Apotex, Barry Sherman’s ‘fifth child,’ sold to American buyer as police continue to probe his murder
He was butterball" to one teacher at Forest Hill Collegiate. Another called him sluggish." But Bernard Barry" Sherman's brain was alive with schemes and ideas that would eventually take him to the heights of the Canadian business and philanthropy scene.
I like to make money and give it away," Sherman would say when people asked what got him out of bed in the morning. In his life, Sherman did both, becoming a billionaire and giving enormous gifts to Jewish and non-Jewish causes.
Wednesday, Apotex, the company he founded in 1974, was sold to a New York private equity firm for an undisclosed amount. The sale, which requires regulatory approval, starts a new chapter for the homegrown firm Sherman started in a small building on Ormont Drive in an industrial area in the northwest part of Toronto. SK Capital, the New York firm, says that it is delighted to have the opportunity to support" a proudly Canadian" firm that delivers high quality, affordable medicines." SK Capital has a large portfolio of companies, many of them suppliers of chemicals to pharmaceutical companies.
News of the sale comes as police continue to probe the targeted" double murder of Sherman and his wife, Honey. The couple was found dead in their home on Dec. 15, 2017. They had last been seen alive together two days earlier at a meeting at Apotex headquarters to discuss plans for a mansion they wanted to build.
Apotex was widely known as Sherman's fifth child. He and Honey had three daughters and a son but as friends and family have told the Star, he focused the majority of his attention on the generic pharmaceutical firm.
As son Jonathon said at the Sherman funeral in 2017, he and his siblings understood why our dad wasn't always present, he was a pretty busy guy."
When Sherman founded Apotex, the name he chose was one of hundreds that he and his best friend and early business partner had brainstormed over for years as far back as high school when they tried to imagine the type of business they would one day start. They'd always liked the suffix tex" and the original word for a drugstore was apothecary" and so Apo-tex was born. Eventually, the hyphen was dropped.
Sherman's father was the president of a zipper manufacturing company and died when Sherman was ten years old. His mother returned to work as an occupational therapist and took in boarders to support Sherman and his sister. There was no family money to rely on - Sherman wanted to make it big.
Despite fears of teachers that Sherman was slow" he proved them wrong by leading Ontario high school students in academic honours the year he graduated. It was on to the University of Toronto and then the Massachusetts Institute of Technology where he got both a masters and a Ph.D. in just a few years. He was headed to a job at NASA but was attracted by his uncle Lou Winter's fledgling work in generic pharmaceuticals. Sherman bought Winter's company, then sold it, then started Apotex in 1974. Winter's four children would later allege in court that Sherman owed them $1 billion - a judge ruled against the Winter children shortly before Sherman's death.
Friends and business associates say that Sherman's ability to build Apotex came down to three factors. Ingenuity and an intriguing combination of frugality and risk-taking.
Frugality. Harry Radomski, Sherman's long-time lawyer, tells a story of how Sherman called him from his Apotex offices one day to discuss his accounts. This was before email, and Radomski had sent a series of separate accounts for payment and used separate envelopes. We have a problem," Sherman said over the telephone line. Radomski took a deep breath. Sherman continued. You sent ten accounts. In ten envelopes. Next time, if you send them in one envelope, you will save the price of nine stamps."
Ingenuity. Sherman's doctoral thesis was called Precision Gravity Gradient Satellite Attitude Control" and he had no background in chemistry other than what he picked up from his uncle's firm. Yet he started out creating drug formulations just by figuring it out," as one of his close friends said. In an anteroom off his office at Apotex he had a mini lab where he would work on the next drug for Apotex, trying to devise a way to defeat the patent given to the brand name company that actually came up with the drug.
Risk-taking. Over the 43 years that he ran Apotex, Sherman was often up or down tens of millions or even half a billion dollars. He would sometimes order the mass production of a generic drug while awaiting a court ruling that would validate his argument (and Sherman often prepared the legal argument, his lawyers told the Star). If he won, he was first to market, if he lost, he had to pay. Shortly before his death, Sherman was facing a court order to pay $580 million to a brand name company from a gamble he lost (a settlement was arrived at following his death). Yet this risk taker was once convinced by a good friend to put down a $10 bet at a Las Vegas blackjack table. Sherman promptly lost. Where are you going?" the friend asked as Sherman walked away. That's it. I gamble every day in business. What do I need this game for?"
The sale of Apotex to the New York firm comes following the resolution by Apotex of allegations of price fixing by the US Justice Department and the State of Texas. Last year, the Star reported that Apotex paid almost $100 million (U.S.) to settle allegations that it conspired with competitors to hike the prices of popular drugs. As part of the deal with U.S. officials, Apotex agreed to co-operate with investigations of rivals, including recording telephone conversations, introducing law enforcement to sources, or testifying before a grand jury, documents filed in court say. Sources close to the Sherman family and Apotex say those allegations - now resolved - complicated the Sherman children's plan to sell Apotex.
Apotex did not respond to a request for an interview about the sale announcement.
With the deaths of Barry and Honey Sherman, their estate passed in four equal portions to their four children. Sources have told the Star that Sherman's worldwide holdings in real estate, companies and investments approached $10 billion at the time of his death, with Apotex (it's a private company so there is no public valuation available) being the biggest part of the estate. None of the Sherman children were interested in running the pharmaceutical company their father built and so almost immediately after the deaths plans went into effect to find a buyer. The European division went first, in 2018, and now the entire company.
Sherman, at the time of his death, was expanding Apotex. He'd just bought a new plant in Florida. The email he sent the night he died showed how he was still invested in the most minute details of his fifth child. API: appears we will need about 120 to 150 kilos to do all work. What source did we use previously and at what cost?" Sherman wrote shortly after 8 p.m. on Wednesday Dec. 13, 2017. API" refers to the active pharmaceutical ingredient, the actual drug compound in a formulation, in this case, a drug that treats congestive heart failure. Sherman would be dead within a couple of hours of sending the email to his plant in India.
As friends of Sherman have noted to the Star, he planned to live forever, which made the early police theory that he and Honey were a case of murder-suicide all the more odd.
I can't die, Jack," he would say to Jack Kay, his second in command at Apotex and close friend. The world can't get along without me."
Barry, you're full of s--t," Kay yelled back at Sherman. Their offices were connected at Apotex and the door between them rarely closed.
Sherman frequently told Kay that he wanted to keep building Apotex. I still have so much to do," Sherman said not long before his death. I can't die."
Read more on the Sherman investigation.
Kevin Donovan can be reached at kdonovan@thestar.ca or 416-312-3503