Relations between Elan and UBS Warburg are unlikely to be very cordial over the next few weeks after the dramatic slump in Elan shares on Wednesday. A near 12 per cent fall in Elan shares on the New York exchange forced the group into an unscheduled trading statement, which said it was comfortable with earnings forecasts.

But it was the second part of the Elan statement that was more significant, as the group said emphatically that its various drug development programmes were on track. That gave some reassurance to the markets but Elan still closed down 6 per cent on the day.

Earlier, Warburg suggested that Elan's Frovelan migraine drug was facing "significant delays" in the FDA's approval process.

Any bad news or suggestion of bad news is an excuse to sell with the markets in their current state, but the Elan sell-off last Wednesday was grossly overdone and the stock's defensive qualities warrants a better rating in these turbulent times.