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Most people think of Barry Sherman only as the man who made a fortune as a “counterfeiter,” to use his word. Some might also see him as a generic pill guy who dabbled in other businesses, quite often unsuccessfully. But what emerges from interviews with dozens of people who knew Sherman well, or who faced off against him in business, is that Sherman was much more than a “pill guy.” He was a risk-taking entrepreneur whose most successful enterprise just happened to be generic drugs. It could easily have been something else. He tried and failed, and tried and succeeded, at many other ventures. His support for Fred Steiner, at a time when other potential investors backed away, is early evidence of his savvy and appetite for risk.
Sherman was only able to give a financial leg up to Fred Steiner in 1973 after an uneven start in the generic drug business that would eventually be his greatest accomplishment. When Sherman and Ulster took over at Empire Laboratories in 1967, Sherman alternated between over-the-moon excitement and fear of the worst. Bankruptcy would mean losing not only the money the two men had put in, but also the greater amount invested by their own parents.
Empire Laboratories, purchased from the trustees representing Sherman’s late Uncle Lou’s estate, was failing when Sherman and Ulster took control, according to Sherman’s memoir. The orphaned Winter cousins would eventually disagree and dig up information they said suggested the company was doing much better than Sherman claimed. But according to Sherman, when he and his partner took over, no new products had been introduced for several years, the building it was housed in was run down and lacked modern manufacturing machinery, and the man at the helm, courtesy of the trustees, was, as Ulster put it, “a disaster.” To purchase Empire and its generic business, the two young men incorporated a company called Sherman and Ulster Ltd. They paid the Winter estate $450,000, pooling the money they had with loans from Ulster’s father and Sherman’s mother. Sherman was president; Ulster was vice-president.
Empire’s operations were spread out over a five-storey building on Lansdowne Avenue near Dundas Street, an industrial part of Toronto at the time. The president put in charge by the estate trustees, chemistry professor George Wright, was not a strong businessman. Sherman fired him the day they assumed control. The partners decided that Sherman would handle production, quality control, and product development. Ulster would handle sales, accounting, administration, and any human resources issues among the employees.
Manufacturing generic drugs was a fledgling industry at the time, and a confusing set of government rules controlled their existence. Morris Goodman, a Montreal businessman who was one of the pioneers of the generic industry, explains that one of the main problems he and others in his business faced was that “doctors did not believe in generics.” Physicians were wined and dined by the brand name pharmaceutical companies, and their salesmen pushed their brand products at doctors’ offices frequently. Not surprisingly, doctors usually wanted to prescribe the brand name version. Goodman says that if a doctor did prescribe a generic version and the patient didn’t do well, “the doctor blamed the drug.” In an ideal world, the generic version would be identical to the brand name product. Using the simplest example, a generic ASA tablet should be the same as an Aspirin. The problem was, at least in the early days, it often was not the same. Government regulators spent a considerable amount of time trying to catch generic companies producing inferior product. Ulster, recalling those early days, says there was always speculation, never substantiated, that brand pharmaceutical companies paid off the government inspectors to perform extra policing of the generic firms that were trying to get a piece of a very lucrative pie.
Similar issues were encountered by the man who would become Sherman’s biggest rival, Leslie Dan. Dan had founded the generic firm Novopharm in 1965. A Hungarian Jew, he had come to Canada in 1947 and enrolled in the University of Toronto School of Pharmacy. He was fourteen years older than Sherman and was more established in the pharmaceutical world when Sherman and Ulster emerged on the scene. Their bitter rivalry would be the stuff of acrimonious court battles and occasional headlines in future years. Dan’s son, Aubrey, would eventually become an admirer of Sherman, and together they would work on a plan to legally sell marijuana as a pharmaceutical.
Barry Sherman entered the tumult of the pharmaceutical world in 1967 as the twenty-five-year-old owner of a medium-sized generic company and its head of product development. Biochemists and molecular chemists are typically the type of scientists involved in pharmaceuticals. Sherman was neither. His background was in math and physics, and aerospace. “At that time,” Sherman recalled in his unpublished memoir, “I knew little about pharmaceutical manufacturing, and virtually nothing about how to formulate a tablet or capsule.”
Sherman and Ulster shared a long table that acted as a desk at the Empire office on Lansdowne. When they looked at recent company reports, it was clear there was a problem with quality, not just with the quality of prescription pills but also with the company’s relatively simple line of vitamin C tablets, known by the generic name ascorbic acid. James Church, the sales manager, told Sherman that the tablets were soft and broke up in the bottle. Customers were returning them, and revenues from the product, not surprisingly, had taken a big hit. What pharmacy wanted to carry a product that was unstable? What customer, hoping to stave off a cold, wanted to open a bottle and find a jumble of broken pills? Sherman describes in his memoir how he went up to the third floor of the Lansdowne building and spoke to the production manager. The man told him there was nothing wrong with the tablets. He formulated them himself, he said to Sherman, and “every product formulated by him was the best that could be made.” Sherman then walked downstairs to the second floor and questioned the packaging supervisor, who told him that, yes, there was a problem.
