ICN Plans Project With Chinese Government

Venturing where many American companies now fear to tread, ICN Pharmaceuticals Inc. said Friday that the Costa Mesa company plans to enter a joint venture with the Chinese government to build a drug manufacturing plant in Shanghai.

ICN this week signed a letter of intent to enter into a 20- to 30-year contract with the China National Medical Corp. to construct and operate a facility that will produce the ICN drug Ribavirin. The proposed project will cost up to $25 million, he said.

ICN thus is one of the first American companies to proceed with joint-venture negotiations since the Chinese government’s assault on pro-democracy students June 4 in Tian An Men Square.

Many companies have postponed any further action for fear that continued political unrest could jeopardize their investment.

“I would say there have been few announcements of joint ventures and few conclusions of joint ventures since June,” said Martin Well, spokesman for the U.S.-China Business Council, a nonprofit trade association of American companies doing business in China.

But Richard King, an international business consultant in Los Angeles, noted that pharmaceutical companies may be a special case. Not only is the business opportunity for selling drugs immense in China, he pointed out, but the government has made medical care a high priority.

Milan Panic, chairman and president of ICN, said Chinese Premier Li Peng has shown a personal interest in the drug manufacturing proposal. Panic said that on Tuesday Li Peng met in Beijing with him and prospective bankers for the project.

“The Premiere Li Peng said this is a very important and very welcome program and he personally would support it because it is humanitarian,” said Panic in a telephone interview from Tokyo.

Panic, who calls himself “a liberal Democrat,” said he questioned the premier about human rights. “He (Li Peng) said that in their society human rights is having food, having shelter and having health and once you have those you can worry about voting and talking.”

The main reason for the Chinese government’s interest in a partnership with ICN, Panic said, is a hope that Ribavirin, an anti-viral drug, will help to combat hepatitis and hemorrhagic fever, severely debilitating diseases that are widespread in China.

Under the joint venture proposal, he said, ICN will design and manage a 45,000-square-foot drug-manufacturing plant that will be built and operated by the Chinese.

He said the China National Medical Corp. will own all of the drugs produced but pay a royalty to ICN. Half of the Ribavirin will be distributed to the people of China, and half will be purchased by ICN for export to other countries.

Panic said ICN began negotiating a joint-venture arrangement with the China National Medical Corp. about a year ago.