Elan Corp reports 44.5% rise in income

Elan Corporation has reported further strong growth, with net income (after-tax profits) increasing by 44.5 per cent last year to $253.1 million (€224.7 million), before an exceptional charge related to acquisitions is taken into account.

The main contributor to growth was rising sales of the company's pharmaceutical products, including both sales from contract manufacturers and products sold directely by the company, which rose by 69 per cent to $342.1 million (€303.6 million). Earnings per share rose to $1.95 from $1.58.

The company had to take an exceptional charge of $1,424 million in the financial year, due to the write off of acquired in-process research and development expenditure in major acquisitions of Sano and Nano Systems, US drug delivery companies, and Neurex, a major US bio-pharmaceutical company. This led to a bottom line net loss of $1,171 million for last year.

However, investors will be focussing on the underlying strong performance, with net income for the fourth quarter of $72.7 million (€64.5 million), up 40 per cent on the same period in 1997. Product sales during the quarter more than doubled to $131.4 million.

Elan is hoping further growth will come from increasing its direct marketing presence in major markets. Elan is focussing on building its pharmaceutical business and increasing its sales strength in this area, while maintaining its leadership in the area of drug delivery.

Mr Donal Geaney, company chairman and chief executive officer, said that it "now has an opportunity in the near future to significantly enhance its business through expanding its direct presence in neurology, acute care and pain management and by strengthening its position at the forefront of drug delivery technology."

Elan has also signalled its intention to continue rapid growth, announcing yesterday that it has agreed a $325 million (€288 million) unsecured borrowing facility with a group of mainly European banks. The facility has a three-year extendable term. The new borrowing facility follows on the recent issuing of subordinated notes due in 2018, which raised gross proceeds for Elan of $862 million. Together with the new borrowing facility, this gives Elan access to substantial financing to fund further acquisitions.

According to Mr Geaney, Elan has made substantial progress repositioning itself as a speciality pharmaceutical company with a strong portfolio of marketed products and products in the later stages of development, while the acquisitions of Sano and Nano Systems had enhanced the technology base of the drug delivery business.