Within a couple of days, the production manager was shown the door and Sherman promoted Chris Retchford, a young Australian man a few years his junior, who had studied pharmacy for two years back home and then emigrated to Canada. Sherman gave him the title of acting production manager and promised the job would be permanent if he did well. The task ahead, to understand how to manufacture high-quality products, would be critical in Sherman’s career. By 2017, Apotex, the company he started after Empire, would be manufacturing twenty-five billion doses (pills and other formulations of drugs) a year. At Empire in 1967, Sherman needed to learn how to make one pill and make it right.
His first task was to understand the components of pharmaceuticals. All pills, whether prescription or non-prescription, are composed of the active pharmaceutical ingredient, or API, and “excipients,” or inactive ingredients. These are also called binders and fillers. The actual amount of drug, or API, is small. The additives make the pill into a form that can be swallowed and also, depending on the type of medicine, help deliver the active ingredient to the body in a way that allows it to be absorbed properly to have the best effect. Shortly before his death in 2017, Sherman was devising the best way to deliver the various active ingredients of marijuana to the body in pill form.
Working alongside his new acting production manager, Sherman set up a series of trials to see what worked and did not work with the ascorbic acid tablets that were disintegrating in the bottles. The former production manager had left a list of all the inactive ingredients: lactose, microcrystalline cellulose, starch, sodium carboxymethylcellulose, magnesium stearate, talc, and colloidal silicon dioxide. Sherman wrote in his memoir that neither he nor Retchford had any idea of the purpose of each ingredient. They ran a series of trials, compressing all the ingredients with a tablet “punch” but leaving one ingredient out each time. They discovered that only two inactive ingredients were needed: microcrystalline cellulose, which makes the tablets hard but also allows them to break up in the stomach within thirty minutes, and magnesium stearate, which is a lubricant that prevents the tablet mixture from sticking to the tablet punch. Problem solved.
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nbsp; Sherman wrote, “It appears that [the production manager’s] approach had been to include a little bit of everything, without doing experiments to determine what was needed and what was not. From that day forward, I personally made all decisions relating to product formulation, based on review of one or more series of comparative experiments.”
During this time at Empire, both Sherman and Ulster kept long hours out of necessity. But Sherman also laboured deep into the evening because, and this is confirmed by literally everyone who knew him well, he loved working. In years to come, people would see him on sunny winter days at the Alpine Ski Club, near the Ontario town of Collingwood, sitting inside at a table, his laptop out, typing, his ski boots unbuckled to rest his feet after an obligatory few runs down the slopes with Honey. That scene was replicated many times. When Sherman began dating Honey Reich three years into his time at Empire, she would often drop by the office and they would have a quick meal, usually chicken and fries from Swiss Chalet, then Sherman would go back to his formulations.
If one of the main lessons Sherman learned in those first few years was how to make a pill better (and cheaper, due to fewer ingredients), the new tool he developed involved the law and the courts. In the days immediately after his death, media stories remarked on his “litigious nature,” with one well-known lawyer pronouncing Sherman “the most active litigant in any industry in Canada.” By his own account, Sherman’s first use of the courts to his advantage was in 1971, when a federal official wrote to tell Sherman and Ulster that Empire was being struck from the country-wide list of approved pharmaceutical companies. Inclusion on that list was a prerequisite for selling drugs in Ontario and also for supplying customers, including hospitals.
“We immediately panicked,” Sherman recalled in his memoir. The bureaucrat who had written the letter was the chairman of a federal board that oversaw the listing of pharmaceutical companies. It was after hours, and Sherman was unable to reach the bureaucrat at his office in Ottawa. He called directory assistance and asked for a home number, dialled, and the board chairman answered. Sherman identified himself, and while there is no account of the call from the bureaucrat’s perspective, Sherman recounts it in his memoir. Ulster’s recollection also matches what Sherman wrote. The man was not happy to be disturbed at the dinner hour, but Sherman kept him on the telephone. What the federal board had done, Sherman said, was unlawful, because it had not disclosed the allegations to Empire and provided the company with a chance to respond. He also took issue with the fact that, in Sherman’s opinion, these were historical complaints from a time before he and Ulster had taken over.
“It appeared that [the bureaucrat] and his board had never heard of the principles of natural justice with which, according to common law, all judicial and quasi-judicial bodies must comply,” Sherman wrote. He warned the bureaucrat that if the decision was not reversed and Empire products reinstated on the list, Sherman would hold the bureaucrat personally responsible. Personal threats were a waste of time, the bureaucrat said, and he hung up on Sherman.
Sherman got in touch with a lawyer he knew, Willard “Bud” Estey, who years later would be named a justice of the Supreme Court of Canada. Estey, with Sherman’s urging, went to court and began an application to have a judge quash the federal board’s decision. Estey also wrote to the Ontario government and asked it to hold off delisting Empire products, pending the court challenge, which the government agreed to do. Shortly before the court hearing, the federal government backed down and relisted Empire products for sale in Canada.
“This was the first time in my career that I found it necessary to initiate legal action. It was to be the first of many,” Sherman recalled.
