What the doctor ordered

Back in 2003, what was to become Staffordshire-based Focus Pharmaceuticals sat within ADL Healthcare, and it was not sitting entirely comfortably. Across the rest of the business, ADL management was looking for a return period of a matter of months for any investment. Focus had a very different business model. Between £100,000 and £250,000 was required to get its generic drugs to market, which involves a two-to-four-year development cycle. This investment would take up to two years to make a return.

As a result, a buy-out was on the cards. Plans were set in motion involving three directors at ADL – Mark Cresswell, who subsequently became managing director; Roland Brown, business development and marketing director; and Ray Maginley, medical and regulatory affairs director.

Prior to the buy-out, Richard Grethe was finance director of Celltech in the UK – a branded drugs company. However, he worked up the business plan with the team, planning to join them in the buy-out and knowing the MBO needed funding, because it would be cut loose from the overdraft facility it had under ADL.

"In a way, it did help that I was independent from the team," says Grethe. "There had to be an element of trust between us – I was relying on the numbers the other guys were supplying me. "As I knew I was going into the business I had to be sure it all stacked up, as well as the business and the management team."

The buy-out

In November 2003, the buy-out of the embryonic new company was completed. An angel investor who knew the business and the management team backed the MBO and provided the initial seed capital. There had been other offers, but for the team it was important to have a backer they knew and trusted too.

"You need understanding from an investor at that early stage," says Grethe, who joined the board in 2004. His investment stake was very small, but for him and the team it wasn’t the cash which was the real skin in the game.

"The real risk we were taking was the opportunities given up elsewhere," he says. "I gave up a great salary, a guaranteed bonus, career progressions in a secure business in a large company, a wonderful final salary pension scheme and lots of opportunity and travel, for a twice-a-week commute to the Midlands from London – with all due respect to the Midlands. It might or might not come off. "We all gave up a lot, but that was quite invigorating. It really made us work. You do not want to be part of a failed business – you put everything into making it work."

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