Happiness, anger, frustration – it’s hard to know exactly which emotion would be dominating the mind of Pharmaceuticals founder Jim Selim today.
Happiness, anger, frustration – it’s hard to know exactly which emotion would be dominating the mind of Pan Pharmaceuticals founder Jim Selim.
Five years ago, the Federal Government’s Therapeutic Goods Administration closed down Pan Pharmaceuticals’ entire production and recalled all of the company’s products after complaints that its travel sickness medicine, Travacalm, had caused hallucinations in some people.
Within months, Pan was in voluntary administration and in 2005 it went into liquidation. Shareholders lost $350 million. Around 400 Pan workers lost their jobs. Pan’s customers – mostly pharmacists and other retailers – lost hundreds of millions in lost sales.
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But yesterday, the Federal Government has effectively admitted the TGA got it all very, very wrong. The Government has decided to settle a massive negligence suit Selim had brought against it in the Federal Court and will pay the entrepreneur $55 million in damages, $5 million of which will go to his legal team.
“I alleged that these people (the TGA) were motivated by a wrongful sense of vengeance,” Selim said yesterday in a statement.
“I alleged that these people knew full well the catastrophic effect their decision would have on Pan, its employees, customers, service providers, shareholders and of course, me and my family, both financially and personally.”
On the surface, it’s hard to disagree. Now the question is: What the hell happened here?
Selim, a Cairo-born pharmacist who established Pan in 1974 with a staff of four people, has always been something of a controversial and colourful character.
In 1976, he appeared before the Pharmacy Board of NSW charged with professional misconduct and was suspended from practising as a pharmacist for three months.
In 1996, Pan had its first big run-in with the TGA when Pan Laboratories (a subsidiary of the Pan Group) was found guilty in the NSW District Court on 13 counts of illegally supplying and exporting therapeutic goods. The TGA alleged the company imported nine million capsules of evening primrose oil from an unaccredited company in Thailand, instead of the approved Canadian supplier.
The company was fined $280,000, but the judgement was later overturned and a new trial ordered. But the new trial never took place because Pan Laboratories went into voluntary liquidation in 1999.
Selim told the ABC’s Australian Story program in 2003 that the 1996 case was the start of the souring of the relationship between Pan and the TGA.
“We didn’t make any big deal out of it. We moved on,” he told the program. “And unfortunately, some people didn’t manage to forget this and managed to have long memories.”
Pan built a new factory in 1998 and Selim floated the company in 2000. Two years later, he made the BRW Rich 200 for the first time with a fortune of $210 million.
Twelve months later, Selim’s fortune had disappeared after the TGA’s decision to shut Pan’s factories and recall more than 1300 of its products.
Following the recall, a raft of claims emerged about Pan’s manufacturing and quality assurance programs, with one whistleblower alleging Pan had falsified test results.
In 2003, Selim admitted that the company did have a problem with suspect test results and that an analyst had been sacked over the problem.
But he always maintained that the TGA’s handling of the matter was heavy handed.
“Look, there’s always deficiencies with any company. Nobody will suggest that companies operating in this country have not got deficiencies, I would say some of them worse than Pan. But the practice is give the auditor’s report, let the company respond and help the company and guide the company to compliance and to overcome the difficulties.
“They (the TGA) see themselves as judge, jury and executioner, and they gave Pan a piece of paper, gave us no right to reply, no time to address anything, and no fair trial, no innocent until you’re proven guilty.”
The TGA said in a statement that the settlement “involves a judgement for the claimant, but does not involve the Commonwealth conceding any of the specific allegations in the proceedings”.
The body also said Pan Pharmaceuticals pleaded guilty to a number of criminal charges including inflicting grievous bodily harm and manufacturing counterfeit medicines, and was fined $3 million.
But Selim’s lawyer, Andrew Thorpe, says the liquidator was in charge of Pan when the guilty plea was entered, not Selim.
Selim, who reportedly suffered a relapse of leukemia last year and is still battling health issues, today called for an apology from the Government and a public inquiry into the events.
He’s probably entitled to both.