Editor’s Note: The Business Journal this week is honoring Gavin Herbert with our first ever Lifetime Achievement Recognition.Â
My first venture at being an entrepreneur came at the age of 12. We lived on a 10-acre farm in the San Fernando Valley where we grew a variety of fruit. I put a classified ad in the Los Angeles Times for selling apricots at a roadside stand. Before 6 a.m. on a Saturday morning, more than 40 cars were lined up. Because of scarcity caused by rationing during World War II, buyers canned the apricots.
We made $300, which was a lot in those days.
Once the war ended, no one lined up.
My father ran a pharmacy where he started a small ophthalmic business above one of his drugstores in Los Angeles. In 1950, one of his friends, Stan Bly, came by with an idea for the first antihistamine eye drop called Allergan. I was 18 years old when I began helping Stan in a 1,000-square-foot lab. We got up to about $25,000 in annual sales.
About three years later, trauma hit our little company when sadly Stan died of a heart attack, my dad was hospitalized for months after a car accident and the Navy drafted me because I had bad grades at USC.
While stationed as a corpsman in San Diego, I was able to sneak up to stabilize the company during my free time on weekends. When I got out two years later, the company’s sales were about $100,000 a year. I talked my dad into letting me try to build it into a real company.
In 1961, we hit our first million dollars in sales and moved to Orange County where we built a little 30,000-square-foot plant in Santa Ana. We decided to specialize in ophthalmology and surround the eye doctor with a range of products. The big companies weren’t pursuing this industry, and the FDA had recently changed the rules to require eye drops to be produced in a sterile manner. Previously, pharmacies made eye drops, but they weren’t sterile.
When contact lenses entered the market in the 1960s, we invented a wetting solution for hard lenses called Liquifilm. We also became a big supplier for wetting solutions for soft lenses.
Why did I pick Orange County? The reality was that I had a sailboat in Newport Harbor, and I loved to sail. Fun little fact: As a teenager, I crewed on Humphrey Bogart’s sailboat. I once met his wife Lauren Bacall, who was as beautiful as in the movies. I was supposed to crew Bogart’s boat in the Trans-Pacific Race, but he got called to Africa where he made a movie that became quite popular – “The African Queen.”
In 1967, Allergan acquired a 24-acre industrial site from the Irvine Company and built a new 100,000-square-foot production facility. We created a master plan with architect Bill Blurock. After going public in 1971, we built a new six-story headquarters building that included research. I put in a little park with a track, a baseball field, tennis courts and exercise areas.
We were a startup company that nobody knew anything about, so we had to do some things to differentiate ourselves. We focused on good facilities because you spend most of your life at work. We did a lot of things to encourage creativity and fun.
We were bootstrapped by our own funding until we went public in 1971 with annual sales around $10 million. After being in business for 20 years, it was at that time that I realized we would become successful. I think one of the reasons for Allergan’s success was our focus on recruiting and training smart people. I am very proud that so many former Allergan team members have become leaders in the pharmacy industry.
The New Startups
About the time of the Allergan IPO in 1971, I was spending time on my gardening hobby, and I would often visit a gardening center in Costa Mesa, where I became good friends with its owner, Roger McKinnon.
I initially invested a minority share in his little company. Circumstances changed and Roger decided to go into real estate, and I ended up buying the nursery business.
In 1975, I moved Roger’s Garden to Newport Beach where it still resides today. Roger’s is celebrating its 50th anniversary this year since opening in Newport. My son Gavin Jr. manages the business that now includes the Farmhouse at Roger’s Gardens.
At Roger’s, we created a product that provided slow-released oxygen that prevented plants from being overwatered. We later created a product for outdoor use. We were demonstrating it one time at a conference in Las Vegas for golf course superintendents. Next door were some PhD scientists in the environmental industry, and they came to our meeting looking for a source of slowly released oxygen to be used in stimulating bacteria to reduce contamination from oil fires. They wanted to buy this stuff.
I had my manager take off for a couple weeks to find out what this was all about. We learned that the government had established new rules for gasoline tanks at gas stations. Our initial business was cleaning up leaky gas stations.
That’s how 30 years ago, I started Regenesis to clean up contaminated ground water. We developed a strategy to surround contaminated ground water with a whole range of products. We’ve treated 30,000 sites around the U.S.
Time magazine recently named our product SourceStop as one of the 200 best inventions of 2024. It was a nice surprise. SourceStop works to eliminate the risk of per and polyfluoroalkyl substances – also known as forever chemicals – in soil and groundwaters. The product acts as a soil filter, reducing concentrations of the pollutants by up to 99%.
I remain chairman, and we have an excellent CEO, Scott Wilson. We have about 120 employees and sales are running at about $50 million annually.
About four years ago, I got involved in starting a new biotech company called TechImmune, which is a joint venture with the University of California, Irvine. When COVID-19 hit, a researcher who was studying a vaccine for herpes came up with a concept that he could design a longer lasting COVID-19 vaccine that wouldn’t be affected by all the variants as the current ones are.
Initially, I was very skeptical. But when the researcher received a $4 million NIH grant, I got my Allergan research team to evaluate it. We decided to bring the best vaccine specialists from around the world to help us determine its potential – they gave it an enthusiastic thumbs up. I recruited Dr. Jeffrey Ulmer, who was global head of External Research at Novartis and head of preclinical R&D US at GSK Vaccines, as CEO
We think we’ve proven the principle in animals and now we’re ready to test it in human trials. It will be a more effective COVID-19 vaccine, so you won’t have to have a new one every six months.
In 1980, I bought Richard Nixon’s Western White House in San Clemente. My wife Ninetta and I spend most weekends there with family and friends. The Herbert family has grown where Ninetta and I have 5 adult children, 11 grandchildren and 10 great grandchildren and most live in Orange County. The history there is amazing. The Nixons owned the property for 12 years, including when he was president. The property is now protected by The Mills Act, which is designed to preserve historic properties.
The Big Secret
Of course, Allergan was the big score.
During a 20-year period after we went public in 1971, our sales climbed 20% annually.
After my father passed away in 1978, we merged for tax reasons with the big pharma company SmithKline Beckman. However, it didn’t work out and in 1989, we were spun out and became a public company again.
One of our secrets was listening to customers about their needs.
In the early 1990s, I got a call one day from Dr. Alan Scott in San Francisco, who talked to me about Botox to treat cross-eyed patients, which was a very small market. I started to say no, but our strategy was to surround the eye doctor with a whole range of products. We thought Botox might be used to treat other new indications such as juvenile cerebral palsy and torticollis. We ended up licensing it. Suddenly, we thought instead of a $10 million product, it might be a $50 million to $100 million product.
As time went on, doctors continued to experiment with Botox, finding uses like treating migraine headaches. By 2000, it achieved $100 million in sales.
Initially, I didn’t think it’d ever get FDA approval for wrinkles. It’s a cosmetic procedure and the drug is the most potent in the world. The clinicals were so good with the efficacy at 90% and the side effects were very limited. Dermatologists found they could sell it and make people happy and feel young again.
Only 40% of Botox sales are for wrinkles while the rest is for other medical indications like post stroke paralysis, urinary incontinence or migraines.
Now, 24 years later, annual sales are around $7 billion, which is amazing because the patents don’t exist anymore.
Our company was doing great under the leadership of our then CEO David Pyott. Then in 2014 a disastrous hostile takeover bid began. We were attacked initially by a company that was a house of cards; we were totally vindicated on how flaky this activist company was.
Pyott did everything he could to avoid a hostile takeover, and we eventually made a friendly merger with a company that changed its name to Allergan. That wasn’t a wonderful experience because they did the easy short-term way to profit by cutting critical expenses like research. In 2020, it was acquired by AbbVie, which has been a good parent by investing in research. I still own shares, which has made me happy because they’ve doubled since we did the AbbVie deal.
Retirement at 93? I recently read an article in the Wall Street Journal and the bottom line is – don’t.
My friends who have kept busy have done a lot better than those who haven’t. I remember Arnold Beckman in his 90s would go to his labs to speak to researchers and the new PhDs. My good friend lived to 104.
