ICN Buys Major Stake in Russian Drug Maker
ICN Pharmaceuticals Inc., amassing a wider Eastern European base to re-anchor its operations, said Thursday that it bought a majority stake in a Russian company.
The Costa Mesa drug company said it bought 65% of Polypharm of Chelyabinsk--which is about 1,000 miles east of Moscow--and plans to increase its stake in the Russian firm over the next several months.
The acquisition--ICN’s third in Eastern Europe this year--marks the latest step in an aggressive strategy to rebuild its presence in a region where it’s still recovering from economic setbacks brought by the Bosnian war.
Analysts see the company’s attempt to expand in Eastern Europe as a shrewd move by its controversial Chairman Milan Panic. Panic, who took a seven-month leave of absence from ICN in 1992 to serve as prime minister of his native Yugoslavia, knows many political leaders throughout the region.
Eugene Melnitchenko, a financial analyst and former ICN executive, says Panic’s access to the movers and shakers has paved the way for ICN to expand. “Being Eastern European, he knows how to relate to them,” says Melnitchenko, a native of the Ukraine.
*
Though Panic’s image in the United States has been marred by two sexual harassment cases brought against him by former employees, a federal investigation into possible insider trading of the company’s stock and shareholder lawsuits, Melnitchenko say such issues generally don’t bother Eastern Europeans.
“They see Milan as a poor Slav who made it good in America. They see Milan as someone who will bring them the necessary technology to provide medicines they lack,” Melnitchenko said.
Panic, who is traveling in Eastern Europe, wasn’t available for comment.
He and ICN have settled the sexual harassment cases, admitting no wrongdoing. They are cooperating with the federal investigation into possible insider trading and deny related charges brought against them in shareholder lawsuits.
Polypharm, a drug manufacturer and marketer, founded in 1920, posted sales of more than $13 million last year, according to ICN. The Russian company employs 667 people, sells most of its production through distributors and wholesalers, and claims a 1.5% share of the Russian drug market.
In 1993, effects of international sanctions and price controls triggered a harrowing drop in the company’s Eastern European revenue to $239.8 million from peak sales of $325.9 million the year before. Critical export revenues for its Belgrade-based Galenika unit--then the company’s sole factory in the region--shrank to zero in the 3 1/2-year period of sanctions that ended last December, says ICN’s spokesman David Calef.
“Now we’re looking to rebuild our export business,” Calef said. He noted that Galenika wracked up export revenue of about $25 million in the first six months of this year--roughly half of the comparable period in 1991.
ICN also holds majority stakes in Russia’s oldest drug company, Oktyabar of St. Petersburg, and Leksredstva, of Kursk. And it operates sales, marketing and administrative offices in Moscow.