It was at about this time that Sherman asked his friend and business partner Fred Steiner to come on a tour of a house he was building in Toronto on Beaverhall Drive. Sherman had a contract with the house builder that stipulated certain parts of the construction had to follow a timeline. The plumbing was one of the items, and the toilet in the main bathroom had not been installed as promised.
“I want you to be a witness,” Sherman said. He sued the contractor, successfully, as he would with other properties he built. If Sherman believed he was the aggrieved party, and he had a contract, he would take the matter before a judge. The Old Colony Road property, where he would eventually die, was built for relatively little money. Due to his lawsuit for non-compliance with a contract, Sherman would recoup most of the cost of the construction.
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The home in Thornhill, north of Toronto, where Joel and Cindy Ulster had settled down was lively. The Ulsters had four children, and were not yet thirty years old. There was a secret in the home that would eventually burst free, but for now it was the picture of domestic, though often chaotic, bliss. Thornhill was a new neighbourhood in the early 1970s, a place with cookie-cutter houses (Mark Ulster, one of Joel and Cindy’s boys, says, “Every fifth house was the same”) and perfect lawns. Mark recalls how his parents always had friends over, “just hanging around.” The adults would get together, and the kids—Mark and his siblings and whoever else was there—would put on a play or some other performance. Everybody seemed to get along. At one point, Joel and Cindy fell in love with the Toronto production of Hair and attended it several times. They befriended the cast, and one night they invited them all to the Thornhill house for a cast party. Later, two actors in the play, who were married with children, moved in for several months. Mark says his “crazy hippie” parents and their friends did not quite fit into the area, which Mark took as a sort of badge of honour. Today a successful documentary writer and producer, Mark recalls with fondness how nice it was to have his parents’ friends around, and the most popular of them was Uncle Barry, a busy man who still found time for his friend’s kids, and a man who would later give Mark a helping hand.
“Barry was just always around,” says Mark. “He was very positive. I had always thought that Barry would be a great father, because he was very devoted and would really get down to your level and show interest in you, which was nice.” Caroline, Mark’s wife, who knew Sherman in later years, recalls his warmth. Photos taken of weekend get-togethers at the Ulster home show Barry and Honey mugging for the camera.
But for all the appearance of a typical suburban family, the Ulsters really were different. The secret in the house was that Joel Ulster was gay and had fallen in love with a man named Michael Hertzman, a Toronto clothing store owner. One day in 1973, Ulster took a walk with Sherman on the streets around their Empire factory and told him his plan to leave Cindy. He had already confided in his friend that he was gay. Ulster recalls that walk, no sidewalks in those days, dodging broken pavement on the side of the road, trucks rumbling past. “He was very supportive,” Ulster says. The next day, Joel told Cindy that he could no longer live with her, that he preferred men. Cindy at first believed that her husband was just going through a phase. “It was a huge scandal, because my dad was gay and it was the early 1970s. It was a pretty crazy situation,” Mark Ulster says, remembering how it was viewed by others. After all, only a few years earlier, homosexual acts were against the law in Canada. That changed when Liberal prime minister Pierre Trudeau passed legislation decriminalizing gay sex, famously saying, “There’s no place for the state in the bedrooms of the nation.”
Ben Ulster, who had backed son Joel and Barry Sherman financially, was not at all supportive of his son’s decision to leave his family. But Joel had made up his mind. The question was, Where was he going to live? He telephoned Michael Hertzman and told him he had done it, he had told Cindy. Michael asked, “Do you have a place to stay?” Joel did not, and Michael said Joel could stay with him. Following Cindy’s wishes—they eventually divorced—he kept the fact that he was gay from their children until they were in their early teens. Mark’s brother Jeff recalls his naïveté from those early years: he thought his father merely had a roommate.
Jeff U
lster also recalls how at first their mother would not let Michael into the house after the couple separated. But Cindy was not a housekeeper (she proudly had a poster in her front hall that said “Fuck Housework”), and so eventually Joel and Michael would be occasionally permitted to visit, when they would do an “intervention” and throw out accumulated trash from the ongoing parties the house still hosted. Cindy eventually met and fell in love with another man and remarried. She died of cancer in 2013.
Throughout the years, until the Shermans’ deaths, Barry and Honey remained close with Joel and Michael. Among the adventures they shared was a train trip on the Polar Bear Express, in Northern Ontario. Photos from the early 1970s kept by Michael and Joel in a well-organized album show the two couples standing in front of a stone monument outside Cochrane, Ontario, the train’s southern terminus, Honey in red bell bottoms, Barry in dress slacks. In another photograph, a grinning Honey has curved her body into a pantomime of the polar bear depicted on the side of the train.
Today, Joel and Michael are married and living in New York City. On the walls of their apartment are testimonials to a family life being lived well: dozens of smiling photos of Joel and Michael taken all over the world with the four children from Joel’s first marriage and the two children he and Michael adopted in New York. Over the years, Sherman provided financial assistance and mentorship to all the Ulster children. All six are now adults and successful in a wide range of careers.
The Billionaire Murders Page 10
