330 jobs go at Elan

The US-owned Elan Pharmaceutical company is to cut its 900-strong Irish workforce by more than a third.

The move, forced on the firm after a disastrous year that has seen its shares value plunge by 95%, will mean the loss of 250 jobs at its plant, which includes a research and development department near Athlone, Co Westmeath, and another 80 at two offices in Dublin, where Elan has its corporate headquarters.

In all, the company is chopping 1,000 of its 4,700 worldwide employees by the end of the year as part of a massive restructuring exercise.

The development follows a dramatic collapse in the value of Elan - once the highest-performing company on the Irish stock exchange - and the subsequent resignation earlier this month of former chairman and chief executive Donal Geaney.

The workers were told of their fate at a meeting with new chairman Garo Armen, who took over from Mr Geaney to head a five-member executive committee with responsibility for overseeing a huge restructuring of the company, including a review of activities in Ireland.

Company sources confirmed, as well, that they would consider selling their property in Athlone, if a suitable offer emerged after the completion of an American investigation of accountancy practices, and that plans for an expansion in Macroom, Co Cork, had been dropped.

Mr Armen has committed Elan to raise more than €1bn to ensure recovery.

Today it also revealed second quarter revenue of €465 m, down 1% from a year earlier, and a net loss of €818 m from a profit of €136m last year.

The losses relate to charges of €842m, mostly resulting from asset writedowns and a decline in the value of investments.

Elan is aiming to save around €306m year though the cost cutting measures and it also planning to raise the overall sum over by the end of 2003 through the disposal of assets, non-core businesses and products.

Mr Armen said the plan was to create a “new Elan” which will be a biopharmaceutical company focused in neurology, pain and autoimmune diseases.

He reported: “We have made significant advances in recent weeks and are implementing tough decisions to make the new Elan a stronger company, reinforce our liquidity, preserve our pipeline and rebuild our credibility.”

The company has decided not to exercise its option to acquire certain dermatology products from Glaxosmithkline for €183m, but Mr Armen said the company had sufficient cash, liquid resources and investments and other assets “to meet its liquidity requirements”.

Elan also expects to file four new drug applications by the end of 2004 and has bought royalty rights to Antegren and some other products from Autoimmune.

News of the recovery plan initially sent Elan shares up by about 12% on the Dublin stock exchange today.

Deputy Irish Prime Minister Mary Harney said she was deeply disappointed at the Elan move, and requested state agencies to seek alternative employment possibilities for those being laid off.

The job losses were described as a devastating blow to the Irish midlands by the Fine Gael parliamentary opposition party.

A spokesman said: “On a personal basis, this is a catastrophe for the employees themselves and attention must focus on guaranteeing them alternative employment in the immediate future.”