ICN’s Sale of Russian Operations Is Finished

ICN Pharmaceuticals Inc. of Costa Mesa said Monday that it completed the sale of its Russian operations as part of a major restructuring to focus on the company’s primary drug business.

ICN said the price paid represents about 50% of annual sales of the Russian business, which was about $100 million last year.

The cash sale, to the Russian investment firm Millhouse Capital, involved five manufacturing facilities, a marketing and distribution network, and 96 retail pharmacy stores and kiosks throughout the country.

Those operations employed about 6,100 people, slightly more than half of the company’s total workforce, said Jeff Misakian, ICN’s vice president for investor relations.

Misakian said the company lost money in Russia last year, but a breakdown of the losses was not available.

Misakian said most of the money from the sale would be used to expand the company’s pharmaceutical business.

ICN’s businesses in Russia and in other parts of Eastern Europe were built up under Milan Panic, the company’s founder and former head.

ICN also is trying to sell its operations in the Czech Republic and Hungary as well as its Irvine-based biomedical division.

“We are moving forward aggressively on the rest of our divesture plans, which remain on track to be completed by the end of the year,” ICN Chairman and Chief Executive Robert W. O’Leary said.

Wall Street analysts said the sale announced Monday was part of an effort to rein in a company that had grown too large and unwieldy.

“ICN had too many plants and too many people in too many countries. It was not efficiently run,” Bear Stearns analyst Joseph Riccardo said.

Analysts said ICN also needed to take such steps to generate cash because of declining royalties from its big moneymaker, hepatitis C drug ribavirin. A lower-cost version of ribavirin is already on the market, and the patents on the drug, which was developed by ICN subsidiary Ribapharm Inc., are under challenge by another drug company, Three Rivers Pharmaceuticals.

ICN faces other potentially costly problems, including a revolt by the Ribapharm board against ICN’s $168-million, $5.60-a-share tender offer to buy back the shares of Ribapharm that were spun off in an initial public offering last year. Some analysts said ICN may be forced to substantially raise its tender offer.

ICN shares closed Monday at $16.76, down 23 cents on the New York Stock Exchange. Ribapharm shares fell 5 cents, to $6.45, also on the NYSE.