Riding High on the Ribavirin Rainbow : Costa Mesa Manufacturer Pins Hopes on Antiviral ‘Wonder Drug’
In the early 1970s, ICN Pharmaceuticals Inc. didn’t know which way to turn first. On its laboratory shelves were the building blocks for 2,000 potential new drugs, just begging for arduous and costly development into effective, approved and--it hoped--lucrative medicines. But the young drug company could afford to pick only one.
After two years of study, ICN finally bestowed that honor on ribavirin, a compound the company says kills certain viruses by jamming their reproductive systems. A better choice couldn’t have been made, gushes Milan Panic, the chairman, president, chief executive and head cheerleader of the Costa Mesa firm.
Although ribavirin has yet to win the U.S. Food and Drug Administration’s blessing, Panic (pronounced PAN-ish), a Yugoslavian immigrant who gave up his biochemistry studies to open a pharmaceutical house in 1959, is betting the company’s future on the drug.
If, as Panic and the rest of his zealous staff believe, the drug will be effective against a broad spectrum of viruses, from AIDS to influenza, ICN could become a formidable player in the highly profitable pharmaceutical industry.
But there are obstacles to be overcome. Ribavirin must pass the rigorous testing required by the FDA, and ICN must negotiate the equally tortuous marketing path to put the drug on the nation’s pharmacy shelves.
If the problems prove too great, as some analysts and researchers suspect, ICN will remain, at least for the foreseeable future, what it is today: a modestly profitable $45-million-a-year drug company in an industry dominated by billion-dollar giants.
Clearly, Panic is counting on a Cinderella scenario for the drug, which the company often calls “the next penicillin.” “It is not immodest to say that we can make the most major contribution to medicine today if we exploit this product right,” he told ICN shareholders, this week after dangling visions of $500 million in annual sales of the product.
Although researchers acknowledge that ribavirin may be among the antiviral drugs with the most potential, medical experts and financial analysts prescribe extreme caution in estimating its probable effects, both on disease and on the company’s balance sheet.
“As the first drug to work against many viruses, ribavirin clearly shows promise,” said Dr. Clyde Crumpacker, a Harvard University medical professor who is testing the drug on 120 people who suffer from recurring genital herpes. “But one has to be careful. In the beginning, there are all sorts of hopes and dreams. It’s still too early to say.”
Dr. Joseph McCormick, director of the viral division at the Center for Disease Control, Atlanta, observed, “I am not aware of a drug with more potential uses. . . . but this is not the next penicillin. It isn’t effective against every virus known to man.”
In many ways, ICN, which already sells about 350 drugs and chemical compounds, is like dozens of other small pharmaceutical companies that are pinning their hopes on finding one “breakthrough” drug that will bring them super profits and high marks for humanitarianism.
Many of those small companies, as well as the giants of the industry, are looking to the relatively new field of antiviral medicine for the miracle drug they are seeking. Whereas antibiotics, which combat bacteria, are well established on pharmacy shelves, antiviral drugs are less than 30 years old, and fewer than half a dozen of them have received FDA approval.
So far, medical researchers have discovered that ribavirin, which has taken 15 years and $30 million to develop, shows promise as a treatment for treating herpes, acquired immune deficiency syndrome (AIDS), the two most common types of influenza, certain exotic fevers and a deadly childhood respiratory disease.
Research is inconclusive on all but the respiratory disease, but ribavirin’s potential effectiveness such a broad spectrum of conditions puts it in a special category. Each of the few antiviral drugs on the market today has been licensed to combat just one of the hundreds of viruses known to man, said Harvard’s Crumpacker.
ICN currently is seeking FDA approval of ribavirin as a remedy for one specific malady: respiratory syncytial virus, a potentially deadly lung condition that afflicts children under 5. Approval of this application, submitted in September 1982, is expected within two months. When it comes, Panic told shareholders, the company will submit the drug to the FDA for approval as a flu treatment, a process that often takes at least two years.
Meanwhile, company executives revealed this week that at least two hospitals will soon seek FDA permission to operate “compassionate care centers” where people dying of AIDS would be treated with ribavirin. The centers, one of which reportedly would be in San Francisco General Hospital, would dispense the drug in regulated amounts to AIDS patients considered to have virtually no chance of surviving.
An FDA spokesman would not comment on the hospital applications, but he did say the agency already has approved similar use of other drugs believed to be effective against AIDS for terminal cases.
Although ICN is intensely interested in the AIDS research and revels in the publicity it has received since last December, when ribavirin was announced as a potential cure for the disease, the company is far more interested in seeing the drug receive approval as a flu treatment.
The FDA’s blessing of ribavirin as a flu treatment would give ICN what it has always wanted: a part of the $2 billion in annual sales of flu medicines and a chance to become a giant of the drug industry.
At least one financial analyst questions whether ICN is going to enjoy the good fortune it expects from its wonder drug, however.
Craig Dickson, of Interstate Securities, Charlotte., N.C., said that the FDA is far more likely to approve a drug to treat life-threatening diseases than as a remedy for common influenza. And the lack of a flu application, Dickson said, would take a big chunk out of the profits ICN expects to reap from the drug.
“Diseases that are important to the nation’s health are often not large in terms of numbers--and in terms of potential profit dollars,” said Dickson, who follows the drug industry. “The big money in this drug is in flu treatment, but I doubt whether the FDA is going to be anxious to approve a drug to treat a disease where the risk of death is almost nil and the risk of potential side effects is fairly sizable, because of the huge numbers of possible users.”
Even if the drug is approved to treat flu, Dickson suggested, ICN may not be able to exploit the full potential of the hot property it has in ribavirin. He cited the near disaster the company was forced to weather in the mid 1970s, when it should have been concentrating its attention on developing ribavirin.
Panic rarely mentions those years, when ICN barely survived taking on enormous debt to acquire a worldwide network of pharmaceutical companies.
That strategy worked for several years, by giving ICN a spectacular growth curve, soaring earnings, skyrocketing stock prices and a sales peak of $178 million in 1972. The company began to unravel, however, when some of its acquisitions started losing money and creditors demanded repayment of loans.
To salvage the company and retire $100 million in debts, Panic, who barely survived a bitter proxy fight in the process, sold almost all of the the company’s assets. The reorganization took about seven years, and was complete in just 1983.
“So far, the company has proven to be unreliable in handling the promise of ribavirin,” Dickson said. “The company hasn’t been able to put one foot in front of the other and build a logical base for itself.”
Furthermore, Dickson contended, ICN doesn’t have the sales and marketing staff or expertise it would need to get such a “big” drug the exposure it needs to start turning equally big profits. “It’s hard to imagine ICN selling $100-million quantities of this drug with its present sales force,” he said.
But Panic, who has been planning for years for ribavirin’s big moment, said he was a step ahead of the marketing problem. If necessary, he said, the company will assign marketing rights for the drug to one of the world’s major pharmaceutical houses. Already, he added, Abbott Laboratories Inc., in North Chicago, has approached the company about a marketing deal.
Panic isn’t easily dissuaded from the belief that he has found ICN’s ticket into the pharmaceutical big leagues. He dismissed other potential stumbling blocks just as quickly.
“I am an eternal optimist.” he told the shareholders. “I believe our potential is enormous, and it is great to live with potential. It’s like living with love.”
