Sales: $56.7 million (1998)
Stock Exchanges: NASDAQ
Ticker Symbol: AKRN
NAIC: 334517 Irradiation Apparatus Manufacturing; 339112 Surgical and Medical Instrument Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 339115 Ophthalmic Goods Manufacturing; 42221 Drugs and Druggists’ Sundries Wholesalers
Akorn, Inc. is a niche pharmaceutical market leader in the United States, focusing on the manufacture and marketing of a variety of products, including diagnostic and therapeutic pharmaceuticals in the ophthalmology, rheumatology, anesthesia, and antidote sectors. More than 300 companies worldwide compete with Akorn in the ophthalmic marketplace alone, including Montgomery, Alabama-based Blount International Inc. and Thornwood, New York-based Carl Zeiss Inc. The company’s ophthalmic division manufactures and markets an extensive line of diagnostic and therapeutic pharmaceuticals, in addition to surgical instruments and related supplies. Diagnostic products, primarily used in the office setting, include mydriatics and cycloplegics, anesthetics, topical stains, gonioscopic solutions, and angiography dyes. Therapeutic products include antibiotics, anti-infectives, steroids, steroid combinations, glaucoma medications, decongestants/antihistamines, and anti-edema medications. Surgical products include surgical knives and other surgical instruments, balanced salt solution, postoperative kits, surgical tapes, eye shields, anti-ultraviolet goggles, facial drape supports, and other supplies. Non-pharmaceutical products include various artificial tear solutions, lubricating ointments, lid cleansers, vitamin supplements, and contact lens accessories.
The company sells its products throughout the United States to physicians, optometrists, wholesalers, group purchasing organizations, and pharmacies. Additionally, the company markets generic brand, small-volume niche pharmaceuticals and anesthesia products used in the treatment of specialty indications, including rheumatoid arthritis and pain management, and provides contract manufacturing services through its injectable division, Taylor Pharmaceuticals, headquartered in Decatur, Illinois. Top competitors in the various pharmaceutical and ophthalmic segments include Merck & Co., Novartis AG, Bristol-Myers Squibb Company, Glaxo Wellcome PLC, Alcon Laboratories, Bausch & Lomb, and Allergan.
A Company Formed by Circumstance: 1969–71
Joe Yazbeck, the founder, started the company in 1969, as he traveled throughout Louisiana selling ophthalmic pharmaceuticals out of the trunk of his car. As he went, Yazbeck created a catalog from which his customers could order products from him. In addition to selling products, Yazbeck sold small blocks of stock in the company to anyone who would listen to him and, eventually, the company was forced under Securities Exchange Commission guidelines to go public. Thus, Yazbeck incorporated Akorn, Inc. in Louisiana in 1971, placing its headquarters in the small town of Abita Springs, near New Orleans.
The company grew slowly over the next decade and a half, but truly began gaining mass in the late 1980s, as other companies were acquired. In January 1988, Akorn acquired Spectrum Scientific Pharmaceuticals, Inc. for more than 187,000 shares of common stock. Less than a year later, in September 1989, the company acquired Norbrook America, Inc. for one million shares of common stock. The acquisition was merged into subsidiary Walnut Pharmaceuticals, Inc. in May 1990 which, in turn, was sold by Akorn in July 1993. In July 1990 the company acquired certain assets of Optometric Pharmaceuticals Inc. for some $355,000, merging the acquisition into subsidiary Spectrum Scientific Pharmaceuticals, Inc.
New Leadership: 1991–98
In 1991, Dr. John N. Kapoor, a Bombay-born, American-educated, Chicago-based venture capitalist who had a track record working with pharmaceutical, medical, and biomedical companies, took the helm at Akorn. Kapoor immigrated to the United States in 1964 to obtain his doctorate in medicinal chemistry. By 1977, he was working at Invenex Laboratories, in charge of research and development for the pharmaceutical manufacturer, but was bored with his job. Stone Container Corp., which had purchased a company called LyphoMed (founded in 1969 in Chicago) to “freeze-dry drugs, such as antibiotics, too unstable to store in liquid form,” according to Christine Donahue in Forbes, hired Kapoor to be LyphoMed’s general manager. His job was to bolster the struggling pharmaceutical division, which was racking up losses of $75,000 a month. Kapoor negotiated to buy the division from Stone for $2.7 million, and dramatically turned the company around, with revenue growing from $6 million in 1981 to $159 million in 1989, eventually selling the firm to Japan-based Fujisawa Pharmaceutical Company.
Wealthy from the sale but not quite ready to retire, Kapoor went on to purchase a two-thirds stake in Chico, California-based O.P.T.I.O.N. Care Inc., approximately the fourth largest provider of home intravenous therapy at the time, from Sutter Health for $18 million in 1990. Serving as chairman of the company, Kapoor also would go on to hold that position for NeoPharm, Inc., a company which manufactured drugs for diagnosis and treatment of cancer.
When he finally took the helm at Akorn, Kapoor immediately began to change the direction of the company, moving away from catalog-based distribution and creating a full-scale manufacturing company. In January 1992, the company acquired Taylor Pharmaceuticals, a manufacturer of specialty injectable pharmaceutical products, for more than 926,000 shares of stock. The acquisition significantly bolstered the company’s manufacturing abilities. In July 1994, the company acquired the intraocular lens segment of Azusa, California-based Optical Radiation Corp.’s ophthalmic products division for 5.25 million shares of stock. The rest of Optical Radiation was acquired by Benson Eyecare Corp. of Rye, New York.
