Elan confident despite stock market showing

Neans McSweeney

While there are no certainties in the sector, particularly in the existing climate, the ongoing turmoil and restructuring within the company would probably not make it open to such a threat, executive vice president,

Séamus Mulligan, said yesterday.

Speaking at a breakfast briefing with Waterford Chamber of Commerce yesterday, the native Waterford man said he was confident the company will recover within the next nine to 12 months. And troubled shareholders should also realise their investment within a similar timeframe.

“Elan can and will survive. I firmly believe this. Over the next nine months, we are committed to delivering on a billion dollar assets sale. We were never in such a strong position to deliver on this. Our asset sales are key to our success and restructuring.

“The challenges which we face at the moment probably would deter a hostile takeover,” he told the Irish Examiner/Esat Business-sponsored briefing.

Elan’s internal difficulties were a factor in its current misfortune. But it has also fallen foul to external factors within the pharmaceuticals sector. It has seen up to 50% of value wiped out in recent weeks and months.

And while the probe into its financial transactions continues, the company continues to make progress in its development of ground-breaking drugs. It is also making progress in its search for a drug to cure Alzheimer’s disease despite an earlier setback. It continues to work on drugs to cure Crohn’s Disease and multiple sclerosis. They are in the final stages of such work and hope to have a product on the market in 2005.

Meanwhile, Mr Mulligan warned that while Ireland’s pharmaceuticals sector has been very fortunate in that it has not been hit by much of the cost restructuring abroad, it may not always be so fortunate. New deals and consolidations have been driven by cost-cutting and the need to develop new, groundbreaking drugs to succeed. “We are lucky that Warner Lambert merged with Pfizer, which did not have a secondary manufacturing plant in Ireland,” he said.

The overlap, which has led to major restructuring and job losses elsewhere, has not yet caused problems in Ireland. “The industry today is still very fragmented, even with the mergers and consolidations which have taken place in the past 15 years. We have an industry today in which the top ten pharmaceutical companies still account for only about 50% of the sales. There is bound to be continued consolidation within that. There is a lot of concentration within the media on Elan. You might swear that we were the only company with problems. We are probably a reflection of the Irish market size. A unique feature of our industry is that one small hiccup can cause a major change in our strategy. Just two days ago, Wyatt laboratories announcement that one of its products had a potential link with breast cancer. Now it has dropped 30% in share value.”