Eli Broad has long fashioned himself as L.A.’s leading philanthropist. He could have competition soon.
After striking an eye-popping deal last week, Dr. Patrick Soon-Shiong stands to become the fourth wealthiest Angeleno with an estimated net worth that exceeds $5 billion a position not lost on the surgeon turned entrepreneur who is poised to turn into one of the city’s biggest philanthropists.
“I plan to take my personal strengths and be very hands-on in my philanthropic work,” Soon-Shiong told the Business Journal, following the announced sale of his generic drug maker APP Pharmaceuticals Inc. to a German medical supply company for at least $4.7 billion.
The acquisition by Fresenius SE could put about $3 billion cash in Soon-Shiong’s own pocket a figure that could rise an additional three quarters of a billion dollars if certain sales goals are met.
And because that wealth is in cash, and not just on paper, Soon-Shiong said he plans to dive in to bigger philanthropic activities in the area of health care access.
Though he won’t say exactly how much of his new wealth will be channeled to good works, Soon-Shiong did say he intends in the next several weeks to announce an expansion of his family foundation.
In January 2007, the foundation pledged $35 million to help Santa Monica’s St. John’s Health Center finish its earthquake retrofit. The donation also established a research institute intended to speed patients access to the highest tech innovative research, such as adult stem cell therapies and nanotechnology. The center will focus on difficult diseases like multiple sclerosis, diabetes and cancer, and will bear the name of Soon-Shiong and his wife, actress Michele Chan.
Soon-Shiong, his wife and advisors are considering a number of new missions for their foundation work, among them improving health care access in Los Angeles the city where the South African native of Chinese descent found success after arriving here in the 1980s to work at UCLA as a researcher.
However, Soon-Shiong said he has long been disturbed by the fact that the city offers some of the best health care in the world at places such as UCLA and Cedars Sinai Medical Center while leaving many residents with substandard care at places like the now-closed Martin Luther King Medical Center.
Soon-Shiong also sees a greater role for himself in guiding the development of personalized medicine, a cutting-edge science that one day could enable physicians to study their patients’ unique genetic make-up to develop specific therapies to best treat their ills.
“This really enables me to execute on a vision I’ve had ever since I left (UCLA),” said Soon-Shiong, whose offices are on the 20th floor of the Wilshire Landmark in West Los Angeles. “I want to address disparities of care in Los Angeles, as well as develop new drugs in the personalized medicine (area).”
Soon-Shiong would not verify his wealth. In May, the Business Journal estimated his net worth at $3.7 billion. Discounting taxes and fees from his new income but adding additional wealth that has not been counted previously, the Business Journal now estimates his wealth at greater than $5 billion.
That would place him No. 4 on the list of Wealthiest Angelenos, displacing David Geffen with $4.5 billion but behind Broad, who had $6.9 billion. (No. 1 was Kirk Kerkorian with $10.6 billion followed by Sumner Redstone with $7 billion.)
Quieting skeptics
The deal caps what is becoming a career year for the 55-year-old businessman, who has long been viewed warily both by Wall Street and the medical establishment.
Not only has the sale of the generic drug maker made him big money, but it’s paid off for shareholders who have hung on to the stock through the company’s turbulent last few years.
Soon-Shiong long took criticism from analysts who thought he had milked APP’s generic drug profits to benefit his other company, biotech Abraxis Bioscience Inc.
But over the past year the biotech has seen rising sales of Abraxane a novel breast cancer drug he invented that is the first to be delivered by nanotechnology. That has helped quiet skeptics in the medical community.
Soon-Shiong said the APP sale came together relatively quickly after Fresenius made an unsolicited offer in the late spring, several weeks after he had decided it was time to retire as APP’s chief executive.
Soon-Shiong liked the sale, believing the synergies between APP Pharmaceuticals and Fresenius are good. The merger will allow APP Pharmaceuticals to enter the global generic-injectable drug market. Fresenius in turn gets a foothold in the growing U.S. generic drug market.
Soon-Shiong plans to stay on the board of the new Fresenius subsidiary, and he has a lot of incentive to do so. If APP beats certain core profit targets over the next few years, Soon-Shiong and other investors, including many of the company’s managers and employees could get an additional $6 a share by mid-2011.
Despite his wealth, Soon-Shiong has endured all sorts of setbacks, even before the criticism over how he handled the relationship between APP and Abraxis.
After leaving UCLA in the late 1980s, a company he founded to commercialize artificial pancreas technology faltered after feuding among investors and partners, including one of his two brothers.
And Soon-Shiong got some of his early money and other assistance to launch APP’s predecessor in 1996 from Premier Inc., then one of the nation’s largest hospital buying groups for hospitals.
That investment came back to haunt him a few months after APP’s $144 million initial public offering in December 2001 when Premier was accused of conflicts of interest by steering its customers to American Pharmaceutical products.
Soon-Shiong declined to say whether the APP sale or the recent success of his nanotechnology left him feeling vindicated. But he did acknowledge his own personality traits helped him get through it all.
“From a perspective of pursuing what is right, regardless of what everybody else may say or not say, it is stubbornness,” Soon-Shiong admitted.
