ICN Seeks to Buy Polish Drug Firm : Pharmaceuticals: Costa Mesa company’s latest push into Eastern European market part of effort to create international conglomerate.
Milan Panic, the colorful founder of ICN Pharmaceuticals Inc., said Tuesday that the company is negotiating the purchase of one of Poland’s leading drug makers in its latest push into the emerging Eastern European marketplace.
The announcement that the firm is seeking to acquire Pharmaceutical Works, located in a suburb north of Warsaw, signals its intent to build a powerful international drug conglomerate around the ICN family of companies.
Panic, who spearheaded the 1991 acquisition of 75% of the Yugoslav drug manufacturing firm Galenika by SPI Pharmaceuticals--an ICN subsidiary--said Tuesday that at least four other deals to purchase Eastern European companies are in the works.
ICN Pharmaceuticals is negotiating the purchase of Oktyabr Pharmaceutical Factories near Moscow, and negotiations are ongoing with two unidentified Hungarian drug manufacturers and a Czechoslovakian firm, Panic said.
For his part in the ICN Galenika purchase, Panic has been richly rewarded.
He was paid more than $6.1 million in salary, bonuses and SPI stock in 1991, according to ICN Pharmaceuticals’ proxy report. That made him one of the highest-paid executives in
Orange County for the year.
By comparison, Panic’s total compensation as chairman and chief executive of ICN Pharmaceuticals and its three subsidiaries was $657,729 in 1990.
And on Tuesday, SPI shareholders ratified a stock option plan that grants Panic the right to buy up to 400,000 shares of the company’s stock at $32.25 a share during the year. While the stock closed Tuesday at $26.75 a share and did not trade as high as the exercise price during 1991, Burke Trafton, an analyst with the Beverly Hills brokerage of H.J. Meyers & Co. Inc., said the shares could go a lot higher.
He called Panic’s $5.4-million stock bonus of 1991 “peanuts, if the strategy (of expanding into Eastern Europe) pays off. So far it’s worked out very well.”
The ICN Galenika deal was responsible for SPI’s 159% gain in revenue for 1991, to $364 million from $141 million in 1990.
SPI’s 1991 profits also rose substantially--to $30.1 million from $14.9 million--in large part because of the Yugoslav expansion, company officials said.
The company has not yet released its first-quarter financial report but said Tuesday that sales should hit $120 million. Net income, said company spokesman Paul Knopick, will be at least 40 cents per share--or $7.3 million.
Panic “is going to make (ICN Pharmaceuticals) into a major multinational company,” said Trafton. “I think it’s a great strategy.”
Panic said the ICN companies want to take advantage of the massive selloffs of state-owned companies in the newly democratized nations of Eastern Europe.
“Eastern Europe for us is a very potentially lucrative market,” he said. “It is one (region) which is very fertile for our company.”
ICN Pharmaceuticals is the parent firm in a chain of drug
manufacturing and marketing companies. In addition to SPI Pharmaceuticals, the subsidiaries are ICN Biomedicals Inc. and Viratek Inc.
All four firms are based in Costa Mesa, and all four are
holding annual shareholder meetings this week.
The preliminary agreement to buy Poland’s Pharmaceutical Works was inked two weeks ago but not made public until Panic addressed stockholders at SPI Pharmaceuticals’ annual meeting Tuesday.
Panic declined to reveal how much the firm expects to pay for the 179-year-old company but said the Polish company would add about $120 million a year to SPI’s revenue.
He said SPI officials also are negotiating to acquire the remaining 25% interest in of ICN Galenika.
SPI purchased controlling interest in the Belgrade firm 11 months ago for $50 million cash, unspecified Viratek assets and the transfer of $11 million worth of SPI stock to Galenika’s employees. Panic would not disclose the proposed price of the remaining interest.
Milan Panic’s Compensation
Panic is chairman, chief executive and president of ICN Pharmaceuticals Inc.; he is also chairman and CEO of subsidiaries SPI Pharmaceuticals Inc., Viratek Inc. and ICN Biomedicals Inc.
1990 1991 Salary $574,048 $618,681 Fees* 83,681 Bonus 150,000 Special Bonus 200,000 shares SPI ($5,375,000 value) Loans** 200,000 shares SPI
NO. OF COMMON SHARES AWARDED BY GRANT OR OPTION
1990 1991 ICN 932,008 832,008 SPI 432,000 831,300 Viratek 410,000 610,000 ICN Biomedical 301,667 601,667
* Legal, accounting and insurance fees provided by the company
** Panic repaid 100,000 shares in 1991
What’s Next
ICN Phameceuticals is:
Will seek to acquire Polish company, Pharmaceutical Works
Negotiating to buy the remaining 25% of ICN Galenika
Negotiating purchase of Oktyabr Pharmaceutical Factories near Moscow
Negotiating purchase of two Hungarian drug companies
Negotiating purchase of a Czechoslovakian drug company
Source: ICN Pharmaceuticals Inc.
Stock History SPI Pharmaceuticals Inc.’s stock surged in February, 1991, and again that October after the start of a joint venture with Yugoslavia’s leading drug manufacturer, Galenkia Pharmaceuticals Inc., and the subsequent doubling of the Costa Mesa company’s third-quarter profits. ICN Pharmaceuticals Inc. owns 53% of SPI Pharmaceuticals. Source: Dow Jones News Retrieval Researched by DALLAS M. JACKSON / Los Angeles Times
