Elan seeks binding arbitration on Pfizer dispute

Elan is seeking binding arbitration in the US on a dispute with Pfizer over a research agreement between the two companies.

The agreement, which was established three years ago, has been dissolved by Elan because of what it believes to be "certain breaches" by Pfizer.

Elan contends that, as a result of the termination, it holds exclusive rights to the intellectual property developed over the three-year programme.

The research focused on the development of treatment for Alzheimer's sufferers and was still at an early stage when the agreement came to a close. It was originally drawn up between Elan and Pharmacia, which was subsequently acquired by Pfizer.

Elan chief executive Mr Kelly Martin said the company had tried to resolve the dispute with Pfizer before resorting to binding arbitration. "Prior to taking this step we made every effort to come to a mutually acceptable resolution that would enable us to move forward either with Pfizer or independently," he said.

Elan remains focused on development of Alzheimer's treatments, according to Mr Martin.

A spokeswoman for the firm later declined to expand on Elan's goals in taking the arbitration, aside from its desire to "protect and enforce Elan's rights".

She was unable to offer any detail on the nature of the alleged breaches from Pfizer, since these are the subject of the arbitration.

She said the timeframe of the arbitration would be set by the arbitrator. Binding arbitration generally tends to be faster and cheaper than bringing contract disputes to court trials.

Mr Jack Gorman, analyst with Elan's company broker, Davy, estimated yesterday that Elan's annual costs in relation to the Pfizer collaboration at $5- $10 million. "In the overall scheme, this is a small thing for Elan," he said.

In a separate announcement, Elan also confirmed yesterday that it would retain its drug delivery and acute care businesses in the US, thus putting to an end market speculation that most of these were up for sale.

The company described the businesses as "value-generating" and said they provided opportunities for revenue growth. Analysts said the move suggested that Elan's restructuring programme was almost over. The company has raised $1.9 billion (€1.5 billion) through asset sales and has generated an extra $595 million through a share and note issue.

It emerged at the start of this week that Elan was in discussions on the sale of its European sales and marketing operation. Elan's shares rose 36 cents in late trading last night to $6.15 in New York where they are mainly traded.