning the business their father built.
The couple had four adult children, none of whom currently work at the company.
In 1996, with Apotex well on its way to becoming one of Canada's largest pharmaceutical plays, Mr. Sherman took a stab at writing his memoirs while on safari in Tanzania. The first words of the 47-page draft: "I admit to being a workaholic."
Normal, well-adjusted people do not typically become selfmade billionaires. There was in Mr. Sherman a deeply rooted drive to succeed.
In his memoir, which was never published, Mr. Sherman reflected on how his upbringing shaped his work ethic. His father was also an entrepreneur, the co-owner of a factory that made zippers. Mr. Sherman was 10 years old when his father died at work of a massive heart attack.
Years later, he said in the memoir: "Although I do not know to what extent, if any, I was affected by my father's early death, a psychologist would likely suggest that the drive to achieve which I later exhibited was caused, at least in part, by a resulting insecurity."
Mr. Sherman's memoir, titled A Legacy of Thoughts, goes into great detail in describing the savings to be gleaned from cutting the number of ingredients in a Vitamin C tablet from eight to three chemicals without changing the pill's benefits. It laid out a startup strategy that still guides Apotex's operations.
He said the company would focus on specific lines of drugs, and "would get to break-even with minimum equipment, minimum floor space, minimum personnel and in minimum time."
From the moment Apotex opened in 1974, the company used litigation to establish and defend its right to sell generic versions of name-brand drugs, typically looking to law firm Goodmans LLP for counsel. One Bay Street executive who knew Barry Sherman well called Apotex "a patent litigation firm that happens to make drugs."
Not every court battle was successful, but at Mr. Sherman's memorial service, co-founder Jack Kay said: "Losing did not matter. What mattered was standing up for what you believe. The concept of letting go was not in his DNA."
He never did truly let go of control of his company. Today, Apotex remains privately held and provides minimal financial disclosure. The company said annual sales are $2.5-billion.
However, a spokesman for Apotex said the company has a "robust succession plan" that began to play out more than five years ago, when Mr. Sherman stepped down as chief executive officer and away from day-to-day operations to focus on specific projects, such as formulating drugs. Mr. Sherman was succeeded by Mr. Kay, and Apotex then appointed Jeremy Desai as CEO in 2014.
"Our broad portfolio continues to be a competitive advantage, and our senior team of scientists who worked closely with Barry will ensure this advantage continues, as they apply the same research and development philosophy and formulation principles that Barry used," Apotex spokesman Jordan Berman said.
While the operational game plan remains the same at Apotex after the founder's passing, ownership remains a massive question. As a private company, Apotex does not detail its shareholders, but the Sherman family is widely thought to be the majority owner.
In paying tribute to his parents at last week's memorial, son Jonathon Sherman displayed an attitude toward his father's work that can only be described as complicated. While he lauded his father's business acumen, the 34-year-old clearly resented his dad's devotion to Apotex at the expense of family.
So rare were Barry Sherman's appearances at Jonathon's hockey and baseball games that those games became "my Stanley Cups and my World Series," he said.
A long line of rival drug companies and private equity firms would be willing to bid on Apotex if it is ever put up for sale. If the rest of Barry and Honey Sherman's heirs share Jonathon Sherman's ambivalence toward the company, that day may be fast approaching.
© The Globe and Mail