Acquisition seemed to be the key word in the industry as, in March 1995, two of Akorn’s top British competitors, Glaxo Holdings and Wellcome, merged to form Glaxo Wellcome PLC. In 1995, the company reported total sales of $30 million. Akorn continued to forge ahead, acquiring, in May 1996, San Clemente, California-based Pasadena Research Laboratories, Inc. (PRL), a distributor and marketer of injectable products. The Taylor Pharmaceutical Division was formed with PRL and Taylor as the base, thrusting the company into the injectable pharmaceutical market.
Also that month, the company’s AK-T-Caine PF (tetracine HCl) product was given approval by the U.S. Federal Drug Administration (FDA) to be used as a topical anesthetic for use in ophthalmic surgery. A study by Dr. Eric J. Rothchild of the Rothchild Eye Institute in Del Ray Beach, Florida, highly touted the new product, saying that “eyes treated with preservative-free tetracaine were again visibly smoother, and there was less disruption of the epithelium” and that the eyes healed faster with this product.
In July 1996, the company acquired the rights to distribute an injectable product line in the anesthesia/analgesia market from Belgium-based Janssen Pharmaceutica NV, for $1.6 million. That year, the combined company’s total revenue jumped 13 percent to $33.9 million. Acquisitions continued in April 1997, as the company agreed to purchase a number of products from Becton-Dickinson and Company. Later that year, the company made plans to acquire Socoloff Health Supply Co. (a.k.a. Solos Ophthalmology), for undisclosed terms. The acquisition of the Norcross, Georgia-based company, which manufactured and distributed hand-held ophthalmic instruments and disposable operating room devices, was called off in December of that year. In 1997, Akorn’s total revenue climbed again, to $42 million, an increase of 23.9 percent over the previous year.
In 1998, the company continued to grow, as Akorn acquired Advanced Remedies, Inc. (ARI), an ophthalmic manufacturing and research and development facility, in July from New Jersey-based Sidmak Laboratories Inc. In September, the company moved its principal executive offices to its new location in Buffalo Grove, Illinois. During 1998, the company engaged in clinical trials for its new potential migraine-relieving product, called TP-1000. That year the company also released, through its ARI acquisition, a generic form of cromolyn sodium 4%, a drug used to treat allergies of the eye. The new product was created to compete with Allergan’s Opticrom and Bausch & Lomb’s Crolom (which dominated the U.S. market in 1997, with a market share of ten percent and sales of $11 million).
Changing of the Guard: 1998
Near the end of 1998, at the annual meeting of The American Academy of Ophthalmology, Akorn launched its corporate web site. That year, the company’s total revenues climbed again, by 35 percent, rising to $56.7 million, and the company had five Abbreviated New Drug Applications (ANDAs) approved by the FDA. The growth was attributed by Akorn’s new president and CEO, Floyd Benjamin, as coming from “strength in the base business of diagnostics, antidotes and anesthesia as well as growth from products acquired in 1998.” Benjamin, formerly the president of the company’s Taylor Pharmaceuticals division, replaced Kapoor in November 1998, as the latter stepped out of day-to-day operations, but retained his position as chairman of the board.
Akorn, Inc. is a vertically integrated specialty pharmaceutical company, focusing on niche markets such as ophthalmology, anesthesia, antidotes, and rheumatology. The Company has internal resources devoted to research and development, manufacturing, distribution and sales and marketing. Akorn’s growth strategy relies on internal product development as well as acquisition and licensing of specialty products from others.
With an ongoing strategy of key acquisitions and new product introduction (as of September 1999, the company had eight ANDAs and three NDAs awaiting approval at the FDA, and, since January 1996, the company has acquired or licensed 14 branded specialty pharmaceutical products from Allergan Inc., ALZA Corp., and Janssen Pharmaceutical), Akorn’s sales continued to rise slowly but steadily, promising to propel the company past the $100 million mark in the early 21st century.
Taylor Pharmaceuticals Inc.
Ophthalmic Products; Injectable Products.
- Company is founded by Joe Yazbeck.
- Business incorporates in Louisiana.
- Dr. John Kapoor becomes president of Akorn.
- Company acquires specialty manufacturer Taylor Pharmaceuticals.
- Akorn releases eyecare product that competes with products manufactured by Allergan and Bausch & Lomb; Floyd Benjamin replaces Kapoor as president.
“Akorn Announces Purchase Plan,” Chicago Tribune, November 18, 1997.
“Akorn Cancels Acquisition,” Chicago Tribune, December 12, 1997.
“Akorn, Inc. Reports Second Quarter Results; Discusses 1999 Outlook Sales Up 15 Percent; Gross Profit Up 19 Percent,” PR Newswire, July 20, 1999, p. 4941.
“Akorn Launches Cromolyn Sodium, Anti Allergic Eye Drug,” Business Wire, May 8, 1998.
“Benson Eyecare Corp.; Definitive Agreement Set to Buy Optical Radiation,” Wall Street Journal, July 5, 1994.
Donahue, Christine, “Micronutrients and Macrodollars,” Forbes, February 27, 1984, p. 96.
“New Product Newswire: Rx: AK-T-Caine PF,” Drug Topics, May 20, 1996.
Pulley, Mike, “Sale by Sutter Health Frees Chico Firm to Chase Growth,” Business Journal Serving Greater Sacramento, October 29, 1990, p. 2.
“The Red Chip Review: Discovering Tomorrow’s Blue Chips Today,” PR Newswire, June 17, 1999.
Rothchild, Eric J., “Preservative-Free Tetracaine Promotes Quicker, Better Corneal Wound Healing,” Ocular Surgery News, August 1997.
—Daryl F. Mallett