SPI Profits Reduced by Balkan War

SPI Pharmaceuticals Inc. said Monday that the ongoing war in the former Yugoslavia has continued to hurt the Costa Mesa drug company’s bottom line.

SPI, which holds a 75% interest in ICN Galenika, said the Belgrade-based subsidiary weathered the ravages of the Bosnian civil war last year, however, breaking even instead of suffering losses as many health care analysts had predicted.

ICN Galenika, which SPI acquired in 1991, was once the pride of the company, generating a major portion of SPI’s revenue and profit for 1992. For its first full year of operations as an SPI joint venture, for instance, Galenika had $326 million in sales--about 68% of SPI’s total revenue for 1992.

ICN Galenika later began suffering from an ongoing United Nations embargo, which has made it difficult to import raw materials. The Belgrade drug firm also was criticized by Rafi M. Khan, a dissident shareholder, who accused SPI Chairman Milan Panic of running the business while serving as Yugoslavia’s prime minister from July, 1992, to February, 1993.

Panic is also chairman of SPI’s parent company, ICN Pharmaceuticals Inc., which recently underwent a costly proxy fight with Khan, and two other subsidiaries, ICN Biomedicals Inc. and Viratek Inc.

On Monday, SPI said that, discounting Galenika’s drag on business, the company had record sales at all its other operations worldwide. The company reported sales of $404 million for 1993, a 15% drop from 1992 sales of $476 million. Profit for 1993 was $21.5 million, or $1.08 a share, a 43% drop from 1992 profit of $34.5 million, or $1.76 a share.

For the fourth quarter, the company reported profit of $7.7 million, or 39 cents a share, a 13% drop from profit of $8.9 million, or 45 cents a share, for the same period a year earlier. Revenue for the fourth quarter was $147.7 million, a 34% increase from revenue of $109.5 million for same period a year earlier.

Despite the political problems resulting from its presence in the former Yugoslavia, SPI has continued its strategy of establishing a presence in Eastern Europe. The company has also signed agreements to purchase pharmaceutical companies in Russia and Poland, and it recently announced plans to buy a Hungarian drug firm.

In Monday’s trading on the New York Stock Exchange, SPI’s stock closed at $18.25 a share, down 25 cents.

SPI Pharmaceuticals

For the year ended Dec. 31, 1993, SPI Pharmaceuticals Inc. reported a 43% drop in profit from the year before on lower revenues. The company blames the continuing warfare in the Balkans, which has slowed sales of its Belgrade subsidiary, ICN Galenika. Figures in thousands of dollars, except per-share data:

4th qtr 4th qtr 12 months 12 months 1992 1993 1992 1993 Revenue $109,480 $147,685 $476,118 $403,957 Net income 8,947 7,765 34,503 21,510 Per share 0.45 0.39 1.76 1.08

Source: ICN Pharmaceuticals ; Researched by JAMES M. GOMEZ / Los Angeles Times