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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 1-09623
IVAX CORPORATION
INCORPORATED UNDER THE LAWS OF THE I.R.S. EMPLOYER IDENTIFICATION NUMBER
STATE OF FLORIDA 16-1003559
4400 BISCAYNE BOULEVARD, MIAMI, FLORIDA 33137
305-575-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class Name of each exchange
on which registered
COMMON STOCK, PAR VALUE $.10 AMERICAN STOCK EXCHANGE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (ss 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
As of February 29, 2000, there were 153,770,029 shares of Common Stock
outstanding.
The aggregate market value of the voting stock held by non-affiliates
of the registrant on February 29, 2000, was approximately $2.9 billion.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain information required by Parts II and IV are incorporated by
reference from portions of the Registrants 1999 Annual Report to Shareholders.
Information required by Part III is incorporated by reference to
portions of the Registrant's Proxy Statement for the 2000 Annual Meeting of
Shareholders which will be filed with the Securities and Exchange Commission
within 120 days after the close of the 1999 fiscal year.
IVAX CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1999
TABLE OF CONTENTS
PAGE
----
PART I
Item 1. Business........................................................... 1
Item 2. Properties.........................................................13
Item 3. Legal Proceedings..................................................14
Item 4. Submission of Matters to a Vote of Security Holders................17
PART II
Item 5. Market for Registrant's Common Equity and
Related Shareholder Matters......................................18
Item 6. Selected Financial Data............................................18
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.........19
Item 8. Financial Statements and Supplementary Data........................19
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................19
PART III
Item 10. Directors and Executive Officers of the Registrant.................19
Item 11. Executive Compensation.............................................19
Item 12. Security Ownership of Certain Beneficial Owners and Management.....19
Item 13. Certain Relationships and Related Transactions.....................19
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K....20
PART I
ITEM 1. BUSINESS
GENERAL
IVAX Corporation is a holding company with subsidiaries engaged in the
research, development, licensing, manufacture, marketing and distribution of
proprietary and generic pharmaceutical products in the United States and foreign
markets. IVAX was incorporated in Florida in 1993, as successor to a Delaware
corporation formed in 1985. Its principal executive offices are located at 4400
Biscayne Boulevard, Miami, Florida 33137 and its telephone number is (305)
575-6000. All references to "IVAX" in this Form 10-K mean IVAX Corporation
and/or its subsidiaries unless the context otherwise requires.
FOCUS AND STRATEGY
IVAX has determined to focus its business primarily in three areas: (i)
proprietary pharmaceuticals, (ii) generic pharmaceuticals, especially specialty
generics, and (iii) collaborative alliances with other pharmaceutical companies
to further develop or license IVAX' proprietary pharmaceuticals, devices, and
technologies. IVAX intends to leverage its expertise and talent in each of these
areas.
While IVAX has a strong pipeline of proprietary drugs in various areas,
the two areas that are most developed are oncology and respiratory. In the
oncology area, IVAX intends to continue its efforts to bring its proprietary
drug Paxene(R) to market and to license from others oncology compounds that will
complement Paxene (see "Research and Development - PROPRIETARY
PHARMACEUTICALS"). In the respiratory area, IVAX intends to capitalize and
expand on its expertise in inhalation devices for asthma, both dry powder and
aerosol, including those with propellants that contain chlorofluorocarbons
("CFCs") and those that do not contain chlorofluorocarbons ("CFC-Free").
In the generic drug area, IVAX is seeking to improve its worldwide
generic drug business by supplementing its generic product portfolio through the
development and introduction of specialty generic products which, because of one
or more characteristics, are likely to encounter less competition. Such products
include those which are difficult to formulate or manufacture, which involve
regulatory obstacles or potential patent challenges, or for which limited raw
material suppliers exist. IVAX believes that by emphasizing the development of
such products, it can mitigate the pricing pressure on other generic drugs and
thereby realize better margins from the sale of generic drugs. In keeping with
this strategy, IVAX plans to launch generic paclitaxel in the United States in
the second half of 2000.
In the area of collaborative alliances, IVAX has benefited from
licensing or partnering arrangements with major international companies, such as
Glaxo Wellcome plc, BASF Aktiengesellschaft, Yamanouchi Pharmaceutical Co., Ltd.
and Abbott Laboratories. During 1999, IVAX entered into agreements with each of
Indiana Protein Technologies to jointly develop generic peptide-based
pharmaceutical products, and Bristol-Myers Squibb Company to collaborate and
develop products in the areas of inhalation technology and with an option to
negotiate a license for an oral formulation of paclitaxel (see "Licensing and
Collaboration"). IVAX continues to seek strategic collaborations with third
parties to exploit its proprietary technologies on an opportunistic basis.
IVAX also has small, but growing subsidiaries in the areas of
veterinary pharmaceuticals, diagnostic assays and analyzers, and nutritional
supplements and herbal medications.
PHARMACEUTICALS
IVAX' pharmaceutical business historically has grown through the
development and acquisition of brand name, generic and over-the-counter
pharmaceutical products, the license of technology and products
from third parties, and the acquisition of pharmaceutical and other businesses.
IVAX markets several brand-name pharmaceutical products and a wide variety of
generic and over-the-counter pharmaceutical products primarily in the United
States and the United Kingdom. IVAX also maintains direct operations in
Argentina, China, the Czech Republic, Germany, Hong Kong, Hungary, India,
Ireland, Italy, Kazakhstan, Latvia, Peru, Poland, Russia, the Slovak Republic,
Ukraine and Uruguay, and markets its products through distributors or joint
ventures in other foreign markets.
PROPRIETARY PRODUCTS
IVAX has substantial expertise in the development, manufacture and
marketing of respiratory drugs, primarily for asthma, in metered-dose inhaler
("MDI") formulations. IVAX holds patents on a breath-activated MDI which is
designed to overcome the difficulty many persons experience with conventional
MDIs in attempting to coordinate their inhalation with the emission of the
medication. IVAX' device, called Easi-Breathe(TM), emits the medication
automatically in one step upon inhalation, minimizing coordination problems and
better ensuring that the medication is delivered to the lungs. IVAX markets its
Easi-Breathe breath-activated inhaler through its Baker Norton division in the
U.K. and through Galena a.s. in the Czech Republic. In December 1996, IVAX
licensed the Easi-Breathe device to Glaxo Wellcome for use with a number of
inhaled compounds (including, among others, beclomethasone and albuterol) mixed
with CFC or hydrofluoroalkane ("HFA") propellants. The license granted Glaxo
Wellcome the exclusive right to use the Easi-Breathe device for these compounds
on a worldwide basis. IVAX renegotiated this agreement in order to regain rights
to market IVAX' Easi-Breathe inhaler containing beclomethasone and albuterol
worldwide, except that IVAX and Glaxo Wellcome will continue to jointly market
the Easi-Breathe inhaler in the United Kingdom and Ireland until the end of
2000. The parties are discussing a number of other ways in which to strengthen
their alliance.
In September 1997, IVAX sold the United States and Canadian marketing
rights to its proprietary drug Elmiron(R), an innovative drug used for the
treatment of interstitial cystitis, and the urological medications Bicitra(R),
Polycitra(R), Polycitra-K Crystals(R), Polycitra-LC(TM), Neutra-Phos(R), and
Neutra-Phos-K(TM), to ALZA Corporation ("ALZA"). Although this sale represented
an exit by IVAX from the urology business in 1997, IVAX retained the rights to
these products outside of the United States and Canada. IVAX received $75.0
million in up-front payments from ALZA and recognized a $43 million gain on the
sale in 1997. IVAX also received milestone and royalty payments based on the
achievement of specified sales levels in 1998 and 1999, which are included in
other income as additional gain on sale of product rights. IVAX may receive
additional milestone and royalty payments. However, no assurance can be given
that IVAX will receive additional payments from ALZA.
IVAX markets a number of brand-name products treating a variety of
conditions through its subsidiaries throughout the world. These products are
marketed by IVAX' direct sales force to physicians, pharmacies, hospitals,
managed health care organizations and government agencies, and are sold
primarily to wholesalers, retail pharmacies, distributors, hospitals and
physicians. Approximately 20%, 15% and 26% of IVAX' consolidated net revenues
for the years ended December 31, 1999, 1998 and 1997, respectively, were
attributable to worldwide sales of branded drugs.
GENERIC PRODUCTS
Generic drugs are therapeutically equivalent to their brand-name
counterparts, but are generally sold at lower prices as alternatives to the
brand-name products. After giving effect to the restatement described below in
"Disposition of Non-Core Businesses," approximately 57%, 65% and 49% of IVAX'
consolidated net revenues for the years ended December 31, 1999, 1998 and 1997,
respectively, were attributable to worldwide sales of generic prescription and
over-the-counter drugs and vitamin supplements.
In the United States, IVAX manufactures and markets under the "Zenith
Goldline" and "Goldline" trade names approximately 57 generic prescription drugs
in capsule or tablet forms in an aggregate of
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approximately 116 dosage strengths. IVAX distributes in the United States (but
does not manufacture) approximately 349 additional generic prescription and
over-the-counter drugs and vitamin supplements, in various dosage forms, dosage
strengths and package sizes. IVAX' domestic generic drug distribution network
encompasses most trade classes of the pharmaceutical market, including
wholesalers, retail drug chains, retail pharmacies, mail order companies,
managed care organizations, hospital groups, nursing home providers and
government agencies. Approximately 48% of IVAX' 1999 United States generic
pharmaceutical sales were made to the top five customers of that business. None
of these customers individually represents 10% or more of IVAX' consolidated net
revenues. The loss of any of these customers would have an adverse effect on
IVAX' business and results of operations (see "Competition").
