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ICN Reports Record Sales, Profits in '96

Earnings: Results provide relief for firm beset by woes. Credit is given to Eastern European strategy.


COSTA MESA — Crediting its Eastern European strategy for most of the growth, ICN Pharmaceuticals Inc. reported Tuesday that its earnings and sales set records last year.

The drug maker said its profit rose 29% in 1996 to $86.9 million, or $2.40 a share, from $67.3 million, or $2.20 a share, in 1995. Sales rose 21% to $614 million from $508 million, ICN said.

Despite the gains, ICN's stock price dropped by 75 cents a share to close at $25.125 in moderate trading on the New York Stock Exchange.

But analysts said the decline didn't appear to be linked to the company's performance. "The Dow was off 66 points today, and I think it just fell with the market," said Norm Oremland, a broker with Baltimore-based Legg Mason Wood Walker Inc. "The stock is still up 25% from Dec. 31." Legg Mason holds about 2 million shares of ICN stock for various clients.

The record results provided some welcome relief for a company that has been immersed in controversy, including sexual harassment lawsuits and a federal securities probe, all aimed at Milan Panic, its chairman and chief executive officer. The company has denied violations of securities rules and Panic and ICN admitted no wrongdoing in settling two of the three sexual harassment suits in recent months.

Those problems were ignored Tuesday, though, as Panic spent 15 minutes on a telephone conference call telling securities analysts and brokers how happy the company is with its 1996 performance.

ICN said profit in the fourth quarter soared almost 53% to $29 million, or 74 cents a share, from $19 million, or 61 cents a share, a year ago. Sales rose 59% to $174.3 million from $109.4 million.

ICN said that almost all of its sales increase for the year came from its push into the newly opened markets of Eastern Europe, where Panic has deep roots. He was born in Yugoslavia, fled the country during World War II but retained close ties there. He recently served for a year as Yugoslavia's prime minister. In 1996, ICN acquired two Russian drug makers and one Hungarian pharmaceutical manufacturer. It already owned a third Russian drug company and a major Yugoslavian drug maker and distributor.

Combined 1996 sales of ICN's Eastern European operations rose 39% to $355 million from $255 million, the company said. ICN Yugoslavia accounted for 75% of that total, or $267 million in sales, the company said.

Chad TunisC, a Legg Mason broker in Pennsylvania who participated in the telephone conference with ICN officials Tuesday, said the company told brokers and analysts that it is tripling the size of its production facilities in Belgrade and that it expects Yugoslavian sales to top $300 million this year while Russian sales could climb to $150 million from $67 million in 1996.

Latin American sales rose 13% to $49 million from $44 million, reflecting continued improvement since the devaluation of the Mexican peso, ICN said.

In North America, however, ICN's sales fell slightly to $141 million from $144 million last year. The company said the decline came largely from a drop in demand for its proprietary product, ribavirin, which is marketed as Virazole. Sales of the drug represented less than 5% of total revenue. ICN said Virazole sales in the first quarter this year are expected to be "negligible" compared with $8.1 million in the first quarter of 1996.

The company is not abandoning the drug that it has nurtured for nearly two decades, though. It is pushing for approval in Western Europe of a combination therapy for hepatitis C using ribavirin and Schering-Plough Corp.'s alpha interferon.

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