ICN Profit Drops 32% as Sales Fall

ICN Pharmaceuticals Inc. said second-quarter earnings fell 32% as royalties decreased for its biggest product, the hepatitis C drug ribavirin.

Net income fell to $21 million, or 26 cents a share, from $31 million, or 38 cents, a year earlier. The Costa Mesa drug maker was expected to earn 24 cents a share, according to a survey by First Call/Thomson Financial. Revenue increased 7% to $206 million.

ICN shares rose 89 cents to $32 on the New York Stock Exchange.

Ribavirin royalties fell 27% to $31 million, as doctors held off prescribing the drug, which is sold only in combination with Schering-Plough Corp.’s injectable interferon drug, Intron A, to treat the liver disease. Doctors have been waiting for U.S. regulators to approve a combination with an improved version of its Intron A, known as Peg-Intron, and ribavirin.

ICN Chairman Milan Panic lowered his estimate of ribavirin royalties for the year to between $160 million and $180 million from the $180-million-to-$190-million range in January.

Even the lowered forecast “is an aggressive target [and] implies a significant ramp-up in the second half,” said First Union Securities analyst Michael Tong.

Last week, Schering-Plough won approval from the U.S. Food and Drug Administration to market ribavirin and Intron A separately.

Ribavirin capsules, sold as Rebetol, are expected to be available in the next few months.

ICN could realize royalty revenue of about $300 million from ribavirin next year, said Arnhold & S. Bleichroeder analyst Richard Stover.

Higher revenue from ICN’s specialty-pharmaceutical business along with a growing market for hepatitis C drugs, “gives confidence to the outlook for improving earnings beginning in the fourth quarter,” Stover said.