SCHEDULE 14A INFORMATION
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The Securities Exchange Act Of 1934
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[_] Soliciting Material Pursuant to Section 240.14a-12
ICN Pharmaceuticals, Inc.
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(Name of Registrant as Specified in its Charter)
N/A
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
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Following is the text of additional presentation materials delivered to ICN
Pharmaceuticals, Inc. stockholders on or about May 9, 2002:
[LOGO - ICN] ICN PHARMACEUTICALS, INC.
MAY 2002
FORWARD LOOKING STATEMENTS
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THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
o Except for the historical information herein, the matters discussed in
this presentation include forward-looking statements that may involve
a number of risks and uncertainties, including but not limited to,
projections of future sales, operating income, returns on invested
assets, obtaining and maintaining regulatory approval processes,
market acceptance of, and continuing demand for ICN pharmaceuticals'
products and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings
1
PROMISES KEPT
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RESTRUCTURING HISTORY
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o The restructuring was ALWAYS ICN's and UBS's idea; no one else had it.
o It was ALWAYS designed to unlock value for shareholders.
o The restructuring is a complicated process that cannot be rushed.
o The timing has been SOLELY impacted by market conditions.
3
RESTRUCTURING OVERVIEW
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o Initiatives to unlock significant shareholder value
Biotechnology Ribapharm
- RNA listed on NYSE
on April 12, 2002
- IPO Completed
- tax-free
spin-off in 2002
Specialty
ICN Pharmaceuticals Pharmaceuticals ICN Americas
Americas
Specialty
Pharmaceuticals ICN International
Europe
o IPO Prospectus filed
4
RESTRUCTURING PROGRESS
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o Ribapharm IPO completed - raised nearly $300 million in 20% interest.
o Second largest biotech IPO EVER.
o Debt repurchase completed.
o Request for tax-free treatment filed with the IRS.
o Spin off or distribution of remaining interenst in Ribapharm as soon as
IRS approves.
5
RESTRUCTURING STEPS
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Tax Free
Distribution & Spin-off
of Rebapharm
Ribapharm IPO ICN International IPO
Retire Remaining
Debt
Retire Partial Debt
Convertible Offering
Filed Prospectus for
ICN International
S-1 Filed for
Ribapharm
Announced UNLOCKING EQUITY VALUE
Restructuring
Reorganization of
Business Operations
Into Three Distinct
Businesses
6
INTERNATIONAL SPIN-OFF - FACT VS. FICTION
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o Committed to the international IPO.
o European market conditions do not exist for this transaction.
o International IPO scheduled in early 2003 or sooner.
7
SG&A COST CONTROLS
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o SG&A expenses in line with pharmaceutical industry
o Attributed to cost of business:
- Acquisitions
- Increased investment in specialty business, esp. photonics
o Target expense reduction from 8.5% to 7% post-proxy through:
- Legal - New hire freeze
- IR/PR expenses - Redundancy reduction
- Centralization/RNA shift - Tighten vendor controls
8
RESTRUCTURING - FACT VS. FICTION
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o ICN has DELIVERED on its promise to restructure the company with
tangible results.
o To have done so when market conditions were not conducive would have
been DESTRUCTIVE to shareholder value.
o The results point to management's patience, wisdom and experience.
o Opposition suggestion that a restructuring should have been done sooner
points to their lack of experience and the danger to shareholders of
electing their slate.
9
GOVERNANCE
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o ICN has had a long history of dependable corporate governance.
o Corporate governance provisions adopted that codify what ICN has
practiced all along.
o Nominating committee established that it is comprised solely of
independent directors.
- Membership
- Process
o CEO succession process established that will result in a timely and
orderly change in leadership.
- CANDIDATE INTERVIEWS
- NOMINEE QUALIFICATIONS
10
BOARD INDEPENDENCE
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o ICN's board has ALWAYS been comprised of independent directors.
o Since ICN's founding, 39 out of 42 directors have been non-insiders.
o As of May 29, 2002, five elected within the last year:
- Three as shareholder candidates
- Two as qualified by nominating committee
- Roderick Hills
- Barry Cohen
- Gen. Ronald Fogleman
- Ed Burkhardt
- Steven Lee
11
SUCCESSION PLANNING
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o Plan for succession process presented to Board
o Search committee formed consisting of the following directors:
- Hills, Fogleman, Barker
o Retained Korn Ferry International
o The committee will perform search function in orderly and timely fashion
12
OPPOSITION - NO STRATEGY
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o Opposition has NEVER articulated a strategy or objective for ICN
shareholders - EVER.
o They have NO experience managing a global pharmaceutical company.
o They have NO scientific knowledge needed for continued innovations.
o They are very recent shareholders who have executed at least 195 trades,
including 62 sales.
