ICN to Shift Operations to Moscow
Proclaiming Russia the most promising market for medicines on the planet, ICN Pharmaceuticals Inc.’s controversial chairman, Milan Panic, said Wednesday that he is moving his European headquarters and the focus of the Costa Mesa company’s operations to Moscow.
ICN executives said the eastward shift will involve few if any job losses in Southern California, but they made it clear that virtually all expansion of the multinational company will be in Russia and other countries in Eastern Europe.
“Since the market is truly here, we are moving our European efforts from Belgrade to Moscow,” Panic told reporters at a news conference here. He predicted that pharmaceutical sales in Russia will rise from a current $3 billion to $20 billion over the next decade.
“Fifty percent of our efforts in California will be reduced,” Panic said. “We are moving to Moscow.”
Nearly $600 million of ICN’s estimated $700 million in sales last year were in Eastern Europe and the former Soviet Union, company spokesman Herb Lightstone said. Analysts predict the rapidly growing company will post a profit of $130 million for the year, up from about $87 million in 1997.
ICN shares rose $2.50 to close at $45.81 on the New York Stock Exchange.
A move to the less-regulated business environment of Moscow may offer a public relations reprieve for the embattled company and its scandal-ridden chairman.
Four sexual harassment lawsuits have been filed against Panic over the last four years by current or former female employees. He agreed to pay $15 million last year to settle a suit alleging insider stock trading, and an additional $14.5 million to ICN shareholders who accused him of exaggerating the medical capabilities of the company’s ribavirin drug as a possible treatment for AIDS.
Panic and the company remain targets of an investigation by the Securities and Exchange Commission into possible insider trading, as well as of a federal criminal investigation.
Analysts say Panic is likely to flourish and ICN sales soar in the Russian marketplace, where restrictions on drug sales are few, demand is high and ICN is the largest drug company.
“They can pretty much charge any price they want,” said Bob Back, a Chicago analyst.
Panic also outlined plans to open 11 regional distribution centers in Russia to ensure reliable delivery of medicines once they are in production.
A pharmaceuticals research institute in Moscow is also on the drawing board, and Panic said he expects 500 scientists will be employed there within the next three years. ICN already employs 150 Russians here and expects the number of new production jobs to grow to 450 or 500 within a year.
Panic’s most eccentric gesture in a career filled with flamboyance and controversy may have been his 1992 decision to take a leave of absence and return to his native Yugoslavia to take up the post of prime minister while fellow Serbs were waging war in Bosnia-Herzegovina and Croatia.
He eventually clashed with Serbian strongman Slobodan Milosevic, challenging him for the Serbian presidency. He returned to the pharmaceuticals business after losing the December 1993 vote.
Asked if he plans to delve into politics again, Panic said he learned his lesson in Yugoslavia and will stick to business.
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Times staff writer Barbara Marsh in Orange County contributed to this report.
