Case Study: Harvard Drug Group
- Harvard Drug Group (“Harvard”) is the largest independent-focused distributor of generic drugs in the U.S.
- Harvard generates annual sales of over $450 million and serves 42,000 customers, comprised of independent, regional, and national pharmacies, hospitals, long-term-care facilities, medical offices, veterinary offices, and government clients.
- Harvard’s manufactured products line, Major, is one of the largest lines (measured by number of SKUs) of generic products under one label in the industry.
- Harvard’s Letco/Spectrum division is a leading distributor of products to the Compounding Pharmacy market in the U.S.
- Harvard’s IDS division is an industry pioneer in the independent diagnostic testing laboratory market for in-home studies in the U.S., where it controls a significant portion of the oximetry testing market, and is the first mover in the home sleep apnea testing market.
- Harvard operated in a high-growth, and fragmented market.
- Significant organic growth potential due to increasing penetration of generic drugs and branded pharmaceutical patent expiry.
- Opportunities to grow through geographic expansion as well as the identification of high margin complimentary businesses (e.g. veterinary supply).
- Cost savings opportunity from scale and rationalized logistics.
|Investment Period:||1988 – 2011|
|Revenues:||Over $450 million|
|Total Add-on Acquisitions:||11|
Key Operational Activities
- Spearheaded eleven add-on acquisitions to place Harvard in new, high growth and high margin geographies and market segments.
- Invested significant capital in infrastructure development (e.g. logistics and business systems).
- Emphasis on Human Resource Management - recruited exceptional leadership team and Board of Directors.
- Created an organizational culture that placed a premium on customer service.
- Led two sale processes to private equity investment firms.
- For the past fifteen years the Company has led its peer group in return on equity and has produced twelve consecutive years of EBITDA growth.
- In December 2006, HIG acquired a majority of Harvard’s equity in a leveraged buy-out transaction. Randy Friedman continued as Chairman and CEO following the HIG acquisition.
- In April 2010, Court Square Capital Partners acquired Harvard in a transaction that generated significant cash proceeds to the equity holders.