Pan Pharmaceuticals founder Jim Selim dies but class action against Government to continue

The founder of Pan Pharmaceuticals, Jim Selim, has died at the age of 68, but a Federal Court class action over the Federal Government’s role in the 2003 collapse of his company will continue.

Selim, who had battle leukaemia for several years, was at the centre of a nationwide scandal in 2003 when the Federal Government’s Therapeutic Goods Administration closed down Pan Pharmaceuticals’ entire production and recalled all of the company’s products after complaints that its travel sickness medicine, Travacalm, had caused hallucinations in some people.

Within months, Pan was in voluntary administration and in 2005 it went into liquidation. Shareholders lost $350 million and Pan’s customers – mostly pharmacists and other retailers – lost hundreds of millions in lost sales.

Selim went on to sue the Federal Government over the collapse and in August 2008 was successful when the Government decided to settle his case with a $55 million payment to Selim.

“I alleged that these people (the TGA) were motivated by a wrongful sense of vengeance,” Selim said after the judgement.

“I alleged that these people knew full well the catastrophic effect their decision would have on Pan, its employees, customers, service providers, shareholders and of course, my family and I, both financially and personally.”

Selim’s victory opened the way for Pan’s suppliers, customers and distributors to launch a $120 million class action against the Government.

Selim had been due to give evidence during that case, but his illness meant his participation was limited.

However, the case will continue.

Selim, a Cairo-born pharmacist who established Pan in 1974 with a staff of four people, was a controversial and colourful figure in Australia’s pharmaceutical sector.

In 1996, Pan had its first big run in with the TGA when Pan Laboratories (a subsidiary of the Pan Group) was found guilty in the NSW District Court on 13 counts of illegally supplying and exporting therapeutic goods. The TGA alleged the company imported nine million capsules of evening primrose oil from an unaccredited company in Thailand, instead of the approved Canadian supplier.

The company was fined $280,000, but the judgment was later overturned and a new trial ordered. But the new trial never took place because Pan Laboratories went into voluntary liquidation in 1999.

Selim told the ABC’s Australian Story program in 2003 that the 1996 case was the start of the souring of the relationship between Pan and the TGA.

“We didn’t make any big deal out of it. We moved on,” he told the program. “And unfortunately, some people didn’t manage to forget this and managed to have long memories.”

Selim listed Pan on the Australian Stock Exchange in 2000 and made the BRW Rich 200 for the first time in 2002 with a fortune of $210 million.

But just 12 months later, Selim’s fortune evaporated after the TGA’s decision to shut Pan’s factories and recall more than 1,300 of its products.