From humble beginnings to giant drug firm

The origins of Elan Corporation go back to one man working in a bungalow in Monkstown, Co Dublin. Mr Don Panoz brought $50,000 (€57,600) with him from the US after he sold his assets (a house, two cars, a small plane and shares in US pharmaceutical company Mylan Laboratories) and paid off his debts.

His fellow directors on the Mylan board, of which he was the founder, had rejected his idea that the company concentrate on developing delivery systems for drugs that were already in existence.

Mr Panoz came to the Republic and founded Elan in 1969. He rented a four-bedroom bungalow and converted some of the rooms into a laboratory. He lived on his $50,000 and some income from consultancy work, while he researched his idea for better delivery systems. Better delivery of a drug could reduce the amount of the drug to be taken and the frequency at which it had to be taken. This increase in efficiency would have a major beneficial effect in the value of the drug.

His first success was with the antibiotic Tetracycline. The new absorption method cut the dosage and frequency by half. In 1971, Mr Panoz joined forces with a manufacturing company to produce the drug and continued to work on delivery systems for other forms of antibiotic.

Elan profited from royalties from its delivery systems and produced the drugs for the companies that owned them.

By the mid-1970s, the company had several drugs in its portfolio and decided to build its laboratories and manufacturing plant in Athlone. Within a year and a half, the structure had trebled in size.

Mr Donal Geaney, then a partner with Stokes Kennedy Crowley, worked with Mr Panoz when the company investigated the possibility of floating in the Republic. However, they found a lack of enthusiasm among investors and turned their sights towards the US.

Another factor that influenced this move was the capital gains tax regime here, which then had a rate of 60 per cent. This militated against investment, as did the fact that losses could not be offset against tax.

A related company was floated on the US Nasdaq in 1981 and in 1984 was replaced by Dublin-register Elan Corporation. Elan was the first Irish company to float in the US. By 1987, Elan was valued at $100 million.

In 1989, the company was introduced on the Irish market. By this time it had the successful cardiovascular product Cardizem.

Elan was also working on its nicotine patch and on an AIDS treatment that, it was hoped, would slow the progress of the condition.

In 1987, Mr Geaney joined Elan. In January 1995, he was appointed president and chief executive. Mr Panoz remained as chairman. At that time, the company moved to a full quotation on the New York Stock Exchange.

In 1998 it took over Carnrick Laboratories and Neurex, both in the US. The following year it announced it was researching a vaccine for Alzheimer's disease, which drove up the share price.

In January this year, Elan shares experienced a wave of selling when it said it was halting testing of its Alzheimer's drug treatment temporarily. In Dublin, the shares fell from €50.27 to €45. The share price suffered again following a negative post-Enron article in the Wall Street Journal, and collapsed this week with the release for poor growth forecasts for 2002.