In the United Kingdom, IVAX is the largest manufacturer and distributor
of generic pharmaceuticals. IVAX markets under the "Norton" trade name
approximately 110 generic prescription and over-the-counter drugs, about half of
which IVAX manufactures, in various dosage forms and dosage strengths,
constituting an aggregate of approximately 229 products. Such products are
marketed to wholesalers, retail pharmacies, hospitals, physicians and government
agencies. In addition, IVAX manufactures and markets primarily in the United
Kingdom various "blow-fill-seal" pharmaceutical products, such as contact lens
solutions, unit-dose eye drops, solutions for injection or irrigation, and
unit-dose vials for nebulization to treat respiratory disorders. IVAX also
contract manufactures pharmaceutical products in the United Kingdom and Ireland
for other companies.
ACQUISITIONS AND JOINT VENTURES
In October 1999, IVAX acquired the Institute for Drug Research, Ltd.
("IDR"), which is based in Budapest, Hungary. IDR employs approximately 200
scientists and support staff and engages in original drug discovery and provides
contract research services to other pharmaceutical companies. It was originally
founded in 1950 as a government-owned pharmaceutical research and development
center for the Hungarian pharmaceutical industry. It has expertise in drug
discovery, screening, synthesis, and pre-clinical development. Additionally, IDR
has a depository of more than 1,500 microorganisms to produce chemicals of
medicinal value through fermentation. IDR has a number of new drugs that are now
in Phase 1 clinical trials, including a tri-peptide with anti-thrombin activity
similar to heparin, which helps prevent blood clots.
In 1996, IVAX acquired Elvetium S.A. (Argentina), Alet Laboratorios
S.A.E.C.I. y E. and Elvetium S.A. (Uruguay). In 1998, Alet Laboratorios
S.A.E.C.I. y E. merged into Elvetium S.A. (Argentina), which is headquartered in
Buenos Aires and engaged in the business of manufacturing and marketing
pharmaceuticals in Argentina. Elvetium S.A. (Uruguay) is headquartered in
Montevideo and engaged in the business of manufacturing and marketing
pharmaceuticals in Uruguay.
In 1994, IVAX acquired a 60% interest in Galena a.s. ("Galena"), one of
the oldest and best known pharmaceutical companies based in the Czech Republic.
Through open market purchases made in 1995, 1996 and 1999, and a public tender
offer made in 1999, IVAX increased its ownership interest in Galena to 86%.
Galena develops, manufactures and markets a variety of human pharmaceutical and
veterinary products, as well as syrup for a herbal based cola and an energy
sport beverage, active ingredients and herbal extracts used in the manufacture
of pharmaceuticals, including cyclosporin and ergot alkaloids. All products are
manufactured in the Czech Republic. Galena sells its products primarily in
Central and Eastern European countries, including Russia. As part of the 1994
acquisition, IVAX contributed to Galena rights to manufacture and market certain
products and products under development by IVAX in certain countries.
IVAX is a 50% partner in two Chinese joint ventures, one with Kunming
Pharmaceutical Factory, named Kunming Baker Norton Pharmaceutical Co., Ltd.,
which manufactures and markets a variety of pharmaceutical products, and the
other with Beijing Ji-Zhi Pharmaceuticals Technology Development Company of the
Pharmaceuticals Research and Development Centre, China, named Beijing JiAi
3
Pharmaceuticals Limited Liability Company, which manufactures and markets
inhalation products for respiratory ailments.
OTHER BUSINESSES
NEUTRACEUTICALS
IVAX provides contract manufacturing services for the nutritional
supplement industry from its encapsulating facility in Miami, Florida. Turnkey
services include custom formulation, raw material sourcing, soft gelatin
encapsulation, and specialized packaging. Utilizing herbal extracts manufactured
by its Galena a.s. subsidiary, IVAX also manufactures a line of high quality
herbal neutraceutical products in soft gelatin capsules.
VETERINARY PRODUCTS
IVAX formulates, packages and distributes under the "DVM
Pharmaceuticals" trade name various veterinary products in the United States,
primarily neutraceutical and dermatological products for companion animals.
These products are marketed through IVAX' direct sales force and a national
network of veterinary product distributors primarily to small animal
practitioners. DVM is developing several proprietary veterinary products,
including one for feline urological syndrome.
DIAGNOSTICS
IVAX' diagnostics group develops, manufactures and markets diagnostic
reagents and instrumentation. IVAX manufactures and markets a line of enzyme
immunoassays ("EIAs") which are used to detect the presence of infectious and
autoimmune diseases, and a line of autoimmune antigens, reagents and other
related products. IVAX also manufactures and markets automatic instruments for
these assays. The diagnostic group's products are marketed to clinical reference
laboratories, hospital laboratories, research institutions and other commercial
entities in the United States through IVAX' direct sales force. In May 1999,
IVAX' diagnostics group entered into a three year agreement to supply automated
walk-away instrumentation for clinical laboratories to Sigma Diagnostics, Inc.
IVAX also markets these products, as well as diagnostic products manufactured by
others, in Italy through a direct sales force to public hospitals and private
medical laboratories. Sales of IVAX' diagnostic products are also made through
independent distributors in various other foreign markets.
RESEARCH AND DEVELOPMENT
For the years ended December 31, 1999, 1998 and 1997, IVAX spent $54.2
million, $48.6 million and $53.4 million, respectively, for company-sponsored
research and development activities. In 1999, approximately 97% of such amount
was dedicated to pharmaceutical research and development. From time to time,
IVAX may supplement its research and development efforts by entering into
research and development agreements, joint ventures and other collaborative
arrangements with other companies to defray the cost of product development.
IVAX intends to pursue a balanced strategy of developing proprietary
pharmaceutical products with an emphasis on the oncology and respiratory fields,
as well as generic pharmaceutical products with an emphasis on specialty
generics (see "General - Focus and Strategy").
Statements in this Form 10-K concerning IVAX' product development
strategy and the timing of regulatory filings and approvals are forward-looking
statements which are subject to risks and uncertainties. The length of time
necessary to complete clinical trials and from submission of an application for
market approval to a final decision by a regulatory authority varies
significantly. No assurance can be given that IVAX will successfully complete
the development of products under development, that IVAX will be able to obtain
regulatory approval for any such product, or that any approved product may be
produced in
4
commercial quantities, at reasonable costs, and be successfully marketed.
Similarly, there can be no assurance that IVAX' competitors will not develop and
introduce products that will adversely affect IVAX' business and results of
operations.
PROPRIETARY PHARMACEUTICALS
IVAX is committed to the cost-effective development of proprietary
pharmaceuticals directed primarily towards indications having relatively large
patient populations or for which limited or inadequate treatments are available.
IVAX seeks to accelerate product development and introduction by in-licensing
compounds, especially after clinical testing has begun, and by developing new
dosage forms of existing products or new therapeutic indications for existing
products. IVAX intends to emphasize the development of drug products in the
oncology and respiratory fields, and has a variety of proprietary
pharmaceuticals in varying stages of development.
ELMIRON(R). IVAX received its first United States approval to market a
proprietary drug in September 1996, when the United States Food and Drug
Administration (the "FDA") cleared IVAX' New Drug Application ("NDA") for the
marketing of its patented prescription medication Elmiron (pentosan polysulfate
sodium). Elmiron is approved in the United States and Canada for the treatment
of interstitial cystitis, a chronic, progressive and debilitating urinary
bladder disease primarily afflicting women. In September 1997, IVAX sold the
marketing rights to Elmiron for all indications, as well as rights to certain
other products in the United States and Canada, to ALZA Corporation, but
retained such rights outside the United States and Canada. (See "Pharmaceuticals
- - PROPRIETARY PRODUCTS" and Note 6 of Notes to Consolidated Financial Statements
for a more complete description of this transaction.)
PAXENE(R). The active substance in the injectable drug paclitaxel is an
unpatented compound which, in clinical trials sponsored by the National Cancer
Institute, exhibited promising results in the treatment of ovarian and breast
cancer and AIDS-related Kaposi's Sarcoma ("KS"). Bristol-Myers Squibb Company
("Bristol-Myers") currently markets an injectable product containing paclitaxel
under the brand name Taxol(R) for the treatment of ovarian and breast cancer and
KS. Paxene, IVAX' formulation of injectable paclitaxel, is marketed under a
license from NaPro BioTherapeutics, Inc.
IVAX submitted an NDA for Paxene for the treatment of KS in March 1997,
and in December 1997, the FDA determined Paxene to be safe and effective for the
treatment of KS, but indicated that Paxene could not be finally approved for
this indication until August 4, 2004. The delay in final approval is due to a
seven-year market exclusivity period under the Orphan Drug Act granted to Taxol,
which was approved for KS earlier in 1997. Taxol's Orphan Drug exclusivity does
not apply to NDAs or Abbreviated New Drug Applications ("ANDAs") for the use of
paclitaxel to treat indications other than KS and does not apply in any market
other than the United States. IVAX filed an ANDA for paclitaxel with the FDA in
December 1997. In August 1998, IVAX purchased Immunex Corporation's ANDA for
paclitaxel, the first filed with the FDA for paclitaxel injection. IVAX filed an
application for regulatory approval of Paxene to treat KS in the European Union
in 1997 and, in July 1999, the European Committee for Proprietary Medical
Products approved this application. IVAX' Galena subsidiary received an
exception from registration to market Paxene for KS in the Czech Republic in
January 1999. IVAX has also applied for approval to market Paxene in other
countries.
