ICN Pharmaceuticals Inc.'s largest shareholder, renewing its effort to change the company's management, said Friday the Costa Mesa-based drug maker needs a new chief executive to lead its U.S. operations.
ICN Chief Executive Milan Panic, a former Yugoslavian prime minister, could then focus on the company's European business, said Heartland Advisors Inc., which said it holds about 5.2% of ICN's shares.
Heartland disclosed its latest recommendation in response to a restructuring plan that ICN announced June 15.
"There has to be some pretty significant changes," said Eric Miller, fund manager with Heartland, which failed in attempts during the previous two years to persuade shareholders to pass a motion that would have imposed a mandatory retirement age of 70 for board members, forcing Panic, 70, to retire when his term expires this year.
Heartland will decide how to proceed after discussing its concerns with ICN as well as other institutional shareholders, Miller said.
ICN could not be reached for comment.
ICN's restructuring plans include an initial public offering of stock in its biotechnology business, which would own rights to the blockbuster hepatitis C drug Ribavirin. It also announced a partial spinoff of the unit running its international operations, including those in Eastern Europe.
ICN would own more than 80% of both units, with Panic as their chairman. The plan disappointed investors, sending the stock into a 20% decline the day it was announced.
Heartland said it intends to spell out its objections in a report with the Securities and Exchange Commission. Heartland also is sending letters to ICN's directors regarding the reorganization.
"It is our belief that one of the major reasons for the undervaluation of ICN is the market's skepticism of Mr. Panic's leadership," William Nasgovitz, Heartland's founder and president, said in a release. "This skepticism comes from, among other things, the multitude of legal actions undertaken against him. Also, under Mr. Panic's stewardship, the company has experienced uneven financial performance."
ICN shares moved up 6 cents to $27.81 Friday on the New York Stock Exchange. The stock traded as high as $35.81 a month ago.