ICN’s Panic to Manage Firm’s Yugoslav Branch for 3 Months

Milan Panic, the besieged chairman of Costa Mesa-based ICN Pharmaceuticals Inc., is temporarily taking over management of the drug firm’s Yugoslav subsidiary, the company announced Friday.

Panic, assigned to be in charge of Belgrade-based ICN Galenika for the next three months, remains chairman, chief executive and president of the parent company, it was announced.

Company officials declined to predict how Panic will divide his time between Europe and his company duties here.

Officials attributed his increased role in Galenika, ICN’s largest subsidiary, to its need for strong management as it adjusts to business conditions following the lifting of international economic sanctions against Yugoslavia.

Panic, who took a seven-month leave of absence from ICN in 1992 to serve as prime minister of his native Yugoslavia, knows the country “inside and out,” said David C. Watt, ICN’s general counsel, in a phone interview from Belgrade.

Panic was in Belgrade Friday and unavailable for comment.

The company said Radomir Stojicevic, Galenika’s president, is taking a paid leave of absence for a “well-needed rest” after coping with sanctions for 3 1/2 years. It named Dr. Lubisja Rakic, Galenika’s top research executive, as the executive in charge of day-to-day operations there, promoting him to executive vice president.

The changes left shareholders wondering whether the company might be removing Panic from the limelight here in an effort to regain the trust of the investment community. Panic is the target of a government investigation involving alleged insider trading of company stock, shareholder lawsuits and a sexual harassment lawsuit filed by a former employee.

The government investigation and shareholder lawsuits involve Panic’s sale of $1.24 million in company stock in the fall of 1994. The sale occurred after the firm learned the federal Food and Drug Administration wouldn’t approve the company’s star drug Virazole as a stand-alone treatment for the liver ailment hepatitis C.

But the company didn’t disclose the FDA’s decision to investors until February, when the stock lost 42% of its value in six days of trading, falling to $13.25 a share.

The company has said that it will vigorously defend itself in those suits. It is cooperating with the SEC investigation.

“Investors just don’t trust ICN,” said William Nasgovitz, president of Heartland Advisors Inc., a Wisconsin investment company that controls more than 3 million shares. Nasgovitz expressed his hope that Panic’s assignment overseas means the company has “embarked--correctly--on improving the situation.”

The company’s shares closed Friday at $18, up 87 1/2 cents a share. Investors complain that stock price-to-earning ratio is less than half that of major drug company stocks.

Jim McCamant, one of the few analysts who still follow the company, discounted shareholders’ speculation that Panic is being put on the shelf.

He also said that the company attracts little attention from Wall Street analysts because stringent accounting standards don’t apply overseas and it’s hard to get a handle on how Galenika is really performing.

“There’s no way of being sure what the values are,” he said. “Are their earnings real?”