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Executive Summary

Akzo is entering the U.S. generic drug business with three "exclusive" generic products: amantadine, clofibrate, and carbamazepine. Akzo obtained the three products through the July 1 acquisitions of Colmed Labs and Pharmaceutical Basics. Akzo is combining the two Colorado generic companies into a new company, operating under the name VPF. Colmed received approval for carbamazepine 200 mg tabs (Ciba-Geigy's Tegretol) on May 15. Approval for clofibrate (Ayerst's Atromid-S) was obtained by Colmed's Formutec division on June 16. The Formutec division subsequently received approval for amantadine (Du Pont's Symmetrel) August 5. Formutec was a division of Colmed established to handle soft elastic gelatin formulations. Pharmaceutical Basics will manufacture carbamazepine and market all three of the new generics for Akzo. Clofibrate and amantadine, however, will be manufactured and co-marketed by Chase Labs under an agreement with Colmed ("The Pink Sheet" Aug. 4, T&G-2). Pharmaceutical Basics produces only tablet and hard capsule dosage forms. Colmed Labs and Pharmaceutical Basics have had a longstanding business relationship and have offices in the same facility in Denver, Colorado. Colmed's business has consisted of the development and registration of ANDAs. The firm's products, other than soft gelatin dosage forms, have been manufactured and marketed by Pharmaceutical Basics. In 1985, Pharmaceutical Basics received approval to market four generic products: dipyridamole, nystatin, phentermine HCl, and sulfamethoxazole with trimethoprim. According to FDA's monthly list of ANDAs, the firm has not received approval for any products in 1986. Regulatory approval for the majority of products manufactured and marketed by Pharmaceutical Basics had been obtained through Colmed. Akzo acquired Pharmaceutical Basics from the privately held Cook company, for an undisclosed price. Pharmaceutical Basics was Cook's only drug business. Cook continues to own a medical device company called Baxa. Colmed was previously owned by its corporate officers John Gillespie and Raj Matkari. VPF is headed by Jack Van Hulst who was formerly president of Akzo's U.S. Diosynth subsidiary. Prior management at Colmed and Pharmaceutical Basics will remain under the Akzo ownership. Matkari is VP-regulatory affairs; Gillespie is VP-R&D; and Charles Gifford, formerly president of Pharmaceutical Basics, is VP-marketing and production. Akzo, based in the Netherlands, has previously been involved in the U.S. drug business through its brandname pharmaceutical firm Organon, located in West Orange, NJ, and through Diosynth, a manufacturer of bulk pharmaceuticals with plants in Sioux City, Iowa and Chicago. Diosynth also has a large manufacturing facility in the Netherlands which exports products to the U.S. One of the potential advantages of Akzo's acquisition to the ongoing U.S. operations could be the regulatory/production expertise of the Dutch firm. Akzo's Dutch Diosynth facilites have a good regulatory status with FDA. A recent agency inspection report on a plant visit in the Netherlands in December 1985, for example, characterizes Diosynth as "operating at a very high level of complaince with GMP and DMF [Drug Master File] commitments." Pharmaceutical Basics, however, has had ongoing discussions with the FDA regarding certain of its manufacturing practices. Between 1983 and 1986 the firm has been issued at least six post-inspection reports by FDA investigators alleging manufacturing practice deficiencies. One FDA investigator filed a report on the firm after an inspection in late 1985 describing Pharmaceutical Basics as having "poor manufacturing practices, leading to incorporation of foreign material in finished products." Most of the problems cited in the report refer to plant cleanliness, validation procedures, and lack of written records or instructions. VPF said that all the problems cited in the December inspection have been resolved with the FDA.

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