Milan Panic's 42 years at the helm of ICN Pharmaceuticals may be nearing an end. At the company's annual meeting on May 29, ICN shareholders appear to have approved the election of three dissident directors who are expected to seek Panic's removal as chairman and chief executive of the Costa Mesa (Calif.)-based, company that he founded in 1960.
ICN (ICN) says the results will not be final for two more weeks, but privately a representative of the company says the election appears to have gone in favor of the dissidents, who were nominated by two of ICN's largest shareholders, Franklin Mutual Advisers and Iridian Asset Management. The dissidents were competing against three directors nominated by ICN.
Investors registered little surprise. The stock barely moved, ending the May 29 trading day down 15 cents, to $27.80 a share. And while conceding that his role at ICN might be relegated to just that of a director, Panic vowed to defend the rights of ICN shareholders, both in a speech during the meeting and at a press conference afterward. "I fought the Nazis, I fought the Commies. I'm committed to fight if there is someone who tries to destroy the company," said Panic, whose name is pronounced Pan-ish.
"NO LONGER DISSIDENTS." The current fight to unseat Panic kicked into high gear two years ago, when Swiss investor Tito Tettamanti threatened to propose a new slate of directors at ICN, whose stock price had consistently trailed pharmaceutical-industry averages. At that time, as part of a negotiated settlement, Panic agreed to reduce the size of ICN's board from 12 directors to 9. That may have led to his undoing. Last year, three dissidents were elected. The most recent election would give their faction a majority of six directors. "The dissidents are no longer dissidents," says attorney Richard H. Koppes, one of this year's insurgent director nominees.
Outside shareholders say another new director, Robert O'Leary, 58, a longtime hospital and HMO executive, may serve as interim CEO if Panic is asked to step down. Timothy Rankin, a portfolio manager at Franklin Mutual, says he expects the new board to consider spinning off ICN's remaining 80% stake in Ribapharm (RNA), the unit that makes its best-selling drug, ribavirin, something Panic had said the company would do two years ago.
Rankin says Franklin Mutual and its partner Iridian have also called on ICN to sell or spin-off its international operations and cut costs at the company's core U.S. pharmaceuticals unit, whose line includes dermatological treatments, sedatives, and hormone products.
CONTROVERSIAL LEADERSHIP. Panic's years at ICN, though turbulent, have had their share of success. The Yugoslav-born immigrant came to the U.S. in 1956 with just $200 in his pocket. He built ICN into a company that earned $64 million on $848 million in sales last year. It now has a market value of $2.5 billion. Ribavirin, the outfit's treatment for hepatitis C, is marketed in combination with another drug produced by Schering-Plough (SGP). Sales of ribavirin topped $139 million in 2001, up from $3.2 million in 1997.
Even as he grew the business, Panic, now 72, encountered more than his share of controversy. He has been accused by the Securities & Exchange Commission of making false claims regarding ribavirin's potential. The SEC's case is still winding its way through federal court in Los Angeles.
In a related case brought by the Justice Dept., ICN pleaded guilty last December to a single felony count of fraud and paid a $5.6 million fine for not disclosing Food & Drug Administration concerns about ribavirin to shareholders. Over the years, Panic also has settled sexual-harassment suits against him. In the fraud case, Panic said it was cheaper to settle the suit than fight it in court. He predicted a settlement of the SEC charges as well.
PARTING GIBE. Even as he ran ICN, Panic served as Yugoslavia's Prime Minister for eight months in 1992 and 1993 before being pushed out by Slobodan Milosevic. Outside shareholders have criticized Panic's decision to buy pharmaceutical companies in the former Soviet Union in the early 1990s -- a move that resulted in substantial write-offs. He also came under fire from shareholders earlier in 2002 for receiving a $33 million cash bonus for selling a 20% stake in Ribapharm to the public.
Although Panic's years at the top of ICN may be ending, he couldn't resist a parting shot at the dissident directors who may replace him. "It's one thing to win," he said after the annual meeting. "It's another to make things happen." No one can accuse Panic of not making things happen. By Christopher Palmeri in Los Angeles and Arlene Weintraub in Costa Mesa, Calif.