13
SUBSTANTIAL RISK TO SHAREHOLDERS
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o There is ENORMOUS RISK to shareholders in siding with the opposition.
o They have NO track record, NO experience and NO strategy.
o ICN management has CONSISTENTLY delivered on its promises.
o A VOTE FOR THE OPPOSITION PLACES YOUR INVESTMENT IN ICN AT SUBSTANTIAL
RISK.
14
FINANCIALS
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SPECIALTY PHARMACEUTICALS REVENUES 1
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1995 - 2001 CAGR: +18%
[BAR GRAPH OMITTED]
1995-273 $mm
1996-347 $mm
1997-527 $mm
1998-659 $mm
1999-639 $mm
2000-645 $mm
2001-721 $mm
1 Excludes ICN Yugoslavia
16
SPECIALITY PHARMACEUTICALS EBITDA 1
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1995 - 2001 CAGR: +15%
[BAR GRAPH OMITTED]
1995-66 $mm
1996-68 $mm
1997-103 $mm
1998-148 $mm
1999-166 $mm
2000-117 $mm
2001-151 $mm
1 Excludes ICN Yugoslavia
17
FINANCIAL POSITION
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SELECTED CONSOLIDATED BALANCE SHEET DATA
DECEMBER 31, DECEMBER 31,
(US$mm) 2000 2001
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Cash 155.6 327.6
Total Assets 1,477.1 1,754.4
Senior Debt 496.9 191.2*
Convertible Debt - 525.0
Total Debt 510.8 740.7
Total Stockholders Equity 757.2 810.7
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CREDIT STATISTICS
2000 2001
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Total Debt/EBITDA 1.86x 2.80x
EBITDA/Interest 4.56x 4.73x
Total Debt/Total Book Cap. 40% 48%
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* paid off in April
18
Q1 CONSOLIDATED RESULTS FINANCIAL PERFORMANCE
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Q1 02 Q1 01 %CHG.
----- ----- -----
Revenues $246M R $199M 23
Royalties 57M R 28M 103
REVENUES - SPECIALTY PHARMA 189M 171M 10
Operating income 66M R 41M 60
Net Interest 13M 11M 22
Translation 2M .4M nm
Provision for income taxes 20M 9M 119
Net Income* 30M R 21M 43
Cumulative effect 4M -- nm
Net Income 34M R 21M 62
EPS (diluted)-income 0.36 R 0.26 38
Cumulative efect 0.04 --
Net Income 0.40 R 0.26 54
* Before Cumulative Effect of Accounting Change
19
Q1 2002 KEY MESSAGES
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o Record revenue for First Quarter 2002
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o Record Gross Margin - 62%
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o Record royalties in 1Q' 02
--------------------------
o Record operating income in 1Q'02
--------------------------------
o Record pre-tax income
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- Spec.Pharma -- Increased sales in all regions
- Improved Gross Margin from 59% to 62%
> Better manufacturing utilization and cost reductions
> Improved supply chain function due to transfer of
manufacturing of acquired products to our own facilities
20
Q1 2002 KEY MESSAGES (cont'd)
o Provision for Taxes -- We are generating more income in higher
tax jurisdictions, such as North America. Royalties are taxed at the
full U.S. rate
o S, G & A (in $M):
S,G & A expenses as reported 92
One time charges:
Ribapharm charges/allocation 2
Legal expense 3
Stock comp. Charges 3
Debt repurchase expenses 1
Other non-recurring charges 2
IR/PR expenses 2
----
S, G & A expenses
without one-time charges 79
84
Product Sales 189
S, G & A % of sales 42%
21
SPECIALTY PHARMACEUTICALS
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SPECIALTY PHARMA INVESTMENT HIGHLIGHTS
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o High margin specialty business in Americas
- Record of historical growth in Latin America since 1970
- Consistent new product flow in pharmaceuticals
- New growth platform in vast cosmetic dermatology market
o One of the largest specialty pharmaceutical businesses in Europe
- 57% of international revenues from Western Europe
