Auckland businessman and chemist Sir Graeme Douglas has died, at the age of 87.

He started Douglas Pharmaceuticals in 1967, a firm which today has more than 450 staff.

He stepped down from its day-to-day business in 2014, leaving the management to his son, Jeff.

But he remained active in business, with Douglas Nutrition, a specialist nutritional supplements company.

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Jeff Douglas sent a message to Douglas Pharmaceuticals staff, telling them his father had died peacefully overnight.

"He was surrounded by family and in the comfort of his own home. For 87 years he lived a very healthy life, apart from a few replacement joints, and that is something we are all grateful for," he said.

"Unfortunately he was unable to shake the lung infection he acquired in hospital despite the wonderful care from numerous healthcare professionals. Dad's greatest passion was the company and even in his illness he maintained a strong interest in the company's activities."

He said the family and company had "lost a legend". "But together we can continue his legacy."

Douglas Pharmaceuticals got its start when Douglas created a cough syrup called Kofsin, while working as a chemist in Te Atatu, West Auckland.

Demand for it grew to the point where had to contract manufacturing chemists to maintain enough supply.

The next step was to begin importing niche pharmaceuticals and packaging them at his shop before distributing them to other pharmacists.

The chemist shop was turning over $2 million when Douglas sold it in the late 1970s to focus on the new pharmaceuticals business, which shifted to new offices and warehousing in Henderson, also in west Auckland.

By the early 1980s Douglas Pharmaceuticals had about 40 products and a $5m turnover. By the late 80s revenue leapt to $25m - 90 per cent earned domestically. Ten years later it was clocking up sales of more than $70m a year.

Today, the company manufactures products sold in 35 countries.

Douglas and his wife, Ngaire, donated an MRI scanner to Starship children's hospital, its single-largest personal donation.

Douglas was knighted in 2010 for services to philanthropy and athletics and in 1988 was appointed a member of the New Zealand Order of Merit for services to the New Zealand pharmaceutical industry.

He was patron of West Auckland Hospice.

CEO Barbara Williams said she would miss his advice and thoughtful contribution. "Sir Graeme graciously shared his encouragement, great leadership and support with me in my role as CEO, for which I am eternally grateful. He will be hugely missed by everyone. Sir Graeme's generosity enabled us to establish our original social care team, from employment right through to vehicles, keeping them on the road visiting patients and families in their own homes. This means we have one of the most extensive social care services of New Zealand hospices."

Economic Development Minister Steven Joyce tweeted his condolences: "Sorry to hear of passing of Sir Graeme Douglas of Douglas Pharmaceuticals. A great Kiwi innovator and exporter."

A funeral will be held next Wednesday.

Jeff Douglas said it would be a day to celebrate his success. "We will have a function at the company premises, because that's where his heart was. My father still went to the Te Atatu pharmacy sometimes to get his prescriptions."