Irish Pharmaceutical company suffered another blow last night when US credit rating agency Standard & Poors downgraded the company’s credit rating.
S&P lowered Elan from BBB- from BBB based on the company's reduced earnings and cash flow expectations along with debt-financed product acquisitions that are expected over the next two years.
S&P said in a statement that the downward revision reflected Elan’s "solid core pharmaceutical business and significant financial flexibility, offset by its near-term challenges in expanding its product sales and the increased likelihood of major debt-financed product acquisitions".
The downgrade of Elan’s debt rating was expected following Moody's debt downgrade to "junk" status last week.
Analysts said the downgrades will curtail Elan’s expansion plans as they make it more expensive for the company to finance new acquisitions.
As a results the company will be forced to adopt a strategy of squeezing more cashflow from existing operations.