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Executive Summary

PENNEX ACQUIRES PBI's MORTON GROVE LIQUID GENERICS FACILITY, adding more than 50 new ANDA drug products with annual sales in excess of $20 mil., Pennex and Pharmaceutical Basics, Inc. announced March 22. The acquisition of PBI's Morton Grove, Ill. facility will help Pennex "grow from a solely OTC drug manufacturer into a prescription drug manufacturer," the Verona, Pa. firm said. Under terms of the deal, PBI's Dutch parent Akzo agreed to transfer the assets of the Morton Grove plant to Good Health, Inc., a holding company formed by Pennex Chairman Bill Lyons and President Jack Van Hulst in June when the two men bought Pennex ("The Pink Sheet" June 8, 1992, T&G-3). Pennex management assumed operation of the PBI plant on March 22 and will operate it under the PBI name pending closure of the deal, which is expected by the end of April. Pennex said it has not yet decided whether the Morton Grove plant will operate under the Pennex name. PBI will continue to operate its Denver oral solid dosage form generics plant. Val Hulst has tied with both PBI and Akzo. He served as president of PBI from 1986 to 1989. As president of PBI, Van Hulst negotiated the purchase of the Morton Grove plant (then My-K Labs) from Kun Chae Bae in 1988. PBI/Akzo have reported spending considerable resources to upgrade the My-K plant. During a 1991 hearing before Rep. Dingell's (D-Mich.) House Energy & Commerce/Oversight Subcommittee, Piet Bleyendaal, Van Hulst's successor as president of PBI, outlined PBI's clean-up efforts ("The Pink Sheet" March 18, 1991, p. 11). PBI's sale of the plant indicates that the company has decided not to pursue the additional expense of rehabilitating the facility under FDA's application integrity policy. PBI has been going through that process with its Denver facility, recently reporting that its "corrective action plan" for the plant had been approved by FDA ("The Pink Sheet" Nov. 16, 1992, In Brief). In June, PBI conducted a Class I recall of metaproterenol sulfate inhalation solution produced at the Morton Grove plan due to microbial contamination ("The Pink Sheet" June 15, 1992, In Brief). The Morton Grove plant also conducted a series of Class II and Class III recalls in October and November of last year. Pennex said it intends to meet with the FDA to discuss the compliance status of the Morton Grove plant. Pennex itself is operating under a July 2 consent decree resulting from the FDA injunction request against the firm citing violations of good manufacturing practices ("The Pink Sheet" July 20, 1992, T&G-17). Good Health, Inc. purchased Pennex from its Dutch parent Medicopharma soon after the injunction request was filed. The purchase of the PBI plant reflects management's feeling that Pennex is "under control," Pennex said. The firm conducted a large Class III recall, which it characterized as a "clean up" recall, in February ("The Pink Sheet" Feb. 22, T&G-12). Pennex has hired a new management team: VP-Compliance Robert Pilson, VP-Marketing and Sales Daryl Johnson, VP-Operations Henry Rosen and Exec VP Louis Windecker each have more than 20 years of experience in the industry, Pennex said. All four formerly worked with Van Hulst at PBI.

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