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Bitter Pill
Barry Sherman, ​Canada​s generic drug king, was recently found dead ​in his home ​along with his wife​,​ Honey. ​This profile, from Toronto Lifes archives, ​chronicles how he built his multibillion-dollar fortune
BY GERALDINE SHERMAN | PHOTOGRAPHY BY DERMOT CLEARY
This article was first published in the July 2008 issue of Toronto Life, when Barry Sherman was embroiled in a lawsuit brought by his cousins, who claimed they were owed a piece of his pharmaceutical company. That suit was dismissed in late September.
(Snipped)
When Sherman founded the company in 1974, generic drugs were generally dismissed as flawed imitations of the real thing. Since then, Apotex has become Canadas largest drug manufacturer, filling 75 million prescriptions a year. Most of the companys 300 products are versions of such widely used drugs as the antidepressant Paxil, the antihistamine Claritin and the antibiotic Tetracyn. Apotex tests and develops its products with a staff of 2,100 scientists,..... (snipped)
Barry was made his uncles legal heir when it seemed that Lou and his wife, Beverley, couldnt have children. Then, in 1958, Lou and Beverley adopted a baby boy, Tim, and, as sometimes happens, Beverley became pregnant. She gave birth to Jeffrey in 1960, Kerry in 1961 and Dana in 1962. Shortly after the last birth, Beverley was diagnosed with leukemia, and the couple escaped to Bermuda for a last vacation. Barry, still an undergrad, took charge of the plant. He did an admirable job.
Beverley withstood her disease for a few years, but in November 1965, when Barry received a middle-of-the-night phone call at MIT, he expected to hear shed finally succumbed. Instead, he was told his uncle had died suddenly from a probable aneurism. Barry attended Lous funeral, then visited Beverley in the hospital, where they talked about what might happen to Empire and the childrens future interests. He said that if she and the executors wished, he would take over the business and protect its value for the benefit of the children. In return, they would have to grant him the right to purchase the company if it came up for sale. Beverley discussed the idea but made no decision. Seventeen days later, she was dead.
Three days after her death, Barry made the same proposal to trustees of the Winter estate. They said no, that they would continue to run the business. And so the childrens legacyEmpire Labs and a trust fundremained in the hands of two lawyers, an accountant and Royal Trust.
Barry returned to school and completed his PhD. His dissertation led to his first patent, a system to control satellites in orbit. He was a young man with great prospects when he abandoned astronautical engineering to seek an opportunity in a scientific business, the one he knew best, and returned to Toronto early in 1967. He looked into Empires performanceeither out of concern for Lous sons or a personal desire to buy the company on the cheapand reported to the trustees that sales had declined from more than $1 million a year in 1965 to about $800,000. He suggested that Lous children might some day hold Royal Trust liable for negligence if it didnt keep Empire from insolvency.
Within a week, the trustees had put the company up for sale. Sherman and Joel Ulster, a high school friend, bought it for approximately $350,000, beating out a Montreal firm. Shermans mother, Sara, guaranteed a loan of $100,000 and Ulster put up $150,000 borrowed from his father, who also arranged for an operating line of credit. Two options were added to protect the Orphan Childrenthe phrase that the surviving sons, now in their late 40s, still use to describe themselves. The first states that all of Lou Winters sons would be given the opportunity to become responsible full-time employees once they turned 21 or completed their formal education. Second, any employed child who worked two years with the company would have the right to purchase five per cent of the issued shares of the company or companies owning the purchased business. However, the option could be exercised only if Sherman, Ulster or Ulsters father kept control of the business.
Those were promising years for generic drug companies. Empires annual sales, now including the generic psycho*pharmaceuticals Librium and Stelazine, reached almost $2 million. Then, in 1972, ICN Pharmaceuticals expressed an interest in buying Empire and merging it with their Canadian operations. Sherman and Ulster, ambivalent at first, decided to let ICN evaluate their company. When the offer came in at just under $2 million, they took it, netting a few hundred thousand each. ICN made it a condition of sale that none of the principal shareholders in Empire could go back into the same business for five years. Fortunately for Barry, his shares were held by Bernard C. Sherman Limited. ICN must not have noticed the loophole. When Sherman launched Apotex the following year, ICN didnt exercise its non-compete clause.
(there's mention of Tim, Jeffrey but no Kerry, so name could just be coincidence? Shiva at Old Forest Hill Road)
