OxyContin Billionaires Chase Global Profits to Offset U.S. Woes

Bloomberg

A New York state lawsuit is renewing longstanding questions about where some members of the billionaire Sackler family have invested the wealth they amassed from Purdue Pharma LP, the drugmaker accused of helping ignite the U.S. opioid epidemic.

One place where some of the Sacklers’ about $13 billion fortune appears to have flowed is to Mundipharma, a worldwide network of independent associated companies that Sackler family members control through trusts and other investment vehicles.

One of those vehicles, Rosebay Medical Co., was named Thursday as a defendant in an amended complaint filed by New York’s attorney general. Rosebay was described as one of two “ultimate parents” of Purdue in a 2014 securities filing by another drugmaker, and it partly owns some Mundipharma units outside the U.S.

The Mundipharma network of companies, which generate more than $3.4 billion in annual revenue, has offered new ways for the Sackler empire to expand globally even as Purdue Pharma faces the threat of bankruptcy. Mundipharma units have boosted sales of OxyContin in countries like China, but they’ve also focused on less controversial products such as biosimilars, cheaper versions of complex biological medicines that are in increasing demand globally.

In the U.S., states, cities and counties have begun to zero in on the Sackler family holdings amid fears that Purdue itself could declare bankruptcy. More than 1,600 suits against opioid makers have been consolidated in federal court in Ohio, and other cases are pending in state courts. Purdue and other drugmakers have said they didn’t act improperly in marketing their painkillers.

How the U.S. Opioid Crisis Spiraled Out of Control (Video)

The New York lawsuit alleges that the Sackler family “wrongfully obtained profits” from Purdue, regularly moving money out to shield it from legal claims. The state said it was seeking a judgment ordering the Sacklers to return assets to Purdue, and Sackler family members deny the claims.

Brooklyn-born physicians Arthur, Raymond and Mortimer Sackler bought the forerunner to Purdue Pharma in 1952. Shortly after Arthur died in 1987, his brothers bought his interest in the company. Arthur Sackler and his heirs have never had a financial interest in the sale of OxyContin, according to a February statement by Jillian Sackler, Arthur Sackler’s widow.

Mundipharma itself hasn’t been alleged to have engaged in any wrongdoing related to the U.S. opioid epidemic, and a representative didn’t respond to questions about the New York lawsuit against Purdue Pharma and Rosebay.

Purdue Pharma’s opioid drug provides “life-changing relief for the millions of pain patients who have needed it,” the Sackler family members named as defendants in the New York attorney general’s complaint said in a statement on March 28.

“We have always acted properly and are committed to supporting solutions that save lives by preventing addiction and abuse of prescription medicines and treating those who are suffering from addiction,” the family members said in the statement.

In emailed response to questions, Mundipharma representatives in Asia and Europe highlighted the moves that the group has made to move away from painkillers.

Business Model

In 2015, opioids accounted for 86 percent of the network’s European sales of 935 million euros ($1 billion), according to Mundipharma International. This year the group is targeting European revenue of 1 billion euros, with less than 40 percent coming from OxyContin and other opioids. Mundipharma expects its European biosimilar business will grow to 37 percent of sales, up from just 3 percent in 2015.

That shift is the result of “a complete redesign” of the company’s business model, spokesman Patrice Grand said in a statement, with Mundipharma now looking toward growth in biosimilars as well as treatments for cancer, diabetes and respiratory diseases.

Distribution Rights

Mundipharma companies last year announced agreements with drugmakers such as South Korean biosimilar producer Celltrion Inc. and Swiss giant Novartis AG to acquire distribution rights for their non-opioid products in some European, Asian and Latin American countries.

Outside the U.S., the network has units from Singapore to India and from China to the U.K., and while the companies are closely held, some have disclosed information about their ownership and directors. Trusts for the benefit of Richard and Jonathan Sackler owned half of Mundipharma Research Ltd. in Cambridge, England, according to a 2015 filing.

Rosebay Medical, one of the defendants in New York State’s complaint, is one of the two owners of Mundipharma’s Australian business, according to data from the Australian Securities and Investments Commission. Eleven Sackler family members served on its board at different periods of time between 1998 and 2012, the commission’s database shows.

Rosebay Medical is also one of the two current shareholders in Mundipharma Pharmaceuticals Sdn. Bhd., the network’s Malaysian branch, according to the Companies Commission of Malaysia.

Opioids and Heroin and the U.S. Epidemic of Addiction: QuickTake

Court filings say that OxyContin earned Sackler family members more than $4 billion from 2008 through 2015. And despite its efforts to diversify, the Mundipharma network still has a lot riding on the sale of opioids.

In China, Mundipharma has provided support for government-backed pain-management programs. The group last year acquired the China rights to Tramal, an opioid-based painkiller, from a German pharmaceutical company.

Any efforts by drugmakers like the Mundipharma companies to promote emerging-market demand for opioids have the potential to be dangerous, warns Jason White, chair of the World Health Organization’s expert committee on drug dependence.

Medical professionals in middle- and low- income countries may not be aware “that a number of Western countries, particularly in North America, went through this years ago and that people have now realized the problems,” White said.

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Source: Bruce Einhorn , Timothy Annett , and Tim Loh | Bloomberg

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