Founder’s Leap to Politics Could Benefit ICN : Pharmaceuticals: Milan Panic’s departure could calm waves he made with financial community. And his flamboyant style could serve him well as a Yugoslavia peacemaker, opening more doors for the firm.
ICN Pharmaceuticals Inc., the company that Yugoslav immigrant Milan Panic built from scratch, is well-positioned to benefit financially from its founder’s announcement Thursday that he will accept the post of prime minister for his troubled homeland, financial analysts said.
But depending on who is talking, the reasons vary widely.
Panic’s detractors, and there are many, say that, with the departure of the often-controversial businessman, the way will be paved for a calming of the waves Panic has made with some members of the financial community.
But supporters say the flamboyant style that has given Panic undisputed success in the pharmaceuticals industry--and may serve him well as a peacemaker in Yugoslavia--will inevitably open more doors for the company in Eastern Europe and elsewhere.
All agree that Panic has left an indelible mark on ICN Pharmaceuticals, based in Costa Mesa, and its family of three subsidiaries: SPI Pharmaceuticals Inc., ICN Biomed Inc., and Viratek Inc. Panic is chairman of the board and chief executive officer for all of the entities.
The pharmaceutical empire--which has more than two dozen offices and manufacturing facilities in the United States, Canada, Japan, Mexico and Europe--is valued at about $1.1 billion.
Despite the size of the conglomerate, many stock analysts have shied away from its stock in recent years. But critics said that with Panic’s departure, the corporation may re-establish some disconnected ties to Wall Street.
“It’s good news for ICN,” said James D. McCamant, a harsh critic of Panic’s business style and a stock analyst who publishes Medical Technology Stock Letter in Berkeley.
Michael Connor, an analyst with the brokerage Edward A. Viner in New York, agreed. “The man is a master at financial legerdemain,” he said, adding that he quit covering or recommending ICN stock several years ago, when Panic was first alleged to have lied to the public about the effectiveness of an ICN drug in fighting the AIDS virus.
Connor also noted that the configuration of the corporate structure has often been confusing. Assets seem to be mixed at will, making it difficult for analysts to follow the corporation accurately.
“His greatest talent seems to be more in the ability to create and juggle all of these entities than actually coming up with real product and real earnings,” Connor said. “He’s much more adept at public relations.”
Panic’s supporters in the financial community say Panic has, indeed, been a strong booster for the corporation. And that, they say, is his greatest asset and contribution.
Panic, they say, has been almost a magician at the bottom line. The latest hat trick was when he negotiated a 75% controlling interest in ICN Galenika, a Belgrade-based pharmaceuticals company, in May, 1991.
Panic paid $50 million cash for Yugoslavia’s largest drug manufacturer but deposited the money into a Swiss bank account, said Rafi Khan, an analyst for H.J. Meyers & Co. in Beverly Hills. The money was never transferred to Yugoslavia, which owned the company, and has since grown to $65 million, Khan said.
Panic has also negotiated the purchase of pharmaceuticals companies in Russia, Poland and Hungary.
“Mr. Panic’s genius is to do deals to buy Eastern European companies at a very opportunistic cost,” Khan said. “His forte is not micromanagement but handling the big deals.”
The responsibility for the day-to-day administration of the company and its various acquisitions has fallen to Adam Jerney, president and chief operating officer for SPI Pharmaceuticals, the chief subsidiary of ICN Pharmaceuticals.
Company officials would not say Thursday who will succeed Panic as chairman of the board for the family of companies. In fact, ICN spokesman Jack Sholl said that, until Panic is actually sworn in as prime minister, he will remain in control at ICN. Up to 30 days could pass before he takes office.
“It is still premature to talk about a successor,” Sholl said. “Any attempt to do so would be speculative.”
A succession plan was already in place long before the issue arose about Panic’s possible involvement in Yugoslav politics, Sholl said, but he would not detail that plan.
Others within the company and some analysts, however, say the most likely candidate would be Roberts A. Smith, a former UCLA chemist who co-founded ICN with Panic in 1960.
Robert H. Finch--secretary of Health, Education and Welfare for President Richard M. Nixon, former lieutenant governor of California and a member of the ICN board of directors--said he thinks that Smith will take over Panic’s duties as chairman and chief executive, while Jerney, a Hungarian immigrant and confidant of Panic’s, will continue as chief operating officer.
Analyst Khan also said Smith would be the best choice for the job. Although he called Panic a “visionary,” he acknowledged that the company has been hurt in recent years from Panic’s colorful personality.
“A fresh face could make all the difference in the world,” Khan said.
Smith, Khan said, would spend more time talking to analysts and would present a more subdued, businesslike profile: “He will be better with the financial community.”
ICN corporate attorney Arnold Burns said whoever takes over as head of the conglomerate will inherit a firm that will continue to operate with “business as usual.” Both Smith and Jerney are equally qualified for the post, he said.
Not yet clear is whether Panic will be forced to sell off the 2.06 million shares he owns in the four entities or put them in a blind trust. The total value of his holdings, as of Thursday, was $101.6 million, making Panic the wealthiest Serbian in the world.
Since Panic was first offered the prime minister’s job early last month, he has been isolated, unavailable to most in the news media. While he considered his decision, stock in the four corporate entities has fallen up to 20%.
Some analysts attributed the price declines to uncertainty about the future of Panic’s pharmaceuticals empire. For instance, ICN Pharmaceuticals’ stock, which trades on the New York Stock Exchange, closed at $10.875 on Thursday, down 12 cents for the day and off $2.12 since June 1.
Similarly, SPI Pharmaceuticals’ stock, traded on the American Stock Exchange, closed at $20.37, down $5.25 since June 1.
Heirs Apparent
Though Milan Panic will remain as chairman, president and chief executive of ICN Pharmaceuticals and its three subsidiaries until he is formally sworn in as prime minister of his native Yugoslavia, there is already speculation about who will succeed him. Insiders say the successor--or successors--will probably come from within ICN’s executive ranks. Roberts A. Smith and Adam Jerney are the leading candidates.
Roberts A. Smith
Companies: Viratek Inc., SPI Pharmaceuticals Inc., ICN Pharmaceuticals Inc.
Position: President, Viratek; vice president of research and development, SPI Pharmaceuticals; board of directors, ICN Pharmaceuticals
Age: 63
Years with company: 32
1991 Compensation: $193,532
Professional highlights:
1958 -- Professor of chemistry and biochemistry at UCLA until 1987; now professor emeritus
1960-- Co-founded ICN Pharmaceuticals with Milan Panic and was appointed to its board of directors
1980 -- President of Viratek until 1986
1985 -- Member of executive committee of ICN’s Nucleic Acid Research Institute until 1989
1988 -- Resumes presidency of Viratek
Adam Jerney
Companies: SPI Pharmaceuticals Inc., ICN Pharmaceuticals Inc.
Position: President, SPI Pharmaceuticals; vice president of operations, ICN Pharmaceuticals
Age: 49
Years with company: 19
1991 Compensation: $2 million, ranked eighth among the county’s highest-paid executives Professional highlights:
1973 -- Joined ICN as director of marketing research in Europe
1975 -- Appointed general manager of ICN Netherlands
1978 -- Named president of the European Pharmaceutical Group
1981 -- Elected vice president of operations of ICN Pharmaceuticals
1987 -- Named president of SPI Pharmaceuticals
Source: ICN Pharmaceuticals Inc.
Researched by DALLAS M. JACKSON / Los Angeles Times
