Nephron’s Implosion: Another Crony Capitalist Case Study

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by WILL FOLKS

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One of the guiding principles of this media outlet over the years has been that markets should be free and fair – unencumbered by government distortion, manipulation or favoritism. Politicians’ use of tax dollars to subsidize economic development is wrong – irrespective of whether the bet “pays off.”

In South Carolina, though, crony capitalist bets rarely pay off. Corporate welfare in the Palmetto State isn’t just an exercise in corruption… it’s an exercise in failure.

Over and over and over…

Promises are made and ribbons are cut… but the return on investment is rarely if ever what was originally promised.

One company which has consistently failed to deliver on its promises? West Columbia, S.C.-based Nephron Pharmaceuticals – a company which fled Florida under a cloud of scrutiny and rushed into South Carolina’s welcoming arms a decade-and-a-half ago. Late last month, we reported exclusively on Nephron’s latest troubles with federal investigators. This month, reporter Hannah Wade of The (Columbia, S.C.) State newspaper dropped an explosive story up on the company’s failure to pay nearly $1 million in property tax bills to Lexington County – among other serious issues.

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Per Wade, Nephron’s tax bills “sit unpaid as the company’s headquarters was listed for sale-leaseback in late August and as Nephron and its affiliate companies owe, or have owed, various contracting companies millions of dollars.”

All told, Nephron owes Lexington County $950,108 – including an estimated $125,000 in penalties, per Wade’s report. The company is currently attempting to sell its property and lease it back as a way to reduce its total debt load, sources familiar with the situation told FITSNews.

Worth recalling? Nephron was given a massive property tax break by Lexington County officials when it opened its facility in 2011 – part of the tens of millions of dollars in taxpayer-funded incentives it has received over the past fifteen years. Even with its subsidies and massive tax break, Nephron cannot pay its bills.

Wade also referenced Nephron undergoing a “tumultuous audit” by the S.C. Department of Revenue (SCDOR). That audit reportedly involves a “discrepancy” in the job development tax credits the company receives from the state.

Political mega-donor and Upstate businessman Dan Adams – who owns Nephron’s newest facility, Nephron Nitrile – told Wade his company would pay “every penny of tax due.”

Prior to Wade’s report, Adams’ involvement in the new Nephron facility – which purports to produce “American-made” medical-grade gloves – had not been previously reported. Nephron officials refused to tell Wade whether the parent company’s embattled chief executive officer, Lou Kennedy, still had an ownership interest in the glove plant. They also refused to provide Wade with the company’s most recent job numbers – or answer questions about the SCDOR audit.

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RELATED | FDA STILL INVESTIGATING NEPHRON

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Nephron’s pharmaceutical division has previously touted its products as being “proudly made in the USA” – but the company ran afoul of the Federal Trade Commission (FTC) after Kennedy admitted on a conference call purchasing “most all of my active pharmaceutical ingredients from Europe and other countries.”

As we have meticulously documented over the years, Nephron has been in constant trouble with the U.S. Food and Drug Administration (FDA). Last week, we reported on the FDA’s latest activity at Nephron – which comes months after the company’s top human resources officer all but accused its leaders of an alleged cover-up related to the federal investigation.

Despite the drama, Nephron has remained a darling of South Carolina crony capitalists – most notably former governor Nikki Haley. It was Haley who spearheaded the Palmetto State’s initial subsidies for Nephron, but others have since followed her lead. When the company opened its new glove facility in December 2022, for example, governor Henry McMaster and lieutenant governor Pamela Evette both attended the ribbon-cutting.

These politicians have received significant campaign cash from Kennedy and Adams over the years – with Adams currently serving as the chairman of a political action committee supporting Evette’s 2026 gubernatorial campaign.

So, let’s get this straight: Adams can find the money to help subsidize Evette’s candidacy… but his company can’t pay its tax bills in Lexington County?

In an email to employees obtained exclusively by FITSNews, Kennedy tried to put a positive spin on the situation.

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“Nephron Pharmaceuticals is not going anywhere,” Kennedy proclaimed, addressing the company’s decision to put its property up for sale. “As part of our long-term business strategy, Nephron is continuing to reduce costs by restructuring its debt. Nothing more than that.”

“We are incredibly proud of the progress we have made,” Kennedy’s email continued, touting Nephron’s “growing presence in Lexington County.”

“And we are just getting started,” she said.

Kennedy’s email to employees also confirmed our reporting on the recent FDA activity on Nephron’s campus, referring to it as an “audit.”

As always, count on FITSNews to keep our audience in the loop on the latest developments related to this troubled company…

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ABOUT THE AUTHOR…

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and eight children.

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