ELAