"My father-in-law, a dear man, gave me a wonderful gift. He told me, 'If you want to marry my daughter Myrna, you'll have to join the board of governors of Hebrew University.' The ties with his daughter, and through her with the university, are one of the most important of my life," businessman and philanthropist Isaac Kaye told "Globes".
Few people admit that their father-in-laws have such involvement in their lives, especially when it leads them to a relationship that costs quite a bit of money. Kaye, 80, a former top executive in Europe's generic pharmaceuticals industry, was a partner with Philip Frost in Ivax, which they sold to Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) for $7.4 billion in 2006, is one such man.
Although Kaye had retired before the sale of Ivax, he was still a partner in the company, and he made hundreds of millions of dollars on the sale, which turned him into a billionaire.
In 1993, Kaye established the Kaye Innovation Awards at the Hebrew University of Jerusalem. Prizes awarded to date have totaled millions of dollars, on top of his tens of millions of dollars in donations to the university. The awards are granted to inventors who improve the human condition and contribute to the university, which earns royalties from them.
Kaye has been expanding applied research activity in Israel in recent years. He and his son, Steven Kaye, are partners in Israel Healthcare Ventures Ltd., alongside managing partner Dr. Hadar Ron. Isaac Kaye told "Globes" that this led him to become more active in Israel's life sciences industry.
A resident of London, Kaye makes frequent trips to Israel, and his two brothers live here. "That's how things turned out," he says, "I was born in Rhodesia, a British colony at the time, so it was convenient for me to go into business in the UK. But I have already informed my family that at the end of my life, I want to grow old in a facility on the beachfront in Herzliya, just like my brother."
Kaye's roots are in the Jewish community of Southern Rhodesia (now Zimbabwe). He never imagined that he would achieve such success in the international arena, starting as a pharmacist in the family business and becoming the generics tycoon of southern Africa.
"I had a pharmacy," Kaye relates. "The market was undeveloped, and I opened a chain of pharmacies. I then began producing generic drugs and marketed them across southern Africa. I even bought products from Teva, which wasn’t yet called that, which I marketed in the Congo."
"Globes": What was it like as a pharmacist in Rhodesia in the 1960s?
Kaye: "It was fine at first. It was an advanced colony in terms of culture, infrastructure and technology, but I didn’t feel that it was my country. I'm the ultimate wandering Jew."
In the 1960s, when political friction began in Rhodesia, the Kaye family moved to South Africa. "Since we had developed our business across the continent, the move was fairly easy and necessary," he says.
In South Africa, Kaye expanded his pharmacy empire, spreading across most of southern Africa. "That's how it is when you get on the train to success," he says. "Afterwards, you don’t want to get off. A man strives for success in what he does, and it's not a matter of money."
Kaye's time in South Africa was not always smooth. He aroused local ire, partly because he supported the Nationalist Party, which created the Apartheid regime, and because he was a generous philanthropist to doctors and hospitals and therefore accused of buying the market. In his defense, he says that all he wanted to do was to show his appreciation for these doctors.
Today, with no connections to South Africa, he says that his donations to the Hebrew University are "the best way to show my appreciation for these researchers. How else will they finance their studies?" In his eyes, he is consistent.
"We supported the Nationalists, and it ultimately made a deal with Nelson Mandela. I previously tried to broker a similar deal in Rhodesia, but it failed, and today Zimbabwe is a failed state."
Kaye subsequently left South Africa for political reasons. "We thought there would be another revolution," he says. Myrna adds, "In the end, this wonderful man, Mandela, was released, and that saved the situation. Mandela is amazing, but so was Frederik de Klerk, the last leader of the Nationalists, because he created a dialogue with him. The work of the Truth and Reconciliation Commission that was set up to shed light on the atrocities of the Apartheid regime and to give its victims a sense that their voices were heard, was very important."
The next question that begs to be asked is whether this can teach something about the political situation in Israel.
"Yes. You have to talk with the enemy. If wise people talk with each other, it's possible to find a solution. If you don’t talk - that's a total disaster. I love to talk with Arab students at Hebrew University. I don’t feel that they are different from me or from the Jewish students."
While all this was happening in South Africa, the Kaye family was establishing itself in London, where they arrived in the mid-1980s. Kaye founded a flourishing generics company Harris Pharmaceuticals Ltd., which went on to become Norton Healthcare Ltd., which in turn was acquired by Ivax Corporation, which was acquired by Teva.
How were you able, as a new immigrant from South Africa, to establish a successful generics drug company in Britain? "I sold the South African business at a price that I will keep to myself, but which I am prepared to say left me financially comfortable. Before that, I invested a bit in the British generics market. The market flourishing was at the time, after changes in US law, which created many opportunities.
"At that time, my friends at Teva chased after me to acquire us, but I felt that the time was not right. We still had to grow."
Kaye quickly established himself in the UK, becoming a major donor to the Labor Party, activity that once again created political opponents. Meanwhile, Norton Healthcare spread from the UK across Europe.
Kaye met Philip Frost, the founder of Ivax and now the chairman of Teva, through a mutual friend. "We went on a family holiday together. The personal click was instantaneous, partly because of our love for Israel. There was also clear synergy between our companies."
Kaye sold Norton Healthcare to Ivax in a deal that gave Kaye ₤25 million and a stake in the merged company. The size of the holding is still confidential. Norton became Ivax UK Ltd., and Kaye served as chairman.
Ivax competed against Teva in Europe, and Kaye fondly remembers the rivalry. "Eli Hurvitz did wonderful work at Teva. He's a great man, a great Israeli. A man of the people."
Where do you think the generics market is headed?
"Only up, for the same simple reasons that is driving the growth of the brand drug business - the population is aging, emerging markets are entering the circle of health payers, and people's growing awareness about their health."
The brand companies' battle against the generics is particularly sensitive in Africa. In the 1990s and early 2000s, African countries and their lobby in the West called on big pharma not to protect their patents in Africa, for humanitarian reasons. Big pharma companies initially fought back, but public opinion defeated them, possibly combined with business considerations.
"The big companies were all right in this matter," says Kaye. "They understood that it was better and cheaper to forego patents in the African market, and maybe even certify local companies to manufacture drugs for them. Microsoft founder Bill Gates was a great help. Today, the companies sell drugs at basement prices to the Gates Foundation, and he donates them to patients, because the pharmaceutical companies agreed to this model. A man can contribute from his assets or from himself. Gates gives from both, and I also prefer such a donation."
In addition to his philanthropy to the Hebrew University, Kaye has ties with IHCV, which was co-founded by the late Prof. Uri Levitt and Dr. Hadar Ron. Kaye says with regret, "He did not even have a year with us. Hadar has what it takes for the job. He's a lawyer, doctor, and inventor. The fund is successful and working with it very satisfying. We've founded 24 companies, had seven exits, and closed only two companies. I and my son, Steven, not only gave money, we're really involved in managing the fund."
Ron says, "The fund was set up at the time of the classic model, but we have a rule: our investment committee, which comprises the partners, must make unanimous decisions. We don’t restrict ourselves to a field within medical devices or a company stage. The pace at which a company develops does not necessarily determine how close it is to an exit. Late-stage companies sometimes get stuck, and early-stage companies sometimes suddenly have an exit. It's impossible to know."
IHCV has had the sense or luck to invest in companies that subsequently made quite rapid exits, such as ColBar (sold to Johnson & Johnson (NYSE: JNJ) for $159 million in late 2006, but closed down in late 2009) and Optonol (sold to Alcon in late 2009). IHCV made a 50-fold return on its $1.5 million investment in Syneron Medical Ltd. (Nasdaq: ELOS).
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2011
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