Case Study: Harvard Drug Group


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.

Investment Thesis

  • 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
Source: Proprietary
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.

Investment Results

  • 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.