ICN Puts Off Plans for Growth in Eastern Europe

ICN Pharmaceuticals Inc. is delaying expansion into Bulgaria, Romania, Ukraine and Belarus because of the Kosovo conflict, Chairman Milan Panic said Wednesday.

“All investments have been postponed now because of the Yugoslav situation,” Panic said. “There is no forgiveness now on Wall Street to make investments in . . . a country like Bulgaria, where you can hear cannons from Serbia.”

Costa Mesa-based ICN has pushed into the relatively untapped drug markets of Eastern Europe, setting up businesses in recent years in Russia, Poland, Hungary, the Czech Republic and Yugoslavia.

Two years ago, Eastern Europe sales accounted for 58% of the drug maker’s global sales. Last year, though, that share fell to 47% after sales collapsed because of Russia’s economic crisis. This year, sales in the region are expected to fall to 28% of the global total. ICN has written off the bulk of its Yugoslavian operations after its factory in Yugoslavia was confiscated by the government in February.

Panic is a former prime minister of Yugoslavia and an opponent of President Slobodan Milosevic.

ICN’s Polish unit, Polfa Rzeszow SA, is one of the most modern Polish drug makers, and the parent has invested $17.6 million and plans to increase the company’s capital by $2 million in coming years.

Polfa plans to start production of ICN’s leading product, Efudex, whose sales worldwide accounted for $43.1 million. Panic expects the Polish company will increase exports to Western Europe as well as to the U.S.

“While Poland did lose a source of export revenue as a result of Russia’s collapse, its domestic economy continues to strengthen,” Warburg Dillon Read LLC said in its report on ICN operations. “With Hungary, the Czech Republic and Poland now part of NATO, we expect the commercial value of this region to grow.”

ICN employs 8,000 people in Eastern Europe. The factory confiscated in Yugoslavia employed 3,500 people.