ICN’s Net Income Drops 54% as Generic Drug Competition Intensifies

ICN Pharmaceuticals Inc. of Costa Mesa, hurt by generic drug competition, reported a 54% drop in its second-quarter profit and said Tuesday that it was no longer confident about its earnings guidance for the year.

The drug maker posted net income of $14.9 million, or 18 cents a share, down from $32.4 million, or 38 cents, a year earlier.

Excluding discontinued operations, ICN’s earnings fell to $17.4 million, or 21 cents a share, from $50.5 million, or 56 cents.

The year-earlier income included a $262.9-million gain on the sale of stock related to its Ribapharm subsidiary and a $43.3-million loss on early retirement of debt.

ICN posted second-quarter sales of $183.5 million, up slightly from $180.8 million.

The company, however, continued to feel growing pressure from generic competition. Royalties from the sale of its hepatitis C drug, ribavirin, fell 21% to $52 million.

Given such declines, the company said it was concerned about its previously issued earnings guidance for 2003 of $1.20 to $1.25 a share. No new guidance was provided, but Chief Executive Robert W. O’Leary said: “It is difficult to have future visibility on ribavirin sales.”

He said the company was buoyed by a 15% increase in specialty pharmaceutical sales, to $131.5 million from $114.8 million a year earlier. That included such products as treatments for sun-damaged skin. O’Leary said the firm would try to emphasize specialty pharmaceuticals and lessen dependence on royalties.

But analysts were skeptical. “These are not big and exciting products we’re talking about,” said Darshana Punithakumar , an analyst for Mehta Partners in New York. ICN, she said, doesn’t “have any blockbuster drugs on the market and they need one.”

ICN shares fell 66 cents to close at $15.48 on the New York Stock Exchange.