Elan profits rise by 50% to £42m

Increased product sales, royalties and fees have helped Elan Corporation's pre-tax profits rise by more than 50 per cent to $60.3 million (£43 million) for the second quarter of the year, up from $40 million for the same period last year.

In response to the results, which were broadly in line with market forecasts, Elan's share price in New York closed up XXXXXX at XXXXXX. Net income (after tax profit) for the quarter rose 49 per cent to $59.6 million from $40.1 million, while earnings per share rose from $0.41 to $0.53 for the quarter. Turnover increased 82 per cent from $85.8 million in 1997 to $156.1 million this quarter.

Turnover for the first six months of this year was $138 million, compared to $98 million for the first six months of last year. Pre-tax profits for the first six months of this year are at $115 million, up from $77 million in the same period last year.

Earnings per share are up from $0.79 to $3.33 in the first six months of this year, compared to the first six months of 1997.

The biggest contributor to the increase in profits in the latest quarter, compared to the same period last year, was the rise of $33 million to $58.8 million in royalties and fees. Product sales also made a strong contribution, increasing by $29.8 million to $75.5 million. These revenues included increased sales of directly marketed products in the US and Britain and include sales for the month of June from Carnrick Laboratories, following the acquisition of its parent company GWC Health at the end of May.

The acquisition of Mysoline from American Home Products started to make a significant contribution from April 1st to the sales figures.

Research revenue for the quarter rose to $21.9 million from $14.5 million. Of this, $14.7 million was received from Axogen, Elan's research project, compared with $12 million in the second quarter of 1997. However, the spend on research and expenditure increased from $16 million to $31.1 million, mainly because of costs associated with clinical trials for drugs like Antegren and Neurobloc. Because of the increased sales and the acquisition of Carnrick, selling, general and administrative expenses rose from $14.9 million to $33.7 million for the quarter.

According to Mr Tom Lynch, chief financial officer, the company sees product sales increasing, with a new drive into European markets. Commenting on the company's share price in New York, he said it has been performing well, rising from $50 at the start of the year and was now hovering about $72. He said the stock was "very liquid" and this often affected the Dublin market.

The company is now going to put its pharmaceutical business into one division - Elan Pharmaceuticals - which will include Athena Neurosciences, Carnrick and Neurex. Subject to approval from shareholders the division will be formally set up on August 14th and Dr Paul Goddard will become chief executive.