GULFPORT – One of the oldest manufacturing operations in Harrison County has a new owner who is planning to spend $6 million in upgrades and hire an additional 160 employees over the next five years in order to produce liquid generic drugs at the 132,000-square-foot factory located on U.S. 49.
The factory, which opened in 1947, is a landmark in Gulfport marked by a large bottle of Milk of Magnesia.
ANI Pharmaceutical Inc. (ANIP), a subsidiary of publicly-traded Advanced Nutraceuticals Inc. (ANII), was sold to Meridian Venture Partners in late March for approximately $3.4 million in cash, of which $250,000 is held in a short-term escrow to secure indemnity obligations, and the assumption of specified liabilities, primarily trade accounts payable. Meridian Venture Partners said proceeds from the sale were used to repay the outstanding real property mortgage, and the balance was applied to reduce the outstanding loan amounts due to the company`s senior lender.
ANII intends to seek stockholder approval to affect a reverse stock split of one share to be issued for every 300 shares outstanding as of a record date to be determined. The company said the formula for payment of fractional shares would be determined in the near future. A meeting of the stockholders is expected to be scheduled during the spring of 2004, to vote on the reverse stock split, among other items, following preparation of the proxy solicitation materials and other documents for filing with the SEC and subsequent distribution to the stockholders.
Michael Olivier, CED, executive director of the Harrison County Development Commission (HCDC), said the manufacturing plant was established by Phillips in the 1950`s to produce over-the-counter (OTC) products such as Milk of Magnesia, among others.
“The plant was acquired by major and lesser known companies over the years such as Sterling Pharmaceuticals, A.G. Bayer of Germany and later by Ash Corporation, which sold to ANI Pharmaceuticals Inc. and now to Meridian Venture Partners,” Olivier said. “HCDC provided assistance in the acquisition outlining incentives and arranging contact with the Mississippi Business Finance Corporation providing an opportunity to finance a part of the acquisition with Industrial Revenue Bonds.
“HCDC was pleased to play a role in this acquisition that will lead to new capital investment of $6 million to upgrade the plant and create up to 160 new jobs at a very mature plant to produce liquid generic over the counter drugs.”
Meridian has named a new senior management team at the ANIP plant led by Tom Anderson, former president of the U.S. Pharmaceuticals Division (USPD) of Alpharma Inc., a global pharmaceutical firm. As CEO, Anderson will focus on converting ANIP from a pure contract manufacturing operation into a specialty pharmaceutical company.
“With this transaction, we have acquired a significant pharmaceutical manufacturing facility along with the management expertise needed to expand its business in the pharmaceutical market,” said Charlotte Arnold, vice president, Meridian Venture Partners. “Tom Anderson is a proven industry player whose past track record with USPD transformed that company into the industry leader. We look forward to supporting Tom and his management team in building ANIP into a substantial enterprise.”
While with USPD, Anderson was credited with leading the company through a successful turnaround, which resulted in a doubling of sales to $300 million. In recognition of taking the company from an operating loss to profitability levels commensurate with other specialty pharmaceutical firms, Anderson received the 1999 Ernst & Young Entrepreneur of the Year Award in the turnaround category for the Mid-Atlantic region.
Anderson said there are several reasons why Meridian Venture Partners decided to purchase the factory in Gulfport.
“First, the reason you buy companies is not for the brick and mortar, but for the people who are there,” Anderson said. “That is the most important asset. What we found there is a terrific workforce of very dedicated and loyal employees. We have multiple generations of employees who have worked here over the years who are very competent in pharmaceutical manufacturing. One of the big reasons we bought this plant was because of the considerable technical expertise capabilities at this plant to manufacture liquids, creams and ointments and powders.”
Another big incentive was that the business provides a great platform for the business to move into prescription products. Currently, the factory only manufactures OTC products.
“The agenda is to bring on board generic prescription products,” Anderson said. “What we will be doing is converting from contract manufacturing to what we call a specialty pharmaceutical company. Today we are classified as a contract manufacturer. We make products for other people like Walgreens, Rite-Aid, food chains and mass merchandisers like Big Lots, companies where quality value is very important. We will continue that business. In addition, we will commercialize our own products under our own label. Specialty pharmaceutical companies have much higher valuations than contract manufacturers.”
OTC products are very competitively priced, and are primarily labeled under the names of large chain stores. The generic prescription drug business is attractive because there is a potential for increased sales due to the trend for consumers to opt for the less expensive generic equivalent of name brand drugs.
“The prescription generic business is where the savings to consumers will come as the whole category of generic drugs grows in the future as we try to control healthcare costs,” Anderson said. “Generics give consumers alternatives to the high dollar branded products.”
Prior to his work at USPD, Anderson held senior executive positions at FoxMeyer Health Corporation, a $6-billion wholesale pharmaceutical distributor, and Wilson Foods, a $1.3-billion manufacturer and distributor of meat products. Anderson serves or has served as a member of the board of directors for numerous organizations, including Meridian Medical Technologies and the Generic Pharmaceutical Association. He also currently sits on the board of the University of Maryland Biotechnology Institute and the Baltimore Symphony Orchestra.
Anderson received his bachelor`s degree in business administration from the University of Texas at Arlington and earned an MBA in finance at the New York University Stern School of Business.
Contact MBJ contributing writer Becky Gillette at email@example.com.