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SCHEDULE 14A INFORMATION
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ICN PHARMACEUTICALS, INC.
(Name of Registrant as Specified in its Charter)
ICN PHARMACEUTICALS, INC.
(Name of Person(s) Filing Proxy Statement)
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ICN Pharmaceuticals, Inc.
Quarterly Report to Shareholders
For the Period Ending September 30, 1993
<PAGE> 3
To Our Shareholders:
Nineteen ninety-three is proving to be an enormously important
year for ICN Pharmaceuticals. There have been significant
advances in the operations of the three publicly-traded
companies-SPI Pharmaceuticals, Viratek and ICN
Biomedicals-that underlie the value of ICN. These include
solid profit performance by SPI's combined units in North and
Latin America and Western Europe, advancement of the antiviral
Virazole (ribavirin) in Phase III trials for chronic hepatitis
C, and progress in establishing a joint venture with one of
Russia's largest pharmaceutical companies. Reflecting these
and other activities, your stock was the fourth best performer
among the top 100 healthcare companies on the New York Stock
Exchange in the first half of 1993, up 65 percent, according
to Jenk's Healthcare Business Report-a clear demonstration
that we are committed to shareholder value.
ICN: Strong Subsidiaries, Strong Parent
ICN is a holding company with no sales, no trade receivables,
and a few employees. Its value is a combination of the values
of the three publicly traded companies in which it holds
equity positions. ICN's sales, for accounting purposes,
consolidate those of ICN Biomedicals and Viratek. SPI's sales
are not consolidated since it is carried as an equity
investment. Were SPI sales included, ICN's pro forma combined
sales would be $306 million through the first nine months of
1993.
SPI: Endurance and Strength (84 percent of ICN's Combined Sales)
SPI Pharmaceuticals, which manufactures, markets and
distributes a broad range of pharmaceuticals worldwide,
accounts for 84 percent of ICN's pro forma combined sales.
SPI registered nine month net income of $13.7 million, or 73
cents per share, on sales of $256 million. Net income was
fivefold above the second quarter due to significantly higher
income (up 37 percent over last year's third quarter) from
SPI's combined units in North and Latin America and Western
Europe, and the fact that its Yugoslav venture, ICN Galenika,
broke even in the quarter, despite severe hyperinflation and
currency devaluation resulting from economic sanctions against
Yugoslavia. U.S. sales were a record for the third quarter.
Our antiviral Virazole is now the market leader in Mexico,
bolstered by a new cream formulation there for herpes
genitalis and herpes zoster. SPI is coming off seven straight
years of record sales and net income. 1993 will be a record
year for all SPI units combined except for its venture in
Yugoslavia, where, considering the adverse conditions, its
performance nevertheless remains impressive.
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Viratek: Crucial Research for the Future (1 percent of ICN's Combined Sales)
Virazole is now sold in more than 40 countries for at least
one of eight indications, including influenza, herpes and
human immunodeficiency virus. In the U.S. and 22 countries it
is used in aerosolized form to treat babies hospitalized with
severe lower respiratory tract infection caused by respiratory
syncytial virus.
Virazole is now being tested in double-blind,
placebo-controlled, multicenter trials in the U.S. and Europe
as a potential therapy against chronic hepatitis C. One of
the U.S. trials is being conducted by the National Institutes
of Health Liver Unit. Researchers there gave a preliminary
report on 32 out of the 58 patients in the trial in the
October issue of Hepatology, finding that in 16 patients
"...prolonged ribavirin therapy was associated with
significant improvement in serum ALT levels (despite unchanged
serum HCV RNA levels) and in hepatic lobular necrosis." Serum
ALT levels and the degree of hepatic lobular necrosis are key
parameters for monitoring chronic hepatitis C. The NIH data
confirms earlier findings from Phase II clinical studies.
