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. Last Updated: 07/27/2016

ICN Seeks Leading, Long-Term Role

California-based ICN Pharmaceuticals will invest more than $200 million in Russia over the next two years as part of a fierce push to become the country's leading drug manufacturer, the company's top official said Thursday.

Moreover, ICN has promised it will not repatriate its profits for the next five years, instead re-investing them in exchange for federal tax breaks, said ICN president and former Yugoslav prime minister Milan Panic, in Moscow for the grand opening of his company's Moscow office.

"This market for us is very important. Many have been scared to invest here in a significant way, and I can see their point," Panic said. "The economy and political instability present enormous risks. But for us, people who understand Eastern Europe, we're looking at long-term projects."

Panic said ICN has already invested $100 million modernizing three Russian factories in which it has controlling stakes, and "we plan to invest more than double that over the next two years" acquiring new plants to produce drugs domestically.

Russian President Boris Yeltsin this week called on citizens to "buy Russian" over imported goods and Health Minister Tatyana Dmitrieva met with Western drug makers Wednesday to demand more production on Russian soil.

ICN owns a 91 percent stake in St. Petersburg's Oktyabr factory, a 96 percent stake in Leksredstva of Kursk, and most recently, 65 percent of Polypharm drug company in Chelyabinsk.

Panic said ICN's promise not to repatriate profits from Russia is part of a deal with the federal government in exchange for tax breaks.

"The pharmaceutical industry is receiving some assistance from the Russian government for taxes," Panic told The Moscow Times in an interview.

"Last year they voted for us not to have to pay income taxes for some period of time, as long as we don't repatriate." He didn't elaborate on the amount of the tax incentives, but said they will be renewed "one year at a time, to build trust."

ICN officials said Thursday that despite an announcement last year that ICN had licensed the anti-depressant drug Prozac for sale in Russia under the name Flunirin, discussions with Prozac-licenser Eli Lilly are still under way.

In 1996, ICN generated worldwide sales of $615 million and profits of $90 million, figures Panic estimates will grow to $1 billion and $100 million respectively in 1997.

ICN has bet its future on expansion in the former communist bloc. In 1995, Eastern Europe represented roughly 50 percent of ICN's total sales.