Under Construction - Pharmaceutical Executive


Under Construction

Pharmaceutical Executive

"Everything," says Adams, "is moving in the right direction."

Niaspan and Advicor Sales
Turnaround at Key As Michael Jaharis, Kos' founder and chairman emeritus, tells the story, he got into pharma because his last name begins with a J. "The army called me in the Korean War in 1950," he says. "Following basic training, everyone from A to J in our company went into the medical corps and the rest into the trucking corps. I decided I wanted to be a doctor, but I realized that by the time I got through picking up chemistry and those things, I'd be 31, and that was too old."

Jaharis took a job as a sales rep for Miles Laboratories and attended law school at night. He rose in the company, eventually serving as vice president of the ethical drug division. By the early 1970s, tired of corporate bureaucracy, he partnered with dermatologist Phillip Frost to take over Key Pharmaceuticals, a Miami-based manufacturer of cough and cold remedies. "We were essentially bankrupt," says Jaharis. "We did a million and a half in business, and we were losing some incredible amount like $700,000."

Jaharis set about salvaging the company. "Mike's primary skills were sales and marketing and product selection—he's got a great knowledge of the products in the industry and what's wrong with them," says Kos Chairman Daniel Bell, a former auto executive Jaharis originally recruited as Key's COO. "It came from his days of carrying the bag."

Eventually an idea turned up. "I had heard from some people at the University of Florida that we should perfect our theophylline product," Jaharis says. (The caffeine derivative was a preferred treatment for asthma before the introduction of in-haled corticosteroids.) "I asked how much it would cost. They said—I can't imagine—$25,000 or $50,000. I couldn't do it. They said, 'We really think you should.' So we took a bet and put some money into it."

The product became Theo-Dur, the first sustained-release theophylline. Jaharis developed a sales force of 15 to promote the product to the allergists and immunologists who dominated asthma prescribing. "We taught them how to use it, gave them measures," says Jaharis. "There were 17 different theophyllines in sustained-action form, but no one else really explained the science to doctors."

A second product followed: Nitro-Dur, a transdermal nitroglycerin delivery system. By 1986 Key was selling $200 million a year and it was bought by Schering-Plough for $836 million.

Jaharis had learned valuable lessons: that familiar products could be revived by reformulation and sophisticated deliver;, that specialists drove substantial prescription volume; and that science-based selling could single out a product in a crowded marketplace. He was eager to put them into practice again.

Why Don't We Do It Again? "The Schering-Plough transaction took place in June 1986, and I stayed on for a month to help with the transition," Bell says. "I took a month off, and in September came back to a new office they had set up for me and Mike. The very first day, Mike said, 'Sitting on your desk is a proposal to buy a division of Rohr. Why don't we see if it would make sense to buy that thing?'" Rohr ultimately decided not to sell, so Jaharis and Bell spent the next two years looking for a company to buy.


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