- New product pipeline
23
SPECIALTY PHARMACEUTICALS REVENUES
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SPECIALITY PHARMA REVENUES ANNUAL GROWTH 12% [BAR GRAPH OMITTED]
ICN International Annual Growth 6%
2000 $338mm 50%
2001 $359mm of specialty
pharma revenues
ICN Americas Annual Growth 18%
2000 $307mm 50%
2001 $362mm of specialty
pharma revenues
2000 $645mm
2001 $721mm
24
SPECIALTY PHARMACEUTICALS OPERATING INCOME*
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SPECIALTY PHARMA OPERATING INCOME ANNUAL GROWTH 35% [BAR GRAPH OMITTED]
ICN International Annual Growth 114%
2000 $12mm 22%
2001 $26mm of specialty
pharma 0I
ICN Americas Annual Growth 24%
2000 $94mm
2001 $117mm 78%
of specialty
pharma OI
2000 $105mm
2001 $142mm
* Before corporate charges
25
SPECIALTY PHARMACEUTICALS EBITDA*
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SPECIALTY PHARMA EBITDA ANNUAL GROWTH 26% [BAR GRAPH OMITTED]
ICN International Annual Growth 32%
2000 $41mm 30%
2001 $54mm of specialty
pharma EBITDA
ICN Americas Annual Growth 24%
2000 $121mm 70%
2001 $150mm of specialty
pharma EBITDA
2000 $162mm
2001 $204mm
*Before corporate charges
26
SPECIALTY PHARMA REVENUES
Q1 2002 vs. 2001
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Q1 2002 Q1 2001 % CHANGE
------- ------- --------
AMERICAS $92,211 $83,849 10%
-------- ------- --------
INTERNATIONAL 96,450 87,570 10%
-------- ------- --------
TOTAL SPECIALTY 188,661 171,419 10%
SPECIALTY PHARMA OPERATING INCOME
Q1 2002 VS. 2001
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Q1 2002 Q1 2001 % CHANGE
------- ------- --------
AMERICAS $27,6 $28,6 -4%
-------- ------- --------
INTERNATIONAL 9,0 3,4 166%
-------- ------- --------
TOTAL 36,6 32,0 14%
* Before corporate charges
SPECIALTY PHARMA EBITDA
Q1 2002 VS. 2001
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Q1 2002 Q1 2001 %
Actual Actual CHANGE
------- ------- -------
AMERICAS $34,4 $36,4 -5%
-------- ------- -------
INTERNATIONAL 18,3 11,4 60%
-------- ------- -------
TOTAL 52,7 47,8 10%
*Before corporate charges
SPECIALTY PHARMACEUTICALS INTERNATIONAL
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SPECIALTY PHARMACEUTICALS INTERNATIONAL - OVERVIEW
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2001 Revenue: US$359mm
o 466 ethical products 2001 EBITDA: US$54mm*
o 266 OTC products
o A broad product portfolio with
increasing focus on:
- central nervous system
- anti-infective / anti-virals [PIE CHART OMITTED]
- dermatology Export
(AAA)
- alimentary tract and metabolism 14%
- oncology Eastern
Europe
o 2,100+ sales and marketing staff 29%
Western
Europe
* before corporate allocations 57%
31
SPECIALTY PHARMACEUTICALS AMERICAS
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SPECIALTY PHARMACEUTICALS AMERICAS -
OVERVIEW
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o High-margined product portfolio 2001 Revenue: US$362mm
o Increasing investment in sales 2001 EBITDA: US$150mm*
and marketing
o Significant expansion in
dermatology
o consistent new product flow [PIE CHART OMITTED]
Latin America 35%
North America 65%
* before corporate allocations
33
SPECIALTY PHARMACEUTICALS AMERICAS -
GEOGRAPHIC SALES
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YEAR ENDED DECEMBER 31, 2001 [PIE CHART OMITTED]
Brazil $6mm
Argentina $15mm
Mexico $107mm
Canada $24mm
United States $210mm
$362mm
34
SPECIALTY PHARMACEUTICALS AMERICAS -
REVENUE MIX [PIE CHART OMITTED]
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Biomedical
2000 $59mm
2001 $60mm
Ethical Pharma
2000 $248mm
2001 $269mm
Photonics
2000 $33mm
2000 $307mm
2001 $362mm
35
THERAPEUTIC MIX - NORTH AMERICA PRODUCT SALES*
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YEAR ENDED DECEMBER 31, 2001 [PIE CHART OMITTED]
HRT 8%
Neurology 14%
Dermatology 60%
Other 18%
$155mm
*Excluding Biomedicals
36