Bristol-Myers has obtained numerous patents relating to paclitaxel,
including patents covering the production of paclitaxel, its administration to
patients and its formulation. Even if IVAX' NDA for Paxene or its ANDA for
paclitaxel is approved, IVAX will not be able to market paclitaxel if
Bristol-Myers successfully enforces such patents against IVAX. In January 1998,
Bristol-Myers initiated patent infringement litigation against Immunex and,
under the Waxman-Hatch Act, the IVAX-owned paclitaxel ANDA filed by Immunex may
not be approved by the FDA until the earlier of June 2000 or the date when a
court determines that certain of Bristol-Myers' patents are either unenforceable
or not infringed by IVAX' product (see "Governmental Regulation").
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PAXORAL(R). Presently, paclitaxel is marketed only in injectable form.
IVAX is developing an oral formulation of paclitaxel that IVAX believes may
provide significant advantages over the injectable dosage form in terms of
patient convenience and reduced side-effects. IVAX is currently conducting human
clinical trials to test the safety and efficacy of Paxoral.
INHALATION AEROSOL PRODUCTS. IVAX is continuing to develop the
Easi-Breathe(TM) inhaler for use with various compounds. IVAX markets the asthma
drug Cromogen(TM) (sodium cromoglycate) under its own name, and the asthma drugs
Ventolin(R) (albuterol) and Becotide(R) (beclomethasone) under Glaxo Wellcome's
name, in the Easi-Breathe inhaler in the United Kingdom and Ireland. Ventolin
and Becotide are registered trademarks of Glaxo Wellcome. In light of
international agreements calling for the eventual phase-out of CFCs, IVAX is
developing CFC-Free inhalation aerosol products. IVAX received regulatory
approval to market CFC-Free beclomethasone in Ireland and France in 1997 in its
standard MDI and its Easi-Breathe inhaler, the first such approvals for any
company anywhere in the world. In October 1999, IVAX received regulatory
approval to market CFC-Free beclomethasone in its standard MDI in Belgium,
Italy, Finland and Portugal. In 1998, IVAX also applied for approval to market
an albuterol CFC-Free formulation in various European countries. Also, IVAX has
developed a multi-dose dry powder inhaler ("MDPI") which uses no propellant and
is believed to have superior dosing accuracy than competing models. In 1998,
IVAX completed clinical trials in the United Kingdom for budesonide in IVAX'
MDPI. In 1999, IVAX submitted Marketing Authorization Applications in the United
Kingdom for approval to market an MDPI for use with albuterol and budesonide.
In developing environmentally friendly, CFC-Free formulations for MDIs,
IVAX and many of its competitors have obtained or licensed patents on
formulations containing alternative propellants. There are many existing patents
covering the use of hydrofluoroalkane with pharmaceuticals, and successful
product development by IVAX may require that IVAX incur substantial expense in
seeking to develop formulations that do not infringe competitors' patents, or
that IVAX license or invalidate such patents. IVAX successfully invalidated
certain relevant United Kingdom and European patents in the United Kingdom
during 1997, 1998, and early 1999, but there can be no assurance that it will be
successful in defeating the corresponding patents in the United States or other
foreign jurisdictions.
GENERIC PHARMACEUTICALS
IVAX also develops generic pharmaceutical products. During 1999, IVAX
received final FDA approval of 3 ANDAs, tentative FDA approval of 5 ANDAs,
approval of 6 Abridged Product License Applications ("APLAs"), the United
Kingdom equivalent of an ANDA, from the United Kingdom Medicines Control Agency
(the "MCA") and approval of 8 APLAs in 4 other European Countries.
As of January 1, 2000, IVAX had ANDAs or its foreign equivalent pending
as follows:
------------------ -----------------
NUMBER PENDING COUNTRY
------------------ -----------------
29 United States
------------------ -----------------
28 England
------------------ -----------------
11 Ireland
------------------ -----------------
8 Germany
------------------ -----------------
2 France
------------------ -----------------
1 Canada
------------------ -----------------
IVAX is seeking to supplement its portfolio of generic products by
emphasizing the development of specialty generics, defined as those products
which, because of one or more special characteristics, are likely to encounter
less competition. Such drugs include those which are difficult to formulate or
manufacture, which involve regulatory obstacles or potential patent challenges,
or for which limited raw
6
material suppliers exist. By emphasizing the development of specialty generics,
IVAX seeks to introduce generic products that its competitors cannot easily
develop and thereby obtain better margins from sales of its generic products. In
addition, in evaluating which generic pharmaceutical product development
projects to undertake, IVAX considers whether the new product, once developed,
will complement other IVAX products in the same therapeutic family, or will
otherwise assist in making IVAX' product line more complete. Developing
specialty generic pharmaceutical products involves a greater degree of risk than
developing common generic pharmaceutical products and will require substantial
time and resources. No assurance can be given that IVAX will successfully build
a consistent, profitable pipeline of specialty generics or be able to obtain
regulatory approval to market any such products.
GOVERNMENTAL REGULATION
IVAX' pharmaceutical and diagnostic operations are subject to extensive
regulation by governmental authorities in the United States and other countries
with respect to the testing, approval, manufacture, labeling, marketing and sale
of pharmaceutical and diagnostic products. IVAX devotes significant time, effort
and expense to addressing the extensive government regulations applicable to its
business, and in general, the trend is towards more stringent regulation.
In the United States, the FDA requires extensive testing of new
pharmaceutical products to demonstrate that such products are both safe and
effective in treating the indications for which approval is sought. Testing in
humans may not be commenced until after an Investigational New Drug exemption is
granted by the FDA. An NDA must be submitted to the FDA for new drugs that have
not been previously approved by the FDA and for new combinations of, and new
indications and new delivery methods for, previously approved drugs. Three
phases of clinical trials must be successfully completed before an NDA is
approved: phase I clinical trials, which involve the administration of the drug
to a small number of healthy subjects to determine safety, tolerance, absorption
and metabolism characteristics; phase II clinical trials, which involve the
administration of the drug to a limited number of patients for a specific
disease to determine dose response, efficacy and safety; and phase III clinical
trials, which involve the study of the drug to gain confirmatory evidence of
efficacy and safety from a wide base of investigators and patients. In the case
of a drug that has been previously approved by the FDA, an abbreviated approval
process is available. For such drugs an ANDA may be submitted to the FDA for
approval. For an ANDA to be approved, among other requirements, the drug must be
shown to be bioequivalent to the previously approved drug. The NDA and ANDA
approval process generally takes a number of years and involves the expenditure
of substantial resources. There can be no assurance that the time and resources
devoted to seeking regulatory approval for new products will result in product
approvals or earnings.
The owner of an approved drug is required to list with the FDA all
patents which cover the approved drug and its approved uses. A company filing an
ANDA and seeking approval to market a product before expiration of all listed
patents must certify that such patents are invalid or will not be infringed by
the manufacture, use or sale of the applicant's product, and must notify the
patent owner and the owner of the approved drug of its filing. If the approved
drug owner sues the ANDA filer for patent infringement within 45 days after it
receives such notice, then the FDA will not grant final approval of the ANDA
until the earlier of 30 months from the date the approved drug owner receives
such notice or the date when a court finally determines that the applicable
patents are either invalid or would not be infringed by the applicant's product.
As a result, generic drug manufacturers, including IVAX, are often involved in
lengthy, expensive patent litigation against brand-name drug companies that have
considerably greater resources and that are typically inclined to actively
pursue patent litigation in an effort to protect their franchises.
IVAX' diagnostic products are considered medical devices, and as such
require either a 510(k) premarket notification clearance ("510(k)") or an
approved Premarket Approval Application ("PMA") from the FDA prior to marketing.
A product qualifies for a 510(k) if it is substantially equivalent to another
medical device that was on the market prior to May 28, 1976 and does not now
have a PMA or has
7
previously received 510(k) premarket notification clearance and is lawfully on
the market. The 510(k) approval process can take several months and may involve
the submission of data demonstrating its equivalency to similar products in the
market together with other supporting information. An approved PMA application
indicates that the FDA has determined that a device has been proven to be safe
and effective for its intended use. The PMA process typically can last several
years and requires the submission of significant quantities of preclinical and
clinical data as well as manufacturing and other information.
On an ongoing basis, the FDA reviews the safety and efficacy of
marketed pharmaceutical products and products considered medical devices and
monitors labeling, advertising and other matters related to the promotion of
such products. The FDA also regulates the facilities and procedures used to
manufacture pharmaceutical and diagnostic products in the United States or for
sale in the United States. Such facilities must be registered with the FDA and
all products made in such facilities must be manufactured in accordance with
"good manufacturing practices" established by the FDA. Compliance with good
manufacturing practices guidelines requires the dedication of substantial
resources and requires significant costs. The FDA periodically inspects IVAX'
manufacturing facilities and procedures to assure compliance. The FDA may cause
a recall or withdraw product approvals if regulatory standards are not
maintained. FDA approval to manufacture a drug is site-specific. In the event an
approved manufacturing facility for a particular drug becomes inoperable,
obtaining the required FDA approval to manufacture such drug at a different
manufacturing site could result in production delays, which could adversely
affect IVAX' business and results of operations.
In connection with its activities outside the United States, IVAX is
also subject to regulatory requirements governing the testing, approval,
manufacture, labeling, marketing and sale of pharmaceutical and diagnostic
products, which requirements vary from country to country. Whether or not FDA
approval has been obtained for a product, approval of the product by comparable
regulatory authorities of foreign countries must be obtained prior to marketing
the product in those countries. The approval process may be more or less
rigorous from country to country, and the time required for approval may be
longer or shorter than that required in the United States. No assurance can be
given that clinical studies conducted outside of any country will be accepted by
such country, and the approval of any pharmaceutical or diagnostic product in
one country does not assure that such product will be approved in another
country.
The federal and state governments in the United States, as well as many
foreign governments, including the United Kingdom, from time to time explore
ways to reduce medical care costs through health care reform. These efforts have
resulted in, among other things, government policies that encourage the use of
generic drugs rather than brand-name drugs to reduce drug reimbursement costs.