If further studies continue to show that our proprietary
antiviral is efficacious and safe for hepatitis C, we will
seek authorization in early 1994 to market our product for
this indication in the U.S. and in major markets in the world.
More than 1.8 million Americans are believed to be infected by
this disease, with 150,000 to 170,000 new infections annually.
An estimated 8,000 people in the U.S. die each year due to
liver disease caused by hepatitis C.
In addition to funding the Phase III clinical trials
evaluating Virazole and hepatitis C, Viratek is also
continuing to develop its pipeline of drugs, including
anti-cancer and immune stimulatory compounds currently in
clinical trials. Also, Viratek has begun critical,
cutting-edge new research, based on oligonucleotide antisense
technology, targeted to selectively block the expression of
specific genes that cause cancer, viral and skin disorders.
For the first nine months of 1993, Viratek reported revenues
of $4 million, spending $3.7 million in research and
development funding during this period.
ICN Biomedicals: The Comeback Story (15 percent of ICN's Combined Sales)
ICN Biomedicals, our biotechnology research products and
medical diagnostic subsidiary, has recorded three consecutive
quarters of earnings. The comeback is underway. It is
positioned to profit from the entire rapidly growing
biotechnology market, since its products are used in all
sectors of
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biotechnology research, including gene mapping and genetic
engineering. The company's renewed profit is the result of
significantly reduced operating expenses and increased
emphasis on higher-margin products. ICN Biomedicals has a
history of being a proven performer, from 1986 through 1990,
and has been repositioned for competitive growth. ICN
Biomedicals provided 15 percent of ICN's pro forma combined
sales in 1993.
Debt Reduced by $419 Million
At the end of September 1993, the company had $137 million in
public debt outstanding, a reduction of $10 million during the
first nine months of the year. Over the past eight years, ICN
has retired, through repurchase, principal payment or
conversion into equity, $419 million of public debt, equal to
a reduction of 75 percent of total public debt, which was at
$556 million in 1986.
Public Debt Repurchase, Conversions and
Principal Payments (millions of dollars)
<TABLE>
<CAPTION>
Equity and Debt Principal Payment, Public Debt
Issued 1984-1987 Repurchases and Conversions Outstanding-9/30/93
<S> <C> <C> <C>
1986-$ 201
1987- 71
1988- 69
1989- 23
1990- 22
1991- 10
1992- 13
1993- 10
Total $ 556 $ 419 $ 128*
</TABLE>
*Excludes Bio capital debt which is not on ICN's corporate books.
ICN Assets: Strong Financial Position
As a holding company, our financial position is supported by
our investment in our operating units. At the end of nine
months, our company's investment in our operating units was
valued at $292 million, based on their market value (number of
shares multiplied by the market price) and a $70.8 million
investment in Biomedicals' preferred stock. In addition, at
September 30, 1993, ICN had $26.8 million of cash, marketable
securities and receivables from affiliates. During the third
quarter and in early October, the company sold 700,000 shares
of SPI and 272,500 shares of Viratek to meet corporate
financial requirements. ICN, together with SPI, Biomedicals
and Viratek
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held cash and marketable securities of $69 million (some of
which is restricted) at the end of the third quarter of 1993.
ICN also held $18.3 million in other assets.
ICN Market Value (millions of dollars)
and Number of Shares-September, 1993
<TABLE>
<CAPTION>
Number of Shares Market Value
<S> <C> <C>
SPI...............................7.8............................$ 111.0
ICN Biomedicals...................6.3................................27.0
Viratek..........................11.1...............................153.6
-------------------------------------------------------------------------
Total............................................................$ 291.6
</TABLE>
The market value of our long-term publicly traded debt totaled
$126 million, while mortgages and other debt totaled $22.1
million and current liabilities were $7.4 million at September
30, 1993.
