Los Angeles Business Journal: Quiet, deliberate Fu source of Syncor's growth

Robert Sanchez was standing at a blackjack table in Las Vegas years ago when Monty Fu, an old college acquaintance and business rival, sat down.

Fu, co-founder of Syncor International Corp., was a skilled card counter who quietly amused himself with his gambling prowess during breaks at a trade convention. "What a dichotomy," Sanchez said. "I thought, 'He's so quiet and reserved, but here he is doing something aggressive.'"

Sanchez later merged the company he founded, Nuclear Pharmacy Inc., with Syncor, quickly leaving after several clashes with Fu. "He did a lot of aggressive things that on the surface you would never imagine him doing," he said.

Exactly how aggressive is at the heart of an ongoing internal investigation to determine whether he and his brother Moses made $500,000 in payments to customers in Taiwan that might have broken U.S. and foreign bribery laws. Both have been on paid leave since the company disclosed the inquiries.

At stake, among other things, is a pending $1 billion merger with Cardinal Health Inc. of Dublin, Ohio. Cardinal and Syncor opened talks Nov. 21 to possibly modify terms of the pending agreement that would make Syncor a subsidiary of Cardinal.

Fu has a lot to gain - or lose - from that deal. He holds 7.8 percent, or 2 million shares, of Syncor stock, according to the most recent proxy statement, valued at $47.5 million based on the Nov. 20 close of $24.20. Under the terms of the agreement, Syncor shareholders would receive 0.52 Cardinal Health common shares for each share of stock. With Cardinal trading at $65 per share, Fu's holdings would be valued at nearly $65 million.

More broadly, the disclosures are a reminder that the ways of doing business can vary widely around the world and that in some regions - including Asia - payments, whether legal or not, are a part of the process.

"It certainly is the case that business practices around the world vary a great deal because cultures vary a great deal," said Donald Straszheim, president of Straszheim Global Advisors who spends considerable time in Asia. "There's a different line in different countries."

Little information is available on the nature or status of the Syncor investigation. Fu himself did not return phone calls, and executives and board members, some of whom have been with the company for a decade or more, wouldn't talk publicly while the investigation is underway.

But those who have had dealing with Syncor described 55-year-old Monty Fu as a shrewd businessman who fiercely, but quietly, controls the company's operations from the sidelines. "We called him the human calculator, both because he was calculating in the way he ran the business and because he could do complex math in his head," said Mark Hebner, a college friend who was his business partner for 10 years.

Quick mind

While still an undergraduate at New Mexico College of Pharmacy in the early 1970s, Fu latched onto the then-new idea of outsourcing radioactive medicines so hospitals wouldn't have to go through the complicated process of making the drugs themselves.

Radiopharmaceuticals are a combination of radioactive compounds and compounds that concentrate in specific areas of the body when administered. Specialized equipment can then detect the compounds to create images of internal organs and tissues. The procedure can diagnose heart disease, cancer and other disorders.

Son of a Taiwanese exporter, Fu started the business with Hebner. The two met at the New Mexico school in the early 1970s, studying the then-nascent field of nuclear pharmacy. After graduation, Hebner said, the two hit upon the idea of providing radioactive drugs to health care providers and in 1975 they co-founded a company called Pharmatopes Inc. in Toledo, Ohio. Fu's father, who was in the import/export business in Taiwan, backed them, Hebner said.

At first, the work for the two-man team was grueling. "We used to get up at one in the morning, get to work at two, mix up these drugs, deliver them to hospitals, come back and do sales until six at night' said Hebner.

Radioactive drugs are challenging to produce and deliver to hospitals because they lose their effectiveness over hours. To help make the job of timing production and delivery easier, Fu designed a cardboard slide rule device that simplified the necessary math, Hebner said. That tool eventually became in industry standard.

The company grew quickly, distributing to 30 locations around Toledo and Detroit within a few years, Hebner said. In 1982, Pharmatopes merged with two small companies - one, based in California, had just renamed itself Syncor.

Sanchez, who also had been a student at the New Mexico College of Pharmacy, graduated a year earlier to start up his own company, Houston-based Nuclear Pharmacy Inc.

Sanchez said he and Eu avoided competing in the same areas until the early 1980s when they had moved into most major cities and began eyeing each other's territory. In 1985, they agreed to a merger.

That marked the end of Hebner's 10-year ran. President of Syncor from the beginning, Hebner said he was edged out after the merger, taking away $6 million from the deal. Today, he's president of Index Fund Advisors, an Irvine investment management firm.

Sanchez and Fu became co-chief executives of the company, which assumed the Nuclear Pharmacy name, and while Sanchez described the relationship as "cordial," there were conflicts. The co-chief executive arrangement was short-lived, and as the two principals clashed over the terms of the deal, Sanchez said, he decided to leave the company within months of the merger's consummation.

"I don't think Syncor honored the spirit of that merger," said Sanchez. "So I decided to go." And the name was quickly changed back to Syncor.

The company, now headquartered in Woedland Hills, has 130 operations in 48 states. It employs 4,700 and had annual revenues in 2001 of more than $598 million. Overseas branches provide drugs and medical imaging services to customers on six continents.

Both Sanchez and Hebner still express admiration for Fu. "I have nothing but good things to say about Monty," Hebner said. "I think in light of all the problems that have gone on at Tyco and all that stuff, there's a propensity for making villains out of executives."