Apotex Inc. chief executive officer Jeremy Desai has stepped down suddenly, to be replaced by his predecessor, as Canada's generic-drug giant shakes up its executive ranks in the aftermath of founder Barry Sherman's death.
Mr. Desai joined Apotex in 2003 and became CEO of the Toronto-based company in 2014. He "resigned to pursue other opportunities. His notice is effective immediately," Apotex wrote in a statement provided to The Globe and Mail on Friday. Apotex also said: "We thank Jeremy for his contributions and wish him success in the next phase of his career."
Jack Kay, who is currently vice-chairman, will return to the CEO role, a position he held for several years prior to 2014. The news of Mr. Desai's exit from the company came on the same day that Toronto police announced that they believe Mr. Sherman and his wife, Honey, were the victims of a targeted killing.
An Apotex spokesperson said executive changes are unrelated to the police investigation into the deaths.
The sudden shuffle follows questions about Apotex's future without Mr. Sherman, who was the driving force of the company. With the founder's approval, Mr. Desai had implemented strategies to drive growth – initiatives such as a bet on developing new, complex drugs known as biosimilars, and a major investment in the United States. It is unclear how much of his vision will be part of the company's future.
Mr. Desai is leaving the company under the cloud of an unusual lawsuit from rival generic-drug company Teva Pharmaceuticals Ltd.,
New details surrounding the Teva suit are emerging. In its filings, Teva alleges one of its former senior employees, Barinder Sandhu, siphoned hundreds of company documents into personal files and leaked confidential information to Mr. Desai and Apotex.
Teva alleged Ms. Sandhu was in a romantic relationship with Mr. Desai, and that he "resided and/or cohabitated" with her.
What was not disclosed, however, is that Mr. Desai is married to a woman who is or was an Apotex employee.
Apotex would not comment on the Teva lawsuit, which is before the courts.
Mr. Desai came to Canada from Britain with his wife, Kalpna Desai. In 2003, they bought a multimillion-dollar home in an upscale area of Toronto, and the mortgage document declared they were spouses. Since that filing, there have been no updates attached to the property history that indicate a change in marital status.
According to a company website, Ms. Desai started with the firm in 2003 and recently worked for the drug company's biosimilars department, Apobiologix – one of the business units Mr. Desai bet heavily on to diversify the company away from its traditional, orally administered generic drugs. It is unclear whether she remains employed by Apotex, particularly after the CEO's departure Friday.
The spokesperson for Apotex, a privately owned company, had no further comment on Mr. Desai's resignation. Though his lawyer, Mr. Desai declined to comment. Apotex employees were told of the CEO's departure early Friday, before the Toronto police announced their news conference.
In the immediate aftermath of Mr. Sherman's death, Apotex dismissed suggestions that it was in a state of flux, adding that it had mapped out a succession plan long ago. What isn't clear is whether Mr. Desai's departure was part of those plans – or whether there has been a change.
Mr. Sherman worked closely with Mr. Desai. Until his death, Apotex's co-founder continued to work on the company's drug formulations, while Mr. Desai took on a more strategic role, such as betting on the U.S. expansion that included a $184-million (U.S.) investment in Florida for a new research and development centre and a packaging facility.
The pair's finances were also intertwined. When the Desais moved to Toronto, Mr. Sherman personally lent the couple $3.15-million for their mortgage and is named as the chargee on the loan document. He also offered them a lucrative interest rate: zero per cent. The Desais' home is a five-minute drive from the Shermans' residence in north Toronto. Apotex was founded in 1974 by Mr. Sherman, making drugs in a 5,000-square-foot facility. The company grew into one of North America's largest generic pharmaceutical manufacturers, with $2.5-billion in annual sales. At the time of his passing, Mr. Sherman's net worth was estimated to be more than $4-billion.
Before he died, Mr. Sherman was particularly proud of Apotex's Canadian roots, and much of its manufacturing was done at home. However, the generic market is rapidly changing and new entrants from countries such as India and Taiwan are replicating the prowess of the older giants, hurting margins. Apotex is also vulnerable to competition because its strength has historically been in drugs that are administered orally – yet these are the easiest for new entrants to replicate because making them involves copying chemical compounds.
On Friday, Apotex also appointed veteran executive Jeff Watson as president and chief operating officer. Mr. Watson has been at Apotex for 25 years and was previously president of the global generics division, the company's largest line of business. He will be responsible for day-to-day operations, while Mr. Kay will focus on corporate strategy for Apotex, which has 11,000 employees and sells pharmaceutical products in 115 countries, the company spokesman said.