Eyeing A Global Drug Connection

Investors' long-held skepticism about ICN Pharmaceuticals'(ICN) overseas operations seems to be finally waning: Its stock has been on the rise since mid-June, when it was at 22 a share. It's now at 50.

"A lot of investors have taken a hard second look at ICN, its array of medical products, and its ties with strategic partners--Hoffman-La Roche and Schering-Plough," says investment pro Allan Roness, who is high on ICN. The company's products and relationships with these two major drugmakers are finally paying off, adds Roness, director of research at investment firm J.W. Charles.

In early December, Schering-Plough filed for Food & Drug Administration approval to market in the U.S. a treatment for hepatitis-C that includes its drug Intron A and ICN's Rebetol. Studies have shown, says Roness, that the combination has helped patients who are prone to suffer relapses after being treated. Intron A is a more effective therapy when it is combined with ICN's Rebetol against hepatitis C virus, according to the studies, he says. Worldwide sales of Intron A in 1996 totaled $524 million.

Roness says that if the FDA approves the combined drug, it would add approximately $2 a share to ICN's earnings in about a year. Without the combined drug, Roness expects the company will earn $3.20 a share in 1998, up from an estimated $2.83 this year. Based on its strong relationships with its two partners and on the potential of its products, Roness thinks the stock is worth 75.

For years, the Street has ignored ICN, in part because of the risks associated with its vast operations overseas and its controversial founder and CEO, Milan Panic, who served at one time as Prime Minister of Yugoslavia. "He was deemed to be unpredictable," says Roness. ICN makes over-the-counter and prescription drugs--including medicines for viral and bacterial infections, diabetes, and skin and cardiovascular diseases--which are marketed in 60 countries.

One more thing: Roness believes ICN is an attractive acquisition candidate. He says Schering-Plough's licensing agreement with ICN allows it to purchase up to $42 million worth of ICN shares.

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