Elan puts anti-infective drugs on sale
Last week Elan said it had appointed investment bank Morgan Stanley to advise it on asset disposals through which it hopes to raise $1.5 billion by the end of 2003. It didn't say which assets would be sold.
But sources said Morgan Stanley had begun to prepare offer documents on the hospital drugs - Abelcet, Azactam and Maxipime - which would be sent out to prospective buyers. Elan, which hopes the three injectable medicines will fetch at least $750 million, expects to receive first round bids in November.
Bidders would then be narrowed down and invited to conduct more detailed diligence work ahead of submitting binding bids.
Sources said it was highly unlikely a sale could be completed before the end of December.
"To close a deal by the end of December would be very challenging," one source close to the company said.
Elan also plans to sell its drugs delivery arm, their original business, but not until later, the sources added.
"Once this process (the sale of the anti-infectives) is under control you'll see the other sale process start," said one.
The sources said Elan had prioritised the sale of anti-infectives because of the assets Elan now deemed non-core, it was the most attractive and easiest to sell.
" It's going to take more time to focus on the drug delivery business. It's a more complex business than the straightforward selling of a product," the first source said.
A spokesman for Elan declined to comment.
Martyn Postle of Cambridge Pharma Consultancy said the suggested price for the three anti-infectives was ambitious but not out of the question, equating to some 3.5 times combined US sales of $209.7 million in 2001.
Although many big drug firms have been walking away from development of new anti-infectives for the general practice market, medicines for treating serious infections in hospitals remain an attractive proposition.
The emergence of drug-resistant strains of bacteria and fungi has created an unmet medical need for the kind of powerful drugs in Elan's portfolio.
Postle said the three drugs - acquired either singly or as a package - could prove attractive to a US-based speciality pharmaceutical company or a larger drugmaker looking to build up its hospital drug franchise, such as Eli Lilly and Co or Abbott Laboratories Inc.
Abelcet, an anti-fungal which Elan acquired two years ago, is likely to prove the most valuable of the three products since it is one of only three drugs of its type for the treatment of serious systemic fungal infections, he added.
Such infections typically afflict patients with a compromised immune system, such as those undergoing cancer chemotherapy.
Sales of Abelcet totalled $77.0 million in 2001, while Maxipime brought in $86.3 million and Azactam $46.4 million.
