Struggling Drug Firm Pins Hopes on Ribavirin : ICN Pharmaceuticals’ Gamble May Put It Among the World’s Medical Giants
In the early 1970s, ICN Pharmaceuticals Inc. didn’t know which way to turn. 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 settled on ribavirin, a compound the company says kills certain viruses by jamming their reproductive systems.
A better choice couldn’t have been made, maintains Milan Panic, the chairman, president, chief executive and head cheerleader of the Costa Mesa-based 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 business 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. 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.
ICN today is a modestly profitable $45-million-a-year drug company in an industry dominated by billion-dollar giants.
“It is not immodest to say that we can make the most major contribution to medicine today if we exploit this product right,” Panic told ICN shareholders last week after dangling before them visions of $500 million in annual sales of the product.
Although independent 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 Centers for Disease Control in Atlanta, said he was “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 seek. Although 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), 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 against 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 medicine, 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 five.
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 last week that at least two hospitals soon will 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 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.
But at least one financial analyst questions whether ICN is going to enjoy the good fortune it expects from its wonder drug.
Craig Dickson, of Interstate Securities in Charlotte, N.C., said the lack of a flu application 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 specializes in drug industry affairs. “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 took on enormous debt to acquire a worldwide network of pharmaceutical companies--and barely survived.
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 company’s assets. The reorganization took about seven years, and was completed in 1983.
