HI-TECH PHARMACAL TARGETING GENERIC Rx-TO-OTC SWITCHES as a "significant opportunity for growth," the Amityville, N.Y.-based firm said in a May 12 preliminary prospectus for an initial public offering. Although Hi-Tech previously has focused almost exclusively on generic versions of established OTCs for the private label market, the firm has filed 13 ANDAs since early 1991 and hopes to achieve growth through "the introduction of generic products for which patent protection is expiring or, in some cases, 'prescription only' status is being changed to over-the- counter status," the prospectus says. The company does not name any specific Rx-to-OTC candidates, but notes that it "is presently selecting and will continue to select and develop drugs it expects to market several years in the future," the prospectus states. To date, Hi-Tech has received one ANDA approval, for diphenhydramine cough syrup (the brand name equivalent is Warner- Lambert's Benylin). Based on FDA responses to the company's other ANDA filings, Hi-Tech expects to receive approval for most of its submissions within the next six to 18 months, the prospectus says. Additional ANDAs for various formulations of two other drugs will be submitted to the agency "within the next few months." The company is also in the process of obtaining approval from the Drug Enforcement Agency to manufacture and sell generic products containing codeine. "If such approval is obtained, the company expects to manufacture initially five to six cough syrups containing codeine," Hi-Tech noted. A "substantial" portion of the estimated $5.3 mil. in proceeds from the 1 mil. share offering will go towards the construction of a sterile facility for the manufacture and development of a line of generic ophthalmic products, Hi-Tech said in the prospectus. Laidlaw Equities is underwriting the proposed offering of 1 mil. shares at $7 per share. Hi-Tech estimates the cost of completing the sterile facility at approximately $2.6 mil. The firm expects the facility will be in operation within 12 to 15 months after the initial offering is completed. The generic firm's sales for the nine months ended Jan. 31 were $5.2 mil. Hi-Tech markets its line of 75-plus cough/cold, decongestants, vitamins and nutritional products to approximately 200 customers, including private label distributors, drug store chains, mass merchandisers, drug wholesalers, mail-order distributors and local, state and federal government agencies. Darby Drug has accounted for 30% of the company's revenues for the past two years. Hi-Tech's own H-T brand contributes approximately 20% of the firm's sales. Hi-Tech is headed by President and CEO Bernard Seltzer, former VP-sales and marketing for the predecessor company Ketchum Labs. VP-Operations Elan Bar-Giora previously was exec VP of operations for Freshlabs, a subsidiary of the nutritional manufacturer P. Leiner. Hi-Tech has 61 full-time and 13 part-time personnel.
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