ICN Pharmaceuticals Buys 6.3% of Swiss Drug-Chemical Firm

ICN Pharmaceuticals Inc. of Costa Mesa said Tuesday it has bought 6.3% of the stock of F. Hoffman-LaRoche & Co., a giant Swiss drug and chemical firm best known as the maker of the tranquilizers Valium and Librium.

Based on recent trading prices, the 1,020 LaRoche shares that ICN said it has bought in the last year are worth about $210 million, or nearly as much as the $217-million market value of all of ICN’s own stock.

ICN, which reported earnings of $13 million on sales of $103 million in fiscal 1986, is tiny in comparison with LaRoche, which recorded profits of $280 million on sales of about $5 billion last year.

Although ICN officials would not comment on the reason for the stock purchases, a source close to the company said he hopes the link with LaRoche will give ICN a worldwide marketing network for its anti-viral drug, ribavirin.

Ribavirin is used to treat a fatal respiratory virus in babies. ICN is trying to win approval from the Food and Drug Administration for additional testing of ribavirin as a treatment for early-stage acquired immune deficiency syndrome.

Milan Panic, ICN’s chairman, president and chief executive, did not rule out the possibility that ICN might buy even more LaRoche stock. He said under Swiss law, a shareholder must own 10% of a company’s stock to be entitled to representation on the board of directors.

Max Gurtener, vice president of public relations at LaRoche headquarters in Basel, Switzerland, said company officials were taken by surprise when ICN told them some weeks ago of its stock purchases.

LaRoche’s stock is not registered, so there is no record of purchases and sales. Because LaRoche is so much larger than ICN, Gurtener said, it is doubtful that ICN could accomplish a takeover of LaRoche.

Besides, he said, more than half of LaRoche’s 16,000 shares are closely held.

ICN said it has filed information about its LaRoche stock purchases with the Federal Trade Commission and will make another filing with the Securities and Exchange Commission next week.

ICN spokesman Jack Sholl declined to comment Tuesday “on the specifics of the transaction,” other than to say that the stock purchases were made in the last year and that some of the stock was bought privately and some in the public market.

In that period, the market price for LaRoche stock, among the most expensive in the world, has more than doubled from 150,000 Swiss francs per share to 310,000 Swiss francs, or about $200,000, Gurtener said.

Because LaRoche shares are thinly traded, Gurtener said, the ICN purchases might have been the major cause of the skyrocketing stock price.

Panic, however, denied that ICN’s stock purchases were responsible for the dramatic price increase. “The company did not push the market,” he said.

In the last year, ICN has been raising funds in Switzerland for its LaRoche stock purchases by selling ICN stock, bonds and convertible debentures for about 320 million Swiss francs.

Gurtener said earlier this year, ICN first made waves in Switzerland by selling bonds that were convertible into shares in Ciba-Geigy, another major drug company based in Basel. The sale raised 60 million Swiss francs for ICN.

“We can buy more (LaRoche stock); we have lots more money,” Panic said.

The LaRoche stock purchases may have helped to boost the price of ICN’s own stock, which closed at $12.75 Tuesday, up $1 in trading on the New York Stock Exchange.