Virtually every state in the United States has a generic substitution law which
permits the dispensing pharmacist to substitute a generic drug for the
prescribed brand-name product. The debate to reform the United States' health
care system is expected to be protracted and intense. Due to uncertainties
regarding the ultimate features of reform initiatives and their enactment and
implementation, IVAX cannot predict what impact any reform proposal ultimately
adopted may have on the pharmaceutical or diagnostic industries or on the
business or operating results of IVAX.
BACKLOG ORDERS
As of December 31, 1999, the dollar amount of backlog orders for Zenith
Goldline was $3.9 million and for Norton Healthcare was $3.2 million.
8
RAW MATERIALS
Raw materials essential to IVAX' business are generally readily
available from multiple sources. Certain raw materials and components used in
the manufacture of IVAX' products are, however, available from limited sources,
and in some cases, a single source. Any curtailment in the availability of such
raw materials could be accompanied by production or other delays, and, in the
case of products for which only one raw material supplier exists, could result
in a material loss of sales, with consequent adverse effects on IVAX' business
and results of operations. In addition, because raw material sources for
pharmaceutical products must generally be approved by regulatory authorities,
changes in raw material suppliers may result in production delays, higher raw
material costs and loss of sales and customers. IVAX obtains a significant
portion of its raw materials from foreign suppliers, and its arrangements with
such suppliers are subject to, among other things, FDA, customs and other
government clearances, duties and regulation by the countries of origin.
COMPETITION
The pharmaceutical industry is highly competitive and includes numerous
established pharmaceutical companies, many of which have considerably greater
financial, technical, clinical, marketing and other resources and experience
than IVAX. The markets in which IVAX competes are undergoing, and are expected
to continue to undergo, rapid and significant technological change, and IVAX
expects competition to intensify as technological advances are made. IVAX
intends to compete in this marketplace by developing or licensing pharmaceutical
products that are either patented or proprietary and which are primarily for
indications having relatively large patient populations or for which limited or
inadequate treatments are available, and, with respect to generic
pharmaceuticals, by developing therapeutic equivalents to previously patented
products which, because of one or more unique characteristics, are expected to
have less intensive competition. There can be no assurance, however, that
developments by others will not render IVAX' pharmaceutical products or
technologies obsolete or uncompetitive.
In addition to product development, other competitive factors in the
pharmaceutical industry include product quality and price, customer service, and
reputation. Price is a key competitive factor in the generic pharmaceutical
business. To compete effectively on the basis of price and remain profitable, a
generic drug manufacturer must manufacture its products in a cost-effective
manner. As a result of its ongoing cost-control and restructuring programs, IVAX
has reduced its manufacturing costs.
Revenues and gross profit derived from generic pharmaceutical products
tend to follow a pattern based on regulatory and competitive factors unique to
the generic pharmaceutical industry. As patents for brand-name products and
related exclusivity periods mandated by regulatory authorities expire, the first
generic manufacturer to receive regulatory approval for and market generic
equivalents of such products is usually able to achieve relatively high market
share, revenues and gross profit. As other generic manufacturers receive
regulatory approvals and enter the market, sales volumes, market share and
prices typically decline. Accordingly, the level of revenues and gross profit
attributable to generic products developed and manufactured by IVAX is
dependent, in part, on IVAX' ability to maintain a pipeline of products in
development and to develop and rapidly introduce new products, the timing of
regulatory approval of such products, the number and timing of regulatory
approvals of competing products, and IVAX' ability to manufacture such products
efficiently. Because of the regulatory and competitive factors discussed above,
IVAX' revenues and results of operations historically have fluctuated from
period to period. IVAX expects this fluctuation to continue as long as a
significant part of its revenues are generated from sales of generic
pharmaceuticals.
In addition to competition from other generic drug manufacturers, IVAX
faces competition from brand-name companies as they increasingly sell their
products into the generic market directly by establishing, acquiring or forming
licensing or business arrangements with generic pharmaceutical companies. No
regulatory approvals are required for a brand-name manufacturer to sell directly
or through
9
a third party to the generic market, nor do such manufacturers face any other
significant barriers to entry into such market.
The Food and Drug Modernization Act of 1997 includes a pediatric
exclusivity provision that may provide an additional six months of market
exclusivity in the United States for indications of new or currently marketed
drugs, if certain agreed upon pediatric studies are completed by the applicant.
Brand-name companies are utilizing this provision to increase their period of
market exclusivity and are increasingly pursuing other strategies to prevent or
delay the introduction of generic competition. These strategies include, among
other things, initiating legislative efforts in various states to limit the
substitution of generic versions of certain types of branded pharmaceuticals,
seeking to establish regulatory obstacles to the demonstration of the
bioequivalence of generic drugs to their brand-name counterparts, and
instituting legal actions based on process or other patents that allegedly are
infringed by the generic products.
A significant amount of IVAX' United States generic pharmaceutical
sales are made to a relatively small number of drug wholesalers and retail drug
chains, which represent an essential part of the distribution chain of
pharmaceutical products in the United States. Both of these industries have
undergone, and are continuing to undergo, significant consolidation, which has
resulted in IVAX' customers gaining more purchasing leverage and consequently
increasing the pricing pressures facing IVAX' United States generic
pharmaceutical business. Further consolidation among IVAX' customers may result
in even greater pricing pressures and correspondingly reduce the gross margins
of this business, and may also cause such customers to reduce their purchases of
IVAX' products.
Other competitive factors affecting IVAX' business include the
emergence of large buying groups representing independent retail pharmacies and
the prevalence and influence of managed care organizations and similar
institutions, which are able to seek price discounts on pharmaceutical products.
As the influence of these entities continues to grow, IVAX may continue to face
increased pricing pressure on the products it markets.
PATENTS AND TRADEMARKS
IVAX seeks to obtain patent protection on its products and products
under development where appropriate. IVAX currently owns or has licenses under
various United States and foreign patents and patent applications, which cover
certain of its products, products under development, product uses and
manufacturing processes. Protection for individual products, product uses or
manufacturing processes extends for varying periods in accordance with the date
of grant and the legal life of the patents in the various countries. The
protection afforded, which may also vary from country to country, depends on the
type of patent and its scope of coverage. There is no assurance that patents
will be issued on pending applications or as to the scope or degree of
protection patents will afford IVAX, or that IVAX' patents will be held valid by
a court of competent jurisdiction. Although IVAX believes that its patents and
licenses are important to its business, no single patent or license is currently
material in relation to IVAX' business as a whole. Any litigation regarding
IVAX' patents could result in substantial cost to IVAX.
IVAX sells certain of its products under trademarks and seeks to obtain
protection for its trademarks by registering them in the United States, United
Kingdom and other countries where the products are marketed. At present, IVAX
does not consider its trademarks, individually or in the aggregate, to be
material in relation to its business as a whole.
IVAX' success also depends on trade secrets which, in some cases,
cannot be patented or as to which seeking patents may harm IVAX' competitive
position. While IVAX generally requires its employees, advisors and consultants
to execute confidentiality agreements prohibiting such persons from disclosing
IVAX' trade secrets or using them in a manner harmful to IVAX, there can be no
assurance that these agreements will provide adequate protection or that IVAX
can meaningfully protect its proprietary interest in unpatented trade secrets.
10
LICENSING AND COLLABORATION
IVAX has obtained licenses to technology and compounds for development
into new pharmaceutical products from various inventors, universities and the
United States government, and will continue to seek new licenses from such
parties and others, including pharmaceutical companies. Generally, these
licenses grant IVAX the right to complete development efforts initiated by
others and to market any resulting products. IVAX generally is required to pay a
royalty based on sales of the product. There can be no assurance that any
licenses desired by IVAX will be obtainable on commercially reasonable terms or
that any licensed patents or proprietary rights will be valid and enforceable.
IVAX also grants licenses to other pharmaceutical companies relating to
technologies or compounds under development and, in some cases, finished
products. Generally, these licenses grant the licensees the right to complete
development work of the technology or compound, or obtain regulatory approvals
of a product, and thereafter market the product in specified territories. These
licenses often involve the payment of an up-front fee and fees upon completion
of certain development milestones, and also provide for the payment of royalties
based on sales of the product. IVAX often retains the right to supply the
product to the licensees.
In August 1999, IVAX entered into an agreement with Indiana Protein
Technologies ("IPT"), a privately held company, to use IPT's recombinant
technology in the joint development of a number of generic peptide-based
pharmaceutical products.
In November 1999, IVAX entered into a three year product collaboration
and development services agreement with Bristol-Myers in the areas of inhalation
technology and oncology. With respect to inhalation technology, the agreement
calls for IVAX and Bristol-Myers to collaborate to develop one or more of
Bristol-Myers' proprietary molecules using IVAX' patented devices, which
Bristol-Myers would purchase from IVAX. Bristol-Myers would retain the worldwide
rights to market respiratory products containing its compounds. On the oncology
side, Bristol-Myers' Taxol(R) (paclitaxel) is the leading anti-cancer drug in
the world, with 1999 sales estimated to reach approximately $1.5 billion.
However, Taxol is an injectable product and is not orally available. As part of
the agreement, Bristol-Myers was granted an option to negotiate a license to
IVAX' patented system for making paclitaxel orally available.
SEASONALITY
While certain of IVAX' individual products may have a degree of
seasonality, there are no significant seasonal aspects to IVAX' business, except
that sales of pharmaceutical products indicated for colds and flu symptoms are
higher during the fourth quarter as customers supplement inventories in
anticipation of the cold and flu season. In addition, revenues that are
contingent upon licensees achieving certain sales targets during the year tend
to be higher in the second half of the year.
