ICN Won’t Purchase Bulgarian Drug Company

ICN Pharmaceuticals Inc. withdrew plans to purchase Biovet JSC, a Bulgarian drug producer, because of concerns about the crisis in Yugoslavia, one of the U.S. company’s main markets, a Bulgarian government official said Thursday.

The Costa Mesa-based drug manufacturer had planned to pay the Bulgarian government $13.6 million for a 54% stake in Biovet, a maker of veterinary drugs. ICN made a $1.3-million deposit on the purchase, which Bulgaria will keep, said Assen Dyulgerov, chairman of the Bulgarian Privatization Agency’s supervisory board.

ICN “said it can’t explain to shareholders that there are problems in the Balkans, but it wants to invest there,” Dyulgerov said.

The company confirmed Thursday that it has decided to call off the deal, at least for the moment.

“It’s really dangerous when something starts happening in the Balkans--it can quickly spread,” spokesman Ilya Baranikas said. “That’s why the company felt it wasn’t the right time to do it.”

ICN’s decision comes as the North Atlantic Treaty Organization continues air attacks for a third week in Yugoslavia.

ICN had encountered numerous problems in the region during the last year.

It stopped supplying drugs to Yugoslav government-funded institutions because of unpaid debts, and saw its sales plummet in Russia after the government abandoned its defense of the ruble, causing the currency to plunge.

At its factory in Hungary, meanwhile, severe flooding in the eastern region of the country threatened ICN’s operations.

Two months before NATO started its air attacks, the Yugoslav government seized control of ICN’s operations in Belgrade. As a result, the company wrote off the plant, taking a charge of $230 million in the fourth quarter.

ICN was founded by Milan Panic, a Yugoslav emigre who has been an active political opponent of Yugoslav President Slobodan Milosevic. Panic served as prime minister of Yugoslavia from May 1992 until March 1993.

The company had said earlier that adding Biovet’s products to ICN’s line of veterinary drugs would promote its goal of becoming a major supplier of such products. Biovet’s 1997 sales were $30 million, ICN said.

ICN’s stock dropped 38 cents a share Thursday, closing at $28.94.