Sir Graeme Douglas, the founder of Douglas Pharmaceuticals, has died at the age of 87.

Sir Graeme launched Douglas Pharmaceuticals in 1967 and grew the business to an international exporter which today employs 450 staff.

Staff were told of his passing away this morning in an email by Sir Graeme's son Jeff Douglas who took over as managing director of the company in 2014.

"It is with deep regret that I advise you all that my father passed away peacefully last night, " he wrote.

"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."

Jeff Douglas said his dad's greatest passion was the company and even in his illness he maintained a strong interested in the company's activities.

"On September 1st we lost a legend but together we can continue his legacy."

In 2010 the family behind Douglas Pharmaceuticals gave the Starship $3 million, the largest personal donation ever for the children's hospital, to help pay for a new medical scanner.

Sir Graeme, a regular donor to the Starship, said he and his wife quickly decided to make the donation after he was taken on a tour of the hospital and learned the Starship Foundation charity was trying to raise money for the scanner.

"It gives us great pleasure to ensure Starship hospital has its own MRI facility to avoid the delays and discomfort currently experienced by young patients," he said at the time.

In the same year Douglas was made a Knight Companion of the New Zealand Order of Merit in the honours. He received the award for his services to philanthropy and athletics.

Douglas Pharmaceuticals began as a marketer and distributor of over the counter medicines in New Zealand and began manufacturing generic medication in 1980.

By the 1990s it expanded its focus to the export market.

Today its domestic operation have grown to be worth more than $57 million annually and it supplies close to 30 products to more than 35 countries around the world.