ENVIRONMENT
IVAX believes that its operations comply in all material respects with
applicable laws and regulations concerning the environment. While it is
impossible accurately to predict the future costs associated with environmental
compliance and potential remediation activities, compliance with environmental
laws is not expected to require significant capital expenditures and has not
had, and is not presently expected to have, a material adverse effect on IVAX'
earnings or competitive position.
INCREASES IN EFFICIENCY
Beginning in the third quarter of 1996 and continuing throughout 1999,
IVAX announced and initiated restructuring programs in an effort to enhance
operating efficiencies and reduce costs. These objectives were achieved through
workforce reductions, facility consolidations and other cost-saving measures
throughout the organization. (see "Properties"). During this period, IVAX
reduced its worldwide
11
workforce from approximately 8,100 to approximately 3,800 employees, including
reductions resulting from the sale of non-core businesses. IVAX also implemented
strict controls on capital expenditures and working capital spending.
In connection with the restructuring programs, IVAX consolidated its
United States pharmaceutical distribution facilities into a single leased
distribution center in Kenton County, Kentucky in 1997; sold its office,
packaging and warehouse facility in Fort Lauderdale, Florida and its
pharmaceutical manufacturing facilities in Syosset, New York and Kirkland,
Quebec, Canada in 1998; sold its pharmaceutical manufacturing facility in
Shreveport, Louisiana (which was closed in 1996) in 1998; and has substantially
ceased manufacturing at its Northvale, New Jersey pharmaceutical manufacturing
facility in 1999. Production from these facilities has been transferred to
Cidra, Puerto Rico or other existing IVAX facilities.
During 1998 and 1999, a focus of IVAX' restructuring program was the
pharmaceutical operations of its Norton Healthcare Limited subsidiary located in
the United Kingdom. As in the United States, this program included workforce
reductions, facility consolidations and other cost-saving measures. As part of
this restructuring, IVAX reduced its workforce in the United Kingdom from
approximately 1,460 to approximately 1,200. During 1998, IVAX closed two
manufacturing plants in southeast London, England and consolidated its U.K.
manufacturing activities at its Waterford, Ireland facility. In 1999, IVAX
consolidated its U.K. packaging operations into its Waterford, Ireland facility
from Harlow, England and all other functions, including research and
development, were consolidated into its new facility located in the Royal Docks
area of London.
DISPOSITION OF NON-CORE BUSINESSES
During 1997 and 1998, IVAX divested its intravenous products, specialty
chemicals and personal care products businesses, all of which had been
classified as discontinued operations since 1997. As a result of its decision to
divest these businesses, in 1997 IVAX restated its financial statements to
reflect these businesses as discontinued operations. Unless otherwise noted, all
of the financial information contained herein reflects this restatement. IVAX
completed the sale of the last of these businesses in July 1998. See Note 5,
Divestitures, and Note 7, Discontinued Operations, to the Consolidated Financial
Statements and "Management's Discussion and Analysis of Results of Operations
and Financial Condition" incorporated by reference from the Financial
Information section of the 1999 Annual Report to Shareholders for additional
information. These businesses accounted for approximately 6% and 43% of IVAX'
consolidated net revenues before the restatement described above during the
years ended December 31, 1998 and 1997, respectively.
Effective May 30, 1997, IVAX sold McGaw, Inc. ("McGaw"), its
intravenous products subsidiary. IVAX' intravenous products business
manufactured and marketed a broad line of basic and specialty intravenous
solutions, irrigation solutions, intravenous administration sets, infusion pumps
and other infusion supplies and equipment, primarily to hospitals and
alternate-site health care locations in the United States and, through
independent distributors, in various foreign markets. The intravenous products
business had net revenues, including intercompany sales, of $140.6 million for
the five months ended May 30, 1997 and $343.0 million for the year ended
December 31, 1996.
IVAX' specialty chemicals group manufactured and marketed, primarily in
the United States and Canada, several hundred chemical products in three
distinct market segments: vacuum pump fluids, textile and denim products, and
cleaning products. IVAX' specialty chemicals group had net revenues, including
intercompany sales, of $9 million and $41.6 million for the years ended December
31, 1998 and 1997, respectively. During the third quarter of 1997, IVAX
completed the sale of a significant portion of the assets of its specialty
chemicals business in three separate transactions in which IVAX received an
aggregate of approximately $41.1 million in cash. In February 1998, IVAX
completed the divestiture of its specialty chemicals business by selling its
vacuum pump fluids business for approximately $3.9 million
12
(subject to certain post-closing adjustments). IVAX retained certain real estate
assets of the specialty chemicals business which it is seeking to sell.
IVAX' personal care products group developed, manufactured and
marketed, primarily within the United States, a variety of personal care
products, mainly through distributors, stores and mass merchandisers, in three
principal areas: hair care products designed primarily for African-American
consumers, cosmetic products designed primarily for dark-skinned women, and
corrective cosmetics. IVAX' personal care products group had net revenues,
including intercompany sales, of $42.6 million for the seven months ended July
31, 1998, and $73.9 million and $80.0 million for the years ended December 31,
1997 and 1996, respectively. Effective July 14, 1998, IVAX sold Johnson Products
Co., Inc., its personal care products subsidiary, to Carson Products Company, a
wholly-owned subsidiary of Carson, Inc., for approximately $84.7 million (after
certain post-closing adjustments). At closing, IVAX received $35 million in cash
and a secured note for $50 million, which IVAX subsequently sold, without
recourse, for $48.5 million in cash. In a separate transaction, IVAX sold the
Flori Roberts(R), Patti LaBelle(TM) and IMAN(R) product lines of Johnson
Products Co., Inc. to Color Me Beautiful, Inc. IVAX no longer maintains a
personal care products business.
On September 18, 1997, IVAX sold the United States and Canadian
marketing rights to its proprietary drug Elmiron(R) and three additional urology
products to ALZA. Although this sale represented an exit by IVAX from the
urology business in 1997, IVAX retained the rights to these products outside of
the United States and Canada. The gain on the sale of IVAX' urology business in
the United States and Canada ($13 million, $27.3 million and $43.2 million in
1999, 1998 and 1997, respectively) is included in other income as it does not
represent the sale of a discontinued business segment under Accounting
Principles Board Opinion No. 30.
EMPLOYEES
As of January 1, 2000, IVAX had approximately 3,800 employees
worldwide.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report and the documents incorporated by referenced herein contain
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. "Forward-looking" statements are any statements that are not based
on historical information. Such statements involve risks and uncertainties,
including but not limited to economic, competitive, governmental and
technological factors affecting IVAX' operations, markets, products and prices,
and other factors discussed elsewhere in this report and the documents filed by
IVAX with the Securities and Exchange Commission ("SEC"). These factors may
cause IVAX' results to differ materially from the statements made in this report
or otherwise made by or on behalf of IVAX.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Specific financial information with respect to IVAX' foreign and
domestic operations is provided in Note 13, Business Segment Information, in the
Notes to Consolidated Financial Statements incorporated by reference to the
Financial Information section of IVAX' 1999 Annual Report to Shareholders.
ITEM 2. PROPERTIES
IVAX' corporate headquarters are located in Miami, Florida. IVAX
maintains offices, warehouses, research and development facilities and/or
distribution centers in Argentina, China, the Czech Republic, Germany, Hong
Kong, Hungary, India, Ireland, Italy, Kazakhstan, Latvia, Peru, Poland, Russia,
the Slovak Republic, Ukraine, Uruguay and various parts of the United States and
the United Kingdom, most of which are held pursuant to leases. None of such
leases are material to IVAX.
IVAX operates pharmaceutical manufacturing facilities in Buenos Aires,
Argentina; Opava-Komarov, Czech Republic; London and Runcorn, England; Miami,
Florida; Falkenhagen, Germany; Budapest, Hungary; Waterford, Ireland; Rome,
Italy; Cidra, Puerto Rico; St. Croix, US Virgin Islands; and Montevideo,
Uruguay. IVAX' diagnostics manufacturing facilities are located in Miami,
Florida and Springdale, Arkansas. IVAX owns its Miami, Budapest, Buenos Aires,
Cidra, Montevideo, Opava-Komarov and Falkenhagen manufacturing facilities, and
leases its remaining manufacturing facilities. In connection with the sale of
the specialty chemicals business, IVAX retained ownership of its
13
manufacturing facilities in Rock Hill, South Carolina and Marion, Ohio, and is
pursuing the sale of these facilities.
IVAX believes its facilities are in satisfactory condition, are
suitable for their intended use and, in the aggregate, have capacities in excess
of those necessary to meet IVAX' present needs. A portion of IVAX'
pharmaceutical manufacturing capacity and its research and development
activities, as well as its corporate headquarters and other critical business
functions are located in areas subject to hurricane casualty risk. Although IVAX
has certain limited protection afforded by insurance, IVAX' business, earnings
and competitive position could be materially adversely affected in the event of
a major windstorm.
ITEM 3. LEGAL PROCEEDINGS
In late April 1995, Zenith Laboratories, Inc., a wholly-owned
subsidiary of IVAX ("Zenith"), received approvals from the FDA to manufacture
and market the antibiotic cefaclor in capsule and oral suspension formulations.