TOP TEN PRODUCTS - SALES SUMMARY*
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2000 Sales 2001 Sales Gross
Product Category (US$mm) (US$mm) Margin
------- -------- -------- ------- ------
Efudex Dermatologic 32.4 41.4 93%
Bedoyecta Vitamin 25.5 25.3 71%
Mestinon Myasthenia Gravis 18.1 24.3 85%
NLite Dermatologic Laser na 19.0 64%
Kinerase Dermatologic 12.6 12.1 86%
GlyQuin Dermatologic 1.7 9.8 84%
Virazole Antiviral 11.7 9.8 94%
Oxsoralen Dermatologic 6.6 9.3 90%
Testred HRT 5.2 7.9 93%
CES HRT 5.7 5.3 41%
--------- -------- --------
119.5 164.2 82%
Percentage of Total Revenue 48% 54%
*Excluding Biomedicals
37
ICN NORTH AMERICA
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MARKET LEADERSHIP IN PHYSICIAN SKIN CARE
38
DEMOGRAPHICS DRIVE DEMAND
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o 78 million Americans between 35-54
o 22 million women with household
income of $56,000
o Seek non-invasive products that will [GRAPHIC OMITTED]
treat and prevent aging with minimal
downtime
o Growing importance of AK therapy
as risk of skin cancer increases
39
SKIN CARE STRATEGY
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[GRAPHIC OMITTED]
DERMATOLOGY --- Rx
DERMATOLOGY --- Physician
Dispensed
DERMATOLOGY --- Aesthetic
Elective
40
BROAD SKIN AGING PORTFOLIO
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[GRAPHIC OMITTED]
41
GLYQUIN TRx MARKET SHARE
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52 WEEK TREND
[GRAPHIC OMITTED]
Source: IMS Health National Prescription Audit
42
WRINKLE REDUCTION PROCEDURE MARKET
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Number of Procedures (000s)
1997 1998 1999 2000 2001
-------- -------- ------- -------- --------
BOTOX 65 180 498 1,097 1,600
ABLATIVE RESURFACING 64 283 1,262 1,358 2,399
COLLAGEN 347 406 475 592 1,099
NONABLATIVE LASER -- -- -- 50 150
------- ------ ------ ------ ------
TOTAL 476 869 2,235 3,097 5,248
======= ====== ====== ====== ======
Sources: ASAPS, ICN Estimate
43
GROWTH DRIVERS
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NLITE
Laser Collagen Replenishment
o GROWTH OF NON ABLATIVE
PROCEDURES
o CONTINUED PHYSICIAN ADOPTION FOR
NON-ABLATIVE LASERS
[GRAPHIC OMITTED] o COMBINATION THERAPY WITH
BOTULINUM TOXIN FOR WRINKLES DUE
TO COLLAGEN DEFICIENCY
o MULTI APPLICATION SYSTEM
- FDA approved: wrinkles
- Current studies: acne scars,
vascular, active acne
o CONSUMER MARKETING
- Drive patients directly to physicians
44
PHYSICIAN DIRECT
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o DISTRICT OFFICES - AESTHETIC ACCOUNT MANAGEMENT
[] AREAS SERVED
2000 2001
(ACTUAL) (ACTUAL)
-------- --------
PROCEDURES PER MONTH NA 4200
STATES SERVED 47 50
-------------------- -------- --------
[GRAPHIC OMITTED] DOCTORS SERVED
PLASTIC SURGEONS 687 1,400
Dermatologists 518 2,977
--- -----
1,105 4,377
OBGYN NA 1,055
Podiatrists NA 0
-- -
1,105 1,105
----- -----
TOTAL 2,720 5,432
45
R&D PIPELINE
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PHOTOTHERAPY NEW INDICATION PIPELINE
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DISCOVERY PRECLINICAL CLINICAL SUBMISSION CLEARANCE
PHOTOTHERAPY
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PERIOCULAR WRINKLE
GENERAL WRINKLE
[BAR GRAPH OMITTED]
VASCULAR
ACNE SCAR
STRIAE
ACNE
47
ICN INTERNATIONAL PIPELINE
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[GRAPH OMITTED]
48
ICN LATIN AMERICA PIPELINE
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[GRAPH OMITTED]
49
THE VISION
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o Concentrate in the fast growing skin aging market
o Cross sell Rx, light and cosmetic products.
o Invest in product development, clinical proof and line
extensions.
o Accelerate consumer advertising.
o Licensing, product and corporate acquisition consistent
with the growth strategy.
50
[Logo-ICN] ICN PHARMACEUTICALS, INC.
MAY 2002