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Generic
Genius
Entrepreneur Jeffrey Farber
Jeffrey Farber's Auburn Pharmaceuticals has made a
name for itself in the non-name-brand medical world.
>> memos
Alan Reinstein
earned the Max Block
Award for the best
2010 article pub-
lished in the CPA
Journal, titled "Recent
Developments in Fair
Value Accounting."
Reinstein previously
earned the Max Block
Award in 2008 and earned the John L.
Lawler Award for the best article pub-
lished in the Journal of Accountancy in
2009.
Detroit area adver-
tising and market-
ing veteran Dennis
R. Green of West
Bloomfield has joined
International Outdoor
of Farmington Hills as
senior account execu-
Green
tive. International
Outdoor offers billboard advertising in
the Metro Detroit area. Green, who most
recently served as marketing manager
for the Detroit People Mover, owned
an ad agency for many years and also
worked at SMZ Advertising, Continuity
Programs and MarketShare Publications
in recent years.
PriS.
Bill Carroll
Contributing Writer
effrey Farber has been in the
"pill" business since he was a
teenager, spending many of his
summer vacation days counting pills at
his father's pharmaceutical warehouse.
Farber, 50, of Bloomfield Hills, now
runs a $40 million-a-year generic pill
business, Auburn Pharmaceuticals in
Troy, selling about 1,500 different generic
medications to more than 2,000 pharma-
cies nationwide.
"We buy from about 50 different
manufacturers, and the Federal Drug
Administration and Drug Enforcement
Administration have stringent rules and
regulations on the pills," said Farber. "It
takes a [generic] manufacturer three
years to bring a drug to market at a cost
of about $1 million. We follow along
complying with all of the strict rules."
But the Farber family is used to the
pharmaceutical format. Farber and
his brother, David, of West Bloomfield,
worked for their father, Bill Farber, of
Franklin, at Michigan Pharmaceuticals
in Ferndale, then Auburn Hills, then
becoming Major Pharmaceuticals. The
company was sold in 1988; and Jeffrey,
who has a business degree from Western
Michigan University; and David decided
to leave because they felt the new own-
ers wanted to change the nature of the
business.
Bill Farber, a former pharmacist who
used to mix his own compounds in his
store, joined the Lannett Company Inc.,
a national generic pharmaceutical firm
based in Philadelphia; David bought
Detroit Popcorn Co. in Redford, and
Jeffrey became an entrepreneur, opening
Auburn in Troy in 1993.
The business now has 100 employees
and occupies an 18,000-square-foot
office and warehouse, plus a separate
building nearby to house 40 salespeople.
Auburn also recently opened a ware-
house in Salt Lake City, Utah, to handle
j
burgeoning business from the western
states.
The Jewish News talked to Jeffrey
Farber, president and CEO, about Auburn
Pharmaceuticals.
Describe the daily operation of your
business.
"Our account managers use master
national lists to contact prospective
customers nationwide, most of them
independent pharmacies rather than
the large retail chains. We offer weekly
specials, and orders are shipped by UPS,
with customers getting free shipping if
an order is $75 or more. We also sell to
local hospitals, mental health agencies
and some prisons in the state. I have
to keep close track of pricing because
prices can increase or decrease as much
as 90 percent overnight. It's like the ups
and downs of the stock market. I've done
all of the buying up to now, but I recently
hired an associate to help me."
Exactly what is a generic drug?
"It's a drug sold or prescribed under
the nonproprietary name of its active
ingredients or under a generally descrip-
tive name rather than under a brand or
trade name."
Why don't you sell to the large chains,
and why do you deal in generics only?
"The large chains usually can buy
directly from the manufacturer because
of their huge orders. We like to help
the corner drugstores, the mom-and-
pop type of operations. There's such a
widespread use of generics now that
it's a lucrative business on its own. The
average citizen wants to take advantage
of the lower price of generics, mainly
through insurance. Auburn is one of only
20 distributors of generic medicines left
in the country."
Aren't brand name pills better than
the generic version?
"That's up for debate. There's a close
line of distinction there. Some doctors
say the brand name pill is better, but
others contend there's really no differ-
ence. All medications are safe because
they undergo stringent testing by the
FDA and DEA."
Aren't the pharmaceutical companies
opposed to generics because they hurt
the business of the more profitable
brand name drugs?
"Basically, some of them do. Generic
manufacturers wanted Plavix, which is a
blood thinner, to go generic last year; but
lawsuits regarding patents put a stop to
it. They're going to try again next May.
Lipitor, mainly taken for high choles-
terol, is due to go generic in November
when patents expire. Lipitor is made by
Pfizer Inc. and is one of the most used
drugs in the country. But Pfizer, unlike
most of the pharmaceutical manufactur-
ers, has its own generic company. I guess
they figured if you can't beat 'em, join
em.
Who are your top generic suppliers?
"Our No. 1 supplier is Teva, based in
Israel, the biggest generic supplier in the
world; they had $16 billion in sales last
year. Our next biggest supplier is Mylan
Laboratories in West Virginia."
How do you protect the drugs stored
in your warehouse?
"Everything is kept under lock and
key, especially drugs like Vicodin, which
are in a separate locked section. We also
carry morphine and some cocaine, used
by ENT physicians; but we keep those
things locked in a cement safe."
How has the recession of the past few
years affected your business?
"It hasn't affected us at all. Our sales
continue to rise about 10 percent each
year. The pharmaceutical business is
recession-proof. Recession or not, people
need their medications and find ways to
buy them." I 1
Illinois-Advocate
Lutheran General
Hospital and Advocate
Lutheran General
Children s Hospital
announce the appoint-
ment of James Keller,
M.D., as chairman,
Department of
Obstetrics and Gynecology. Keller also
serves as director of Maternal Fetal
Medicine, Advocate Medical Group.
He did his undergraduate work at the
University of Michigan, received his
medical degree from Michigan State
University, completed his residency at
Sinai Hospital Detroit and completed a
fellowship in maternal fetal medicine at
Northwestern University Hospital.
Michael K. Hauser of
Oak Park, a sharehold-
er at Maddin, Hauser,
Wartell, Roth &
Heller P.C. and a CPA,
was selected by the
Michigan Association
of Certified Public
Michael
Accountants as one
Hauser
of its presenters at
the recent Management Information
and Business Show. Hauser focuses his
practice on partnership and corporate
tax, state and federal taxation of real
estate transactions, gift and estate tax
and general business.
July 14 0 2011
39