Cefaclor is the generic equivalent of Ceclor(R), a product of Eli Lilly and
Company ("Lilly"). On April 27, 1995, Lilly filed a lawsuit against Zenith and
others styled ELI LILLY AND COMPANY V. AMERICAN CYANAMID COMPANY, BIOCRAFT
LABORATORIES, INC., ZENITH LABORATORIES, INC. AND BIOCHIMICA OPOS S.P.A. in the
United States District Court for the Southern District of Indiana, Indianapolis
Division. In general, the lawsuit alleges that Biochimica Opos S.p.A. ("Opos"),
Zenith's cefaclor raw material supplier, manufactured cefaclor raw material in a
manner which infringed two process patents owned by Lilly, and that Zenith and
the other defendants knowingly and willfully infringed and induced Opos to
infringe the patents by importing the raw material into the United States. The
lawsuit seeks to enjoin Zenith and the other defendants from infringing or
inducing the infringement of the patents and from making, using or selling any
product incorporating the raw material provided by Opos, and seeks an
unspecified amount of monetary damages and the destruction of all cefaclor raw
material manufactured by Opos and imported into the United States. In August
1995, the Court denied Lilly's motion for preliminary injunction which sought to
prevent Zenith from selling cefaclor until the merits of Lilly's allegations
could be determined at trial. On May 10, 1996, the United States Court of
Appeals for the Federal Circuit affirmed the district court's denial of Lilly's
motion for preliminary injunction. On February 28, 1997, Lilly filed an amended
complaint alleging the infringement of an additional patent, and also filed a
motion to add to the lawsuit additional defendants who are not affiliated with
IVAX or Zenith. Lilly subsequently filed a second amended complaint but did not
revise its allegations regarding Zenith. Zenith has filed a motion for partial
summary judgment and has asserted a counterclaim, which remain pending. Zenith
ceased selling cefaclor in January 1997, when it announced a recall in the
United States of cefaclor as a result of the recall by Opos of the raw material
used to manufacture the product.
On April 18, 1997, Lilly filed a complaint in the United States
District Court for the District of New Jersey styled ELI LILLY AND COMPANY V.
ROUSSEL CORP., ET AL. against various defendants, including Zenith. With respect
to Zenith, the complaint asserts claims for violation of the Lanham Act, unfair
competition under New Jersey State law, common law unfair competition and unjust
enrichment. Also named as defendants are Roussel Corporation, Roussel UCLAF
Holdings Corporation, Roussel UCLAF S.A., Hoechst Marion Roussel North America,
and Biochimica Opos S.p.A. (collectively, the "Roussel Defendants"), The Rugby
Group, Inc., and Rugby Laboratories, Inc. (collectively, "Rugby"), and American
Home Products Corporation and American Cyanamid Company (collectively, the
"American Home Defendants"). The claims asserted against the American Home
Defendants and Rugby are essentially the same as those asserted against Zenith.
All of the asserted claims arise out of what Lilly contends were fraudulent
misrepresentations to Lilly and the FDA by Opos regarding the methods utilized
by Opos to manufacture bulk cefaclor and the location of the manufacturing
facility of such cefaclor. According to Lilly, through these alleged
misrepresentations, Opos fraudulently obtained approval from the FDA to market
bulk cefaclor in the United States. The claims asserted against Zenith are
predicated on Zenith's sale in the United States of retail dosage units of
cefaclor manufactured using Opos' bulk cefaclor. Lilly alleges that Zenith, in
marketing and selling retail dosage units of cefaclor manufactured from Opos'
bulk cefaclor, used false and misleading descriptions and representations
regarding Zenith's cefaclor product.
14
The relief sought by Lilly against Zenith, jointly and severally with the
American Home Defendants and Rugby, is an accounting to Lilly for any and all
profits derived by Zenith from the sale of cefaclor and an award of damages to
Lilly, in an unspecified amount, allegedly sustained by Lilly as a result of
Zenith's alleged acts of misrepresentation and unfair competition. Lilly further
seeks an award of treble damages and litigation costs, including attorneys' fees
and interest. Under its unjust enrichment claim, Lilly seeks restitution in an
unspecified amount against Zenith, jointly and severally with the other
defendants. In June 1997, Zenith filed a motion to dismiss the action, which was
granted in June 1998. Plaintiffs filed an amended complaint and, on November 6,
1998, Zenith filed another motion to dismiss, which remains pending.
In November 1996, individuals purporting to be shareholders of IVAX
filed a class action complaint styled MALIN, ET AL. VS. IVAX CORPORATION AND
PHILLIP FROST, ET AL. against IVAX and certain of its current and former
officers or directors in the United States District Court for the Southern
District of Florida which consolidated, amended and supplemented a number of
similar complaints filed earlier in 1996. The plaintiffs seek to act as
representatives of a class consisting of all purchasers of IVAX common stock
between July 31, 1995 and June 27, 1996. The consolidated amended complaint
alleges violations of Section 10(b) and 20(a) of the Securities Exchange Act of
1934, as amended (the "1934 Act") and Rule 10b-5 promulgated by the Securities
and Exchange Commission, and also asserts a claim for negligent
misrepresentation. The complaint generally alleges that IVAX made untrue
statements of material fact and omitted to state material facts necessary to
make statements made not misleading in its public disclosure documents and in
communications to the public regarding its operations and financial results and
that its financial statements were not prepared in accordance with generally
accepted accounting principles. These allegations are centered around
allegations that IVAX failed to disclose that product sales were subject to
shelf stock adjustments and failed to establish reserves for such adjustments.
On August 18, 1998, the United States District Court granted the IVAX
defendant's motion to dismiss the action without prejudice. The plaintiffs
subsequently filed a further amended complaint, and on November 9, 1998, IVAX
filed a motion to dismiss the amended complaint, which was granted on July 1,
1999. Plaintiffs have filed a notice of appeal.
In 1997, two class action complaints were filed by individuals
purporting to be shareholders of IVAX Corporation against IVAX, its chairman and
its former chief financial officer in federal court. One of these actions was
subsequently dismissed without prejudice, and the complaint in the other action,
which was amended to incorporate the allegations in both actions, is now pending
as ALAN M. HARRIS, YITZCHOK WOLPIN AND FAUSTO POMBAR V. IVAX CORPORATION,
PHILLIP FROST AND MICHAEL W. FIPPS. The plaintiffs in that action seek to act as
representatives of a class consisting of all persons who purchased IVAX common
stock and/or call options during the period from August 2, 1996 through November
11, 1996, inclusive. The complaint alleges claims for violation of Section 10(b)
of the 1934 Act and Rule 10b-5 and for negligent misrepresentation. The
complaint alleges, among other things, that during the class period defendants
made untrue statements of material fact and omitted to state material facts
necessary to make statements made not misleading in its statements to the
public, including in a September 30, 1996 press release regarding IVAX'
forecasted earnings for the third quarter of 1996. The complaint seeks
unspecified compensatory damages, interest, attorneys' fees, costs of suit and
unspecified other and further relief from the court. On March 30, 1998, the
court dismissed the complaint with prejudice. An appeal was filed on May 19,
1998 and on July 27, 1999, the district court's opinion was affirmed. Plaintiffs
have filed a motion for rehearing, which remains pending.
On December 21, 1998, an action purporting to be a class action, styled
LOUISIANA WHOLESALE DRUG CO. VS. ABBOTT LABORATORIES, GENEVA PHARMACEUTICALS,
INC. AND ZENITH GOLDLINE PHARMACEUTICALS, INC., was filed against Zenith
Goldline and others in the United States District Court for the Southern
District of Florida, alleging a violation of Section 1 of the Sherman Antitrust
Act. Plaintiffs purport to represent a class consisting of customers who
purchased a certain proprietary drug directly from Abbott Laboratories during
the period beginning on October 29, 1998. Plaintiffs allege that, by settling
patent-related litigation against Abbott in exchange for quarterly payments, the
defendants engaged in an unlawful restraint of trade.
15
The complaint seeks unspecified treble damages and injunctive relief. Nine
additional class action lawsuits containing allegations similar to those in the
LOUISIANA WHOLESALE case were filed in various jurisdictions between July 1999
and January 2000. Zenith Goldline has filed a potentially dispositive motion in
the LOUISIANA WHOLESALE case raising defenses that would also be applicable to
the other pending cases. All cases are in the early stages of litigation, and
any prediction as to their eventual outcomes would be premature. On March 13,
2000 the Federal Trade Commission ("FTC") announced that it had issued
complaints against, and negotiated consent decrees with, Abbott Laboratories and
Geneva Pharmaceuticals arising out of an investigation of the same subject
matter that is involved in these lawsuits. The FTC took no action against Zenith
Goldline. The FTC determinations are subject to a thirty-day public comment
period, after which they will be final.
Zenith Goldline has been named in a number of individual and class
action lawsuits in both state and federal courts involving the diet drug
combination of fenfluramine and phentermine, commonly known as "fen-phen."
Generally, these lawsuits seek damages for personal injury, wrongful death and
loss of consortium, as well as punitive damages, under a variety of liability
theories including strict products liability, breach of warranty and negligence.
Zenith Goldline did not manufacture either fenfluramine or phentermine, but did
distribute the generic version of phentermine manufactured by Eon Labs
Manufacturing, Inc. ("Eon") and Camall Company. Although Zenith Goldline had a
very small market share, as of March 14, 2000, Zenith Goldline has been named in
approximately 4,482 cases and has been dismissed from approximately 763 cases,
with an additional 1,127 dismissals pending. Zenith Goldline intends to
vigorously defend all of the lawsuits, and while management believes that its
defense will succeed, as with any litigation, there can be no assurance of this.
Currently Zenith Goldline is being defended and indemnified by Eon. In the event
that Eon discontinues providing this defense and indemnity, Zenith Goldline has
its own product liability insurance. While Zenith Goldline's insurance carriers
have issued reservations of rights, Zenith Goldline believes that it has
adequate coverage. Although it is impossible to predict with certainty the
outcome of litigation, in the opinion of management, this litigation will not
have a material adverse impact on the financial condition or results of
operation of IVAX.
In March 2000, individuals purporting to be shareholders of
IVAX filed a class action complaint styled GOLDFISHER V. IVAX CORPORATION, ET
AL. against IVAX and certain of its current and former officers and directors in
the Circuit Court of the 11th Judicial Circuit in and for Dade County, Florida.