ICN Holding Balance Sheet Pro Forma
September 30, 1993
(Unaudited)(000's omitted)
<TABLE>
<S> <C>
Assets:
Cash and marketable securities.............................$ 6,220
Receivable from affiliates
and Biomedical's preferred stock..............................91,341
Investments in subsidiaries..................................291,600*
Property, plant and equipment.................................18,300
--------------------------------------------------------------------------
Total assets...............................................$ 407,461
Liabilities and equity:
Current liabilities........................................$ 7,371
Long-term debt**.............................................126,400*
Mortgage and other............................................22,119
Equity.......................................................251,571
--------------------------------------------------------------------------
Total liabilities and equity...............................$ 407,253
</TABLE>
* Market value at September 30, 1993
** Book value at September 30, 1993 and December 31, 1992
amounted to $128 million and $137 million, respectively.
Our Future
The current five-year business plan of our operating units is
based on an aggressive strategy.
Research & Development
To meet current and future healthcare needs worldwide, we plan
to expand our product lines through an accelerated research and
development program.
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. Our proprietary antiviral drug Virazole
(ribavirin) is just now completing Phase III
clinical trials in capsule form in the U.S.
for the treatment of chronic hepatitis C.
. We have initiated a cutting-edge,
multimillion dollar program of "anti-sense"
research to develop gene specific therapies,
which we believe can lead to the in-house
development of important new dermatology,
antiviral and oncology drugs.
. We are continuing to consider many
opportunities to acquire or license promising
new products and technology.
Strengthening our Base Business
Overall, our major objective is to expand our international
foundation to be present in all of the top 15 world major
pharmaceutical markets. As part of our plan, we are:
. Embarked on a long-term expansion program in
Eastern Europe and Russia-an underdeveloped
market with outstanding potential for growth.
. Expanding our product lines from our
subsidiaries in Spain and Mexico, critical
distribution points for inroads in Latin
America and the European Economic Community.
. Actively exploring opportunities for cost
effective acquisitions or joint ventures in
many other important markets, including Japan
and China.
. Concentrating on controlling our costs and
improving margins.
As this report details, we made progress in the first nine
months of 1993 in the continued growth and expansion of our
products and product lines. These actions, combined with the
proposed new indication for Virazole and our targeted research
program, continue to position us to be a major global
healthcare company.
Sincerely,
Milan Panic
Chairman and Chief Executive Officer
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ICN Pharmaceuticals
Consolidated Condensed Balance Sheet
(Unaudited)(000's omitted)
<TABLE>
<CAPTION>
Sept. 30, 1993 Dec. 31, 1992
<S> <C> <C>
Assets
Current assets $ 78,342 $ 78,944
Investment in SPI 68,659 72,569
Fixed assets, goodwill
and other, net 73,252 72,055
- -----------------------------------------------------------------------------------------------------------
$ 220,253 $ 223,568
Liabilities and Stockholder's Equity
Current liabilities $ 43,014 $ 73,347
Long-term debt and other
liabilities 153,475 169,359
Minority interest 12,912 2,619
Stockholders' equity 10,852 (21,757)
- -----------------------------------------------------------------------------------------------------------
$ 220,253 $ 223,568
</TABLE>
Summary Financial Information
(Unaudited)(000's omitted, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Net Sales $ 15,815 $ 113,003 $ 48,170 $ 425,467
Income (loss) before income
taxes, minority interests
and extraordinary income (2,369) 1,075 (4,443) 37,798
Income taxes (222) 4,513 (60) 16,733
Minority interests 196 6,214 491 20,921
-------- --------- -------- ---------
Net income (loss) $ (2,343) $ (9,652) $ (4,247)* $ 144
======== ========= ======== =========
Per share information:
Net loss per share $ (0.11) $ (0.69) $ (0.22)* $ (0.03)
======== ========= ======== =========
Shares used in per share
computation 20,441 14,095 19,572 14,498
======== ========= ======== =========
</TABLE>
*Includes $627,000 extraordinary income or 3 cents per share.
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ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, CA 92626
