Elan break-up under discussion?

The directors of the company are rumoured to be considering the break-up in the wake of Elan's major setback at the end of February when, along with partner Biogen Idec, it pulled its Tysabri (natalizumab) drug for multiple sclerosis off the market, due to two serious adverse reactions, including one death.

The news of the move sent the Irish firm's share price plunging about 70 per cent, as investors reacted to the latest switchback in the rollercoaster ride of Elan's recent history. The company grew phenomenally throughout the 1990s via a series of acquisitions, but was eventually crippled by the accrual of vast debts - in excess of $2 billion (€1.54bn) - that have taken it three years to pay off.

Tysabri was seen as the key to finally getting Elan back into the black after a period of heavy losses, and its withdrawal hit the company hard, despite hopes that it may return to market if Elan and Biogen Idec can prove the side effects were not related to the product.

Prior to the withdrawal, Elan had been optimistic that Tysabri would bring the firm back into profit by the end of 2006.

The break-up rumours, which originated from an article in the Sunday Times, suggest that Elan will establish its biotechnology business in San Francisco under the Athena Neurosciences banner - a company bought by the Irish firm in 1996.

The San Francisco business is responsible for much of the firm's research and development activity, while manufacturing and drug delivery operates out of Athlone in Ireland. The latter also includes the NanoCrystal formulation technology for poorly soluble active pharmaceutical ingredients, which was behind a near-80 per cent increase in revenues to $21.5 million for this business last year.

Elan could not be reached for comment on the rumours.