Shares in pharmaceutical group Elan came under intense selling pressure on the New York market yesterday after an analyst with Credit Suisse First Boston (CSFB) made a scathing attack on the company and its management and set a price target of $7 for the shares.

Elan shares have fallen heavily in recent months after questions were raised in the aftermath of the Enron debacle over its accounting policies.

From a high of $65 a year ago, the shares had fallen to $8.70 before the CSFB report triggered heavy selling in New York yesterday.

In his report, CSFB analyst Mr David Maris said Elan's near-term debt obligations and its special purpose joint ventures remained "shrouded in mystery". He said that a cash squeeze could hurt Elan's ability to meet earnings targets, as less discretionary cash was available to fund joint ventures and meet the potential shortfalls of these special purpose entities.

But Mr Maris also rounded on Elan management.

He said: "Most importantly, we consider certain management issues to be predicative of continued missteps, such as what we consider to be questionable board composition and what appears to be a complete lack of recognition, acknowledgement and contrition by Elan's management that it has any culpability in its actions leading to the collapse of the share price."

Merrill Lynch yesterday came to the defence of the Irish group, saying that, with $1.4 billion (€1.5 billion) in cash, concerns about a cash crunch were misplaced. It also dismissed speculation about the delay in the publication of the company's annual report.

The company itself said it had more than adequate cash resources to finance its operations and to meet its obligations as they fall due.

It said its operating cash flow was positive and Elan would maintain its policy of retaining strong cash balances.

The CSFB report completely overshadowed the announcement from Novartis that the US regulators had approved a new once-daily form of Ritalin, a drug for the treatment of attention deficit/hyperactivity disorder. Ritalin was developed by Elan, which receives royalties from Novartis from sales of Ritalin in the United States.

Elan traded as low as $7.40 in early trading on the New York Stock Exchange before recovering some ground.

However, it slipped again towards the close of trade and fell through the $7 barrier, finishing down $1.81 or 20.8 per cent on $6.89.