ICN Profit Dives 80%, Even Worse Than Dire Forecasts

ICN Pharmaceuticals Inc. said fourth-quarter profit plunged 80% and missed already reduced estimates as costs rose and royalties fell from its biggest product, the hepatitis drug ribavirin.

The Costa Mesa drug maker said profit from operations dropped to $7.6 million, or 9 cents a share, from $38.4 million, or 47 cents, a year earlier. The results were below the 12-cent average estimate of analysts polled by First Call/Thomson Financial.

Revenue fell 1.6% to $209.2 million, as ribavirin royalty payments dropped 9.8% to $30 million, the company said.

The slowdown in ribavirin sales came as Schering-Plough Corp., which sells a combination of ribavirin and Intron A called Rebetron in the U.S., sought U.S. regulatory approval for an improved combination of the drugs. That made doctors reluctant to prescribe the original Rebetron formula, ICN said.

“They have some margin pressure and they lost some share of the market,” said Morton Cohen of Clarion Capital, which owns ICN shares. “Everyone is going to take their [earnings forecasts] down.”

ICN shares fell $1.35 to $25.21, while Schering-Plough fell $2.32 to $38.78. Both stocks trade on the New York Stock Exchange.

Its shares have fallen 10% since ICN said in January that 2000 earnings were less than expected.

The company took a charge of $3.2 million for early retirement of debt, making net income $4.3 million, or 5 cents a share, for the quarter. There were no charges or gains a year earlier.

For the year, ICN’s net income fell 16.2% to $99.4 million, or $1.25 a share, from $118.6 million, or $1.52 a share, in 1999. Revenue rose 7.1% to $800.3 million.

ICN also said research and development costs rose to $19 million from $11 million for the year. The company expects research spending of $45 million for 2001.

Selling, general and administrative expenses rose 17% to $295 million for the year as ICN expanded its sales force and boosted advertising and marketing spending.

ICN said in October that it plans to split into three companies, a move that Chairman Milan Panic agreed to as investors pressured him to give up some control.

Panic, on a conference call with investors, said the restructuring probably will be completed in 2001.