ICN Pharmaceuticals Inc. said Wednesday that fourth-quarter profit fell 80%, missing already reduced estimates, as costs rose while royalties fell from its biggest product, the ribavirin hepatitis drug.
Costa Mesa-based ICN said profit from operations fell to $7.6 million, or 9 cents a share, from $38.4 million, or 47 cents, a year earlier. The results were below the 10-cent average estimate of four analysts polled by IBES International Inc.
Revenue fell 1.6% to $209.2 million from $212.5 million, as ribavirin royalty payments dropped 9.8% to $30 million.
The slowdown in ribavirin sales came as Schering-Plough Corp.--which sells Rebetron, a combination of ribavirin and Intron A, in the U.S.--sought U.S. regulatory approval for an improved combination of the drugs. That made doctors reluctant to prescribe the original Rebetron formula, ICN said.
"They have some margin pressure and they lost some share of the market," said Morton Cohen of Clarion Capital, which owns ICN shares. "Everyone is going to take their [earnings forecasts] down."
ICN shares fell $1.35 to close at $25.21, and Schering-Plough shares fell $2.32 to close at $38.78, both on the New York Stock Exchange. ICN shares have fallen 10% since the company said in January that 2000 earnings were less than expected. Before the company reduced its guidance, the average analyst estimate in an IBES survey was a fourth-quarter profit of 51 cents a share.
The company took a charge of $3.2 million for early retirement of debt, making net income $4.3 million, or 5 cents a share, for the quarter. There were no charges or gains a year earlier.
ICN also said research and development expenses rose to $19 million from $11 million for the year. The company expects research spending of $45 million for 2001.
ICN said in October that it plans to split into three companies, a move that Chairman Milan Panic agreed to as investors pressured him to give up some control over the company.