PHARMACEUTICAL COMPANY Elan has received first-round bids for its drug delivery unit and is hoping for a quick sale of the business, which may fetch as much as $1.4 billion, according to people familiar with the matter.
The move to spin off Elan Drug Technologies (EDT), which develops new formulations of medicines on a contract basis for other drugmakers, will leave Elan focused on its own biotech drugs.
The split has been discussed for some time but has gained importance in the past fortnight following renewed safety concerns over multiple sclerosis drug Tysabri and market disappointment with tests of an experimental Alzheimer's therapy.
Shares in Elan have slumped two-thirds on the twin setbacks.
"They are planning a very quick process," said one source, adding the operation was likely to go to a private-equity buyer.
First-round offers were submitted at the end of last week and Goldman Sachs, which is leading the auction process, is expected to short-list those going through to the next round in the next few days, sources said.
Prospective acquirers of EDT include Texas Pacific Group and Bain Capital. Officials at Elan and the private-equity houses involved declined to comment.
Elan chief executive Kelly Martin said on July 30th that Ireland's biggest drug company was pushing ahead with a strategic review of EDT and had received a lot of interest from potential private-equity buyers.
Mr Martin said a stock market flotation was also being pursued as an option, but the group is now focusing primarily on a sale.
The success of Elan, which recovered from a brush with bankruptcy in 2002, has been linked closely to Tysabri and its Alzheimer's drug. The recent loss of confidence in both products has therefore been a body blow for the company, and a successful sale of EDT could help underpin the share price.
EDT lists 10 out of the world's top 12 drugmakers among its clients, including Merck, Wyeth and Abbott Laboratories. It specialises in producing controlled-release and more-soluble versions of pharmaceuticals, using technologies such as nano crystals. - (Reuters)
