Corrections or additions?

This article by Barbara Fox was prepared for the May 8, 2002

edition of U.S. 1 Newspaper. All rights reserved.

Medpointe: Deep-Pocketed Startup

One way to make a lot of money on a pharmaceutical

company

is to start a small one and somehow grow it big. Another way is to

buy a public company — perhaps one that is having some difficulty

— and take it private.

Anthony H. Wild, James S. Burns, and John T. W. Hawkins took the

latter

option. They rounded up investors, acquired the health care assets

of Carter Wallace, took it private, and named it Medpointe Inc.

"I

am not aware of anybody who has ever done what we did," says

Hawkins,

executive vice president. "Our expectation is to return to public

market later this year or next year, as an IPO."

The Medpointe partners moved from Short Hills to the Half Acre Road

campus; their company now has 600 people worldwide, including 40 in

Princeton, and from 130 to 150 people on the Cranbury campus,

including

personnel from Wallace Pharmaceuticals and Wampole Laboratories. It

also has about 100 people in Decatur and 330 salespeople in the field.

Church & Dwight bought the consumer part of the company, including

the condoms, in an almost simultaneous closing. Medpointe is

co-locating

with Church & Dwight on the site but plans to move this month from

Cranbury to 70,000 square feet at the former Merrill Lynch office

at 265 Davidson Avenue in Somerset. Some research will be conducted

there.

Medpointe paid $408 million for the Carter Wallace’s pharmaceutical

and diagnostic assets, including such prescription drugs as Astelin

nasal spray, Felbaol anticonvulsive therapy, and Soma muscle relaxant.

It had raised $510 million, consisting of $225 million in debt

facilities,

mostly bank loans from Bear Stearns and Lehman Brothers, and the

balance

in equity securities.

"We survived the September 11 disaster," says Hawkins, telling

about the September 28 deal that almost didn’t happen even though

they had commitment letters. He attributes the survival to "the

fact that we were in a stable industry and our business was not

affected

by it."

Leslie Green, the author of an article in a Thomson Financial

newsletter

(www.buyoutsnewsletter.com), pronounced the Medpointe acquisition

the Middle-Market Deal of the Year. The founders made significant

personal investments, but two private equity groups, the Carlyle Group

and the Cypress Group, were the largest investors. Green quotes the

managing directors of those groups as saying they had never worked

on such a complicated, convoluted deal: "Splitting up and sorting

out the shared services and corporate infrastructure — people,

auto fleets, a corporate jet, employee termination contracts, even

telephone systems — turned due diligence into a different kind

of animal."

At one point, Carter-Wallace’s adviser put the two parties in a room

and told them to figure it out for themselves. "We would not give

up, because we recognized there was a gem hidden in this company,"

says William Spiegel of the Cypress Group.

Spiegel also says that Medpointe’s management team "is one of

the best I’ve ever come across. They had operations down pat. they

knew sales and marketing. They had great relationships throughout

worldwide pharma."

CEO Wild has degrees from the University of York and the University

of Cambridge (Churchill College). He spent 22 years at

Schering-Plough,

including being president of that company’s Japanese operation, and

was president of the pharmaceutical sector at Warner Lambert,

quadrupling

the sales in four years and overseeing the acquisition of two

companies.

Wild declined to go with Pfizer in the hostile takeover, says Hawkins.

Burns has degrees from the University of Illinois and DePauw. He

worked

at Booz-Allen & Hamilton, was group president of Becton, Dickinson

and Company, and CEO of Osiris Therapeutics, a biotechnology firm

with cell therapy for regenerating tissue. He has been vice chairman

of Healthcare Investment Corporation, and was a founding partner of

HealthCare Ventures, the VC partnership now based at 44 Nassau Street.

Hawkins grew up in Charlottesville, Virginia, where his father was

an investment banker. He stayed in his hometown to major in economics

at the University of Virginia, Class of 1976, and has an MBA from

Tuck. He has worked for Alex. Brown & Sons, and Irving Trust Company.

The idea for the deal? "I approached Jim Burns and Tony Wild about

forming the partnership in March, 2000," says Hawkins. "In

June, 2000 we began an intensive search to find one or more businesses

to build into a pharma company. We identified Carter Wallace in July,

2000 and spent 14 months raising capital and acquiring the business

with the help of our two largest private equity backers and Bear

Stearns.

I don’t know honestly that it had ever been done before."

He names other companies that come close. "While none of them

started with existing business, it was evident to us it was a business

model that made sense, and was just a matter of how we entered the

race. The quickest way to achieve scale was to acquire a midsize

company

like Carter Wallace, rather than cobbling together smaller

companies."

— Barbara Fox

Medpointe Inc., Half Acre Road, Box 1001, Cranbury

08512-1001. Anthony H. Wild, CEO. 609-655-6000; fax, 609-655-6660.

"Church & Dwight has been very much on the move with the vision

of being the fastest growing consumer products in the U.S., both

through

internal growth and in acquisition.


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