Page 22 - Bloomberg Businessweek-October 29, 2018

Bloomberg Businessweek October 29, 2018

II. THE MAKING OF A BILLIONAIRE prominent businessmen, appearing for the first time on the
Forbes billionaires list in 2000. Although he reliably turned up
One day when Sherman was about 10, his father, Herbert, at charity galas with Honey, who had a wide and affectionate
took him to his office at a factory in downtown Toronto and circle of friends, Sherman’s social graces were limited. He was
put him to work counting zippers, 20 to a box. When he’d virtually incapable of small talk, and he was an unapologetic
finished, Sherman later wrote in a never-published mem- workaholic, abstemious to the point of joylessness. At the ski
oir, his father “exhibited surprise at the number of boxes club where the Shermans took their children on winter week-
I had filled, apparently more than would have been done ends, he could usually be found in the chalet, bent over a thick
in the same time by any of his paid staff.” When Herbert pile of documents. His family lived well, and Sherman had a
started checking the boxes, Sherman recalled, “I was habit of quietly writing checks to Apotex employees who’d run
extremely offended that he doubted that my counts would into financial trouble. But he spent next to nothing on him-
be accurate.” self, driving cars until they fell apart—including a rattling Ford
It was an early sign of Sherman’s determination and Mustang that one friend worried might be leaking carbon mon-
prideful streak, both of which went largely unwitnessed by oxide into the passenger compartment.
his father, who died of a heart attack not long afterward. The generics business is to a certain extent zero-sum,
Awkward, unathletic, and prone to arguing with religious and in private some rival executives described Sherman in
friends about the folly of believing in God, Sherman was an unprintable terms. Attitudes at the branded- pharmaceutical
exceptional student. He majored in engineering physics at companies, which invented the drugs he sought to copy,
the University of Toronto because, he wrote, “it was reputed ranged from barely tolerant to seething. A Bristol-Myers
to be the most difficult.” Squibb Co. executive once recalled him anticipating his turn
His first brush with the drug industry was working sum- to speak during a tense interaction like “a divo waiting to
mers as a driver for Louis Winter, an uncle who ran a medical sing his aria.” At one point in the 1990s, according to two
lab and a generic drug distributor called Empire Laboratories. people with knowledge of the matter, Germany’s Bayer AG,
Many of Sherman’s runs were to pick up urine samples for convinced that Sherman was infringing its patents, hired
pregnancy tests. He went on to a doctoral program in engi- private investigators to recruit Apotex employees as infor-

50 neering at MIT; he was in Cambridge when he heard that mants and even raised the possibility of planting a stash of
Winter had died suddenly. Confident he could make a go of (illegal) drugs in his car. (Bayer said in a statement that it
his uncle’s company after finishing his Ph.D., Sherman engi- “has never called on employees or external service provid-
neered an acquisition. While he was learning the ropes of ers to obtain information in a criminal manner” and that
drug production, he met and married Honey. A daughter of any use of “illegal methods” would have occurred without
Holocaust survivors, she’d been born in a displaced-persons the company’s knowledge or authorization.)
camp before immigrating to Canada as a child. After about Still, plenty of business-
five years running his uncle’s old company, Sherman agreed men play hardball. What
to sell. The proceeds became seed capital for Apotex. made Sherman unique
The generics business is built on a simple premise: When was his habit of entering
a cheaper, chemically identical substitute for a brand-name into side businesses with
drug is available, patients ought to have access to it. The characters who would
industry’s products took a long time to be broadly accepted, never be welcome in the
however. Until the 1980s, generics were restricted by thickets executive suite at Pfizer
of regulation that protected patent holders from competi- Inc. An early example was
tion, leaving only a small part of the market for copies. The an attempt to invest in a Sherman in 1995
landscape in the U.S. changed dramatically in 1984, when yacht- chartering venture. As Sherman would learn, there
Congress passed the Hatch-Waxman Act. The law allowed were no yachts, only shell companies, leading the creators
generic manufacturers to challenge patents in court before of the scheme to be convicted of fraud. He later became the
they expired and, if successful, to enjoy a lucrative period largest shareholder of Nutrition for Life International Inc.,
of exclusive sales. a multilevel marketer of vitamin supplements whose pitch-
Eager for a slice of the world’s largest pharmaceutical man, Kevin Trudeau, was a twice-convicted felon fond of
market, Sherman was one of the most aggressive users of lines such as “With my experience in business, I can solve
this system, drawing on what colleagues described as a all the problems.” (Trudeau, no relation to Justin, is in a U.S.
prodigious knack for identifying the vulnerabilities in brand- prison for a conviction stemming from his promotion of the
name drug patents. Apotex was one of the first companies to book The Weight Loss Cure “They” Don’t Want You to Know JOHN MAHLER/TORONTO STAR/GETTY IMAGES
produce a generic version of AZT, the earliest widely effec- About, whose gnostic secrets included consuming a meager
tive treatment for HIV; later it raced to market with a copy 500 calories a day.)
of the blockbuster antidepressant Prozac. Toward the end of his life, Sherman was linked to another
By the mid-1990s, Sherman was one of Canada’s most convicted fraudster, Shaun Rootenberg, who was working