The plaintiff seeks to act as the representative of a class consisting of all
purchasers of IVAX common stock between December 19, 1997 and the date of class
certification. The complaint generally alleges that IVAX' adoption of a
shareholder rights plan containing a provision that would limit the ability of
certain members who might be added to the Board of Directors following a change
of control to approve a decision to redeem the rights, which is commonly known
as a "dead hand" provision, is a violation of the Florida Business Corporation
Act and IVAX' articles of incorporation and by-laws. Plaintiffs seek an
injunction invalidating this provision, as well as damages in an unspecified
amount which, in the opinion of management, would not be material.
IVAX intends to vigorously defend each of the foregoing lawsuits, but
their respective outcomes cannot be predicted. Any of such lawsuits, if
determined adversely to IVAX, could have a material adverse effect on IVAX'
financial position and results of operations. IVAX' ultimate liability with
respect to any of the foregoing proceedings is not presently determinable.
With respect to the case styled SMITH & NEPHEW, INC. V. IVAX
CORPORATION, previously reported in IVAX' Annual Report on Form 10-K for the
year ended December 31, 1998, on June 17, 1999, the parties entered into a
settlement agreement pursuant to which the lawsuit was dismissed with prejudice
on August 11, 1999.
16
IVAX is involved in various other legal proceedings arising in the
ordinary course of business, some of which involve substantial amounts. In order
to obtain generic approvals prior to the expiration of patents on branded
products, and to benefit from the exclusivity allowed to ANDA applicants that
successfully challenge these patents, IVAX frequently becomes involved in patent
infringement litigation brought by branded pharmaceutical companies (see
"Governmental Regulation"). Although these lawsuits involve products that are
not yet marketed and therefore pose little or no risk of liability for damages,
the legal fees and costs incurred in defending such litigation can be
substantial. While it is not feasible to predict or determine the outcome or the
total cost of these proceedings, in the opinion of management, based on a review
with legal counsel, any losses resulting from such legal proceedings will not
have a material adverse impact on IVAX' financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is a list of the names, ages, positions held and
business experience during the past five years of the persons serving as
executive officers of IVAX as of March 24, 2000. Officers serve at the
discretion of the Board of Directors. There is no family relationship between
any of the executive officers, and there is no arrangement or understanding
between any executive officer and any other person pursuant to which the
executive officer was selected.
THOMAS E. BEIER. Mr. Beier, age 54, has served as Senior Vice President
- - Finance and Chief Financial Officer of IVAX since October 1997. From December
1996 to October 1997, he served as Vice President - Finance for IVAX. Prior to
joining IVAX, he served as Executive Vice President and Chief Financial Officer
of Intercontinental Bank from 1989 until August 1996.
NEIL FLANZRAICH. Mr. Flanzraich, age 56, has served as Vice Chairman
and President of IVAX since May 1998 and as a director of IVAX since 1997. He
was a shareholder and served as Chairman of the Life Sciences Legal Practices
Group of Heller Ehrman White & McAuliffe from 1995 to May 1998. From 1981 to
1994, he served in various capacities at Syntex Corporation (pharmaceuticals),
most recently as its Senior Vice President, General Counsel and a member of the
Corporate Executive Committee. From 1994 to 1995, after Syntex Corporation was
acquired by Roche Holding Ltd., he served as Senior Vice President and General
Counsel of Syntex (U.S.A.) Inc., a Roche subsidiary. He is Chairman of the Board
of Directors of North American Vaccine, Inc. (vaccine research and development),
and is a director of Whitman Education Group, Inc. (proprietary education).
PHILLIP FROST, M.D. Dr. Frost, age 63, has served as Chairman of the
Board of Directors and Chief Executive Officer of IVAX since 1987. He served as
IVAX' President from July 1991 until January 1995. He was the Chairman of the
Department of Dermatology at Mt. Sinai Medical Center of Greater Miami, Miami
Beach, Florida from 1972 to 1990. Dr. Frost was Chairman of the Board of
Directors of Key Pharmaceuticals, Inc. from 1972 to 1986. He is Chairman of the
Board of Directors of Whitman Education Group, Inc. (proprietary education),
Vice Chairman of the Board of Directors of North American Vaccine, Inc. (vaccine
research and development), Vice Chairman of the Board of Directors of
Continucare Corporation (integrated health care), and a director of Northrop
Grumman Corp. (aerospace). He is Vice Chairman of the Board of Trustees of the
University of Miami and a member of the Board of Governors of the American Stock
Exchange.
17
RAFICK G. HENEIN, PH.D. Dr. Henein, age 59, has served as a Senior Vice
President of IVAX and as the President and Chief Executive Officer of Zenith
Goldline Pharmaceuticals, Inc., IVAX' principal United States-based generic
pharmaceutical subsidiary, since July 1997. He held various positions in the
Novopharm Limited organization (pharmaceuticals) since 1988, rising to the
position of President and Chief Executive Officer of Novopharm International in
1996.
JANE HSIAO, PH.D. Dr. Hsiao, age 52, has served as a director of IVAX
and as IVAX' Vice Chairman-Technical Affairs since February 1995, as IVAX' Chief
Technical Officer since July 1996, and as Chairman, Chief Executive Officer and
President of DVM Pharmaceuticals, Inc., IVAX' veterinary products subsidiary,
since March 1998. From 1992 until February 1995, she served as IVAX' Chief
Regulatory Officer and Assistant to the Chairman, and as Vice President-Quality
Assurance and Compliance of Baker Norton Pharmaceuticals, Inc., IVAX' principal
proprietary pharmaceutical subsidiary. From 1987 to 1992, Dr. Hsiao was Vice
President-Quality Assurance, Quality Control and Regulatory Affairs of Baker
Norton Pharmaceuticals, Inc.
ISAAC KAYE. Mr. Kaye, age 70, has served as Deputy Chief Executive
Officer and a director of IVAX since 1990, and as Chairman of Norton Healthcare
Limited, IVAX' principal United Kingdom pharmaceutical subsidiary, since 1990.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
IVAX' common stock is listed on the American Stock Exchange and is
traded under the symbol IVX. As of the close of business on February 29, 2000,
there were approximately 4,433 holders of record of IVAX common stock. The
following table sets forth the high and low sales price of a share of IVAX'
common stock for each quarter in 1998 and 1999 as reported by the American Stock
Exchange and restated to give effect to the 3 for 2 stock split paid on February
22, 2000:
1998 HIGH LOW
---- ---- ---
First Quarter 6.33 4.13
Second Quarter 7.04 5.63
Third Quarter 6.79 4.92
Fourth Quarter 8.37 4.87
1999
----
First Quarter 9.96 7.37
Second Quarter 9.96 7.37
Third Quarter 11.79 9.54
Fourth Quarter 17.21 10.25
IVAX has not paid cash dividends on its common stock during 1998 and
1999 and does not intend to pay any cash dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The information required by item 6 is incorporated by reference to
page 1 of the Financial Information section of the 1999 Annual Report to
Shareholders.
18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by item 7 is incorporated by reference to
pages 2-12 of the Financial Information section of the 1999 Annual Report to
Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by item 7A is incorporated by reference to
page 12 of the Financial Information section of the 1999 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by item 8 is incorporated by reference to
pages 14-42 of the Financial Information section of the 1999 Annual Report to
Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning directors required by item 10 is
incorporated by reference to IVAX' Proxy Statement for its 2000 Annual Meeting
of Shareholders which will be filed with the Securities and Exchange Commission
within 120 days after the close of IVAX' fiscal year end. The information
concerning executive officers required by item 10 is contained in the discussion
entitled "Executive Officers of the Registrant" in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by item 11 is incorporated by reference to
IVAX' Proxy Statement for its 2000 Annual Meeting of Shareholders, which will be
filed with the Securities and Exchange Commission within 120 days after the
close of IVAX' 1999 fiscal year end.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by item 12 is incorporated by reference to
IVAX' Proxy Statement for its 2000 Annual Meeting of Shareholders, which will be
filed with the Securities and Exchange Commission within 120 days after the
close of IVAX' 1999 fiscal year end.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by item 13 is incorporated by reference to
IVAX' Proxy Statement for its 2000 Annual Meeting of Shareholders, which will be
filed with the Securities and Exchange Commission within 120 days after the
close of IVAX' 1999 fiscal year end.
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS
The following consolidated financial statements, related notes and
independent auditors' report, from the Financial Information section of the 1999
Annual Report to Shareholders, are incorporated by reference into item 8 of Part
II of this report:
PAGE IN THE FINANCIAL
INFORMATION SECTION
OF 1999 ANNUAL REPORT
TO SHAREHOLDERS
---------------------
Report of Independent Certified Public Accountants 14
Consolidated Balance Sheets 15
Consolidated Statements of Operations 16
Consolidated Statements of Shareholders' Equity 18
Consolidated Statements of Cash Flows 19
Notes to Consolidated Financial Statements 21
(A)(2) FINANCIAL STATEMENT SCHEDULE
The following financial statement schedule of IVAX is filed as a part
of this report:
Schedule II Valuation and Qualifying Accounts for the three years
ended December 31, 1999
All other schedules have been omitted because the required information
is not applicable or the information is included in the consolidated financial
statements or the notes thereto.
The independent auditors' report with respect to Schedule II is also
filed as part of this report.
(A)(3) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
3.1 Articles of Incorporation. Incorporated by reference to IVAX'
Form 8-B dated July 28, 1993.
3.2 Amended and Restated Bylaws. Incorporated by reference to IVAX'
Form 10-Q for the quarter ended
September 30, 1997.
4.1 Indenture dated November 26, 1991, between IVAX Incorporated by reference to IVAX'
Corporation and First Trust National Form 10-K for the year ended
Association, as Trustee, with December 31, 1991.
respect to IVAX Corporation's 6 1/2%
Convertible Subordinated Notes due November 15, 2001.
20
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
4.2 Form of 6 1/2% Convertible Subordinated Notes due November Incorporated by reference to IVAX'
15, 2001 in Global Form. Form 10-K for the year ended
December 31, 1991.
4.3 Rights Agreement, dated December 29, 1997, between IVAX Incorporated by reference to IVAX'
Corporation and ChaseMellon Shareholder Services, L.L.C., Form 8-K dated December 19, 1997.
with respect to the IVAX Corporation Shareholder
Rights Plan.
10.1 IVAX Corporation 1985 Stock Option Plan, as amended. Incorporated by reference to IVAX'
Form 10-K for the year ended
December 31, 1997.
10.2 IVAX Corporation 1994 Stock Option Plan, as amended. Incorporated by reference to IVAX'
Form 10-K for the year ended
December 31, 1997.
10.3 Form of Indemnification Agreement for Directors. Incorporated by reference to IVAX'
Form 8-B dated July 28, 1993.
10.4 Form of Indemnification Agreement for Officers. Incorporated by reference to IVAX'
Form 8-B dated July 28, 1993.
10.5 Agreement Containing Consent Order, dated December 6, Incorporated by reference to IVAX'
1994, between IVAX Corporation and the United States Form 10-K for the year ended December 31, 1994.
Federal Trade Commission.
10.6 Employment Agreement, dated November 28, 1997, between Incorporated by reference to IVAX'
IVAX Corporation and Phillip Frost, M.D. Form 10-K for the year ended
December 31, 1997.
10.7 Employment Agreement, dated November 28, 1997, between Incorporated by reference to IVAX'
IVAX Corporation and Isaac Kaye. Form 10-K for the year ended
December 31, 1997.
10.8 Employment Agreement, dated January 19, 1998, between Incorporated by reference to IVAX'
IVAX Corporation and Jane Hsiao, Ph.D. Form 10-K for the year ended
December 31, 1997.
10.9 Employment Agreement, dated July 28, 1997, between IVAX Incorporated by reference to IVAX'
Corporation and Rafick G. Henein, Ph.D. Form 10-Q for the quarter ended June
30, 1997.
10.10 Employment Agreement, dated as of May 26, 1998, between Incorporated by reference to IVAX'
IVAX Corporation and Neil Flanzraich. Form 10-Q for the quarter ended
September 30, 1998.
21
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
------- ----------- ----------------
10.11 Form of Employment Agreement (Change in Control) between Incorporated by reference to IVAX'
IVAX Corporation and certain of its executive officers. Form 10-K for the year ended
December 31, 1998.
10.12 Stock Purchase Agreement, dated May 30, 1997, between Incorporated by reference to IVAX'
IVAX Corporation and B. Braun of America Inc. Form 8-K dated June 24, 1997.
10.13 Purchase Agreement, dated June 16, 1998, by and between Incorporated by reference to IVAX'
IVAX Corporation and Carson, Inc. Form 10-Q for the quarter ended June
30, 1998.
10.14 Credit Agreement, dated as of July 14, 1998, among IVAX Incorporated by reference to IVAX'
Corporation, Carson, Inc. and Carson Products Company. Form 10-Q for the quarter ended June
30, 1998.
10.15 Product Collaboration and Development Services Agreement Filed herewith.
dated November 18, 1999, among IVAX Corporation, Norton
Healthcare Limited, Baker Norton International GmbH and
Bristol-Myers Squibb Company.
(Requesting Confidential Treatment)
10.16 IVAX Corporation 1999 Employee Stock Purchase Plan. Filed herewith.
13 The Financial Information section of the 1999 Annual Filed herewith.
Report to Shareholders. With the exception of those
portions of said Annual Report which are specifically
incorporated by reference in this report on Form 10-K
and filed as an exhibit to this report, said Annual
Report is not to be deemed "filed" with the Commission.
21 Subsidiaries of IVAX Corporation. Filed herewith.
23 Consent of Arthur Andersen LLP. Filed herewith.
27 Financial Data Schedule. Filed herewith.
27.1 Financial Data Schedule. Filed herewith.
27.2 Financial Data Schedule. Filed herewith.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by IVAX during the quarter ended
December 31, 1999.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
IVAX CORPORATION
Dated: March 30, 2000 By: /S/ PHILLIP FROST, M.D.
------------------------
Phillip Frost, M.D.
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
NAME CAPACITY DATE
- ---- -------- ----
/S/ PHILLIP FROST, M.D. Chairman of the Board and March 30, 2000
- ---------------------------Chief Executive Officer
Phillip Frost, M.D. (Principal Executive Officer)
/S/ THOMAS E. BEIER Chief Financial Officer March 30, 2000
- ---------------------------(Principal Financial Officer)
Thomas E. Beier
/S/ THOMAS E. MCCLARY Vice President - Accounting March 30, 2000
- ---------------------------(Principal Accounting Officer)
Thomas E. McClary
/S/ MARK ANDREWS Director March 30, 2000
- ---------------------------
Mark Andrews
/S/ ERNST BIEKERT, PH.D. Director March 30, 2000
- ---------------------------
Ernst Biekert, Ph.D.
/S/ CHARLES M. FERNANDEZ Director March 30, 2000
- ---------------------------
Charles M. Fernandez
/S/ JACK FISHMAN, PH.D. Director March 30, 2000
- ---------------------------
Jack Fishman, Ph.D.
23
NAME CAPACITY DATE
- ---- -------- ----
/S/ NEIL FLANZRAICH Director, President March 30, 2000
- ---------------------------and Vice Chairman
Neil Flanzraich
/S/ JANE HSIAO, PH.D. Director and Vice Chairman- March 30, 2000
- ---------------------------Technical Affairs
Jane Hsiao, Ph.D.
/S/ ISAAC KAYE Director and Deputy Chief March 30, 2000
- ---------------------------Executive Officer
Isaac Kaye
24
SCHEDULE II
IVAX CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1999
(in thousands)
ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE AT CHARGED TO
BEGINNING COST AND NET BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OTHER END OF YEAR
- ------------------------------- ------------- ------------- ------------- ------------- --------------
Year ended December 31, 1997 $ 20,061 8,973 (8,702) (1,106) $ 19,226
============= ============= ============= ============= ==============
Year ended December 31, 1998 $ 19,226 7,650 (4,643) 601 $ 22,834
============= ============= ============= ============= ==============
Year ended December 31, 1999 $ 22,834 4,147 (3,747) (1,176) $ 22,058
============= ============= ============= ============= ==============
ENVIRONMENTAL AND LITIGATION ACCRUAL RELATED TO DISCONTINUED OPERATIONS
BALANCE AT CHARGED TO
BEGINNING COST AND NET BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS END OF YEAR
- ------------------------------- --------------- ------------- ------------- --------------
Year ended December 31, 1997 $ - 2,000 - $ 2,000
============= ============= ============= ==============
Year ended December 31, 1998 $ 2,000 2,900 (464) $ 4,436
============= ============= ============= ==============
Year ended December 31, 1999 $ 4,436 308 (1,524) $ 3,220
============= ============= ============= ==============
RESTRUCTURING COSTS AND ASSET WRITE-DOWNS
EMPLOYEE
ASSET TERMINATION PLANT
WRITE-DOWNS BENEFITS CLOSURES TOTAL
------------ ----------- ----------- -----------
Balance at January 1, 1997 $ - $ 1,954 $ 2,654 $ 4,608
1997 restructuring costs and asset write-downs 23,814 5,094 9,180 38,088
Cash payments during 1997 - (2,400) (1,360) (3,760)
Non-cash activity (23,814) (101) (1,107) (25,022)
----------- ----------- ----------- -----------
Balance at December 31, 1997 - 4,547 9,367 13,914
1998 restructuring costs and asset write-downs 14,164 6,305 8,740 29,209
Reversals of restructuring costs and asset write-downs
charged in prior years (8,804) (442) (7,741) (16,987)
Cash payments during 1998 - (3,538) (3,042) (6,580)
Non-cash activity (5,360) (1,098) 936 (5,522)
----------- ----------- ----------- -----------
Balance at December 31, 1998 - 5,774 8,260 14,034
Reversals of restructuring costs and asset write-downs
charged in prior years (539) (73) - (612)
Cash payments during 1999 - (4,264) (3,539) (7,803)
Non-cash activity 539 123 (298) 364
----------- ----------- ----------- -----------
Balance at December 31, 1999 $ - $ 1,560 $ 4,423 $ 5,983
=========== =========== =========== ===========
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF IVAX CORPORATION:
We have audited in accordance with generally accepted auditing standards, the
financial statements included in IVAX Corporation's annual report to
shareholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 4, 2000 (except with respect to the stock split
discussed in Note 12 and the matters discussed in Note 16, as to which the dates
are February 22, 2000 and March 10, 2000, respectively). Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
Financial Statement Schedule II listed in Item 14 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This financial statement schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Miami, Florida,
February 4, 2000.
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------
10.15 Product Collaboration and Development Services Agreement
dated November 18, 1999, among IVAX Corporation,
Norton Healthcare Limited, Baker Norton International GmbH
and Bristol-Myers Squibb Company.
(Requesting Confidential Treatment)
10.16 IVAX Corporation 1999 Employee Stock Purchase Plan.
13 The Financial Information section of the 1999
Annual Report to Shareholders. With the
exception of those portions of said Annual
Report which are specifically incorporated by
reference in this report on Form 10-K and filed
as an exhibit to this report, said Annual
Report is not to be deemed "filed" with the
Commission.
21 Subsidiaries of IVAX Corporation.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
27.1 Financial Data Schedule.
27.2 Financial Data Schedule.