Elan may sell European concerns

PHARMACEUTICAL giant Elan says it is in talks on the sale of some of its European operations.

The company’s share price collapsed by 90% last year when serious flaws in its accounting techniques were exposed.

Since then the company has been forced to sell assets to cut its debt mountain which is still well over $2 billion. The group said the talks were directly aimed at its sales and marketing divisions.

This latest announcement suggests the group could raise $250-$300m. The businesses in question will generate sales of $120m suggesting a market value of twice that amount and possible more depending on the level of interest in the various parts.

Elan’s European business include operations in France, Italy, Britain, Spain as well as Ireland and more than 20 products.

In October, the group raised $570m in a cash call and it netted $102m in an earlier sale of four painkilling drugs to US-based AaiPharma for $102m.

Analysts said the group could be talking to any company, but said the most likely buyers would be small to medium-sized operators interested in expanding their European presence.

The latest sell off will further erode the revenues generated by the group.

Two products on the European market distributed by the group account for 35% of sales. They are Abelcet, used to treat fungal infections and Dilzem for high blood pressure. Early in November the impact of asset sales was highlighted in the third- quarter figures. It showed sales fell by a dramatic 47% on last year.

Total revenues were $174.7m compared to $331.7m in the same period last year. However, revenue from retained products, or products not yet sold, was up 31% at $119.5m compared to $91.1m last year.

It reported a net loss of $91m compared to a whopping $996.4m in the third quarter last year. When it published its third quarter figures Elan said it expected to raise $200m cash from asset disposals by the year end.

It is thought that in the shake out the Irish headquarters in Dublin or its drug-delivery service will be sold in the latest round of disposals. Shares in the group rose by over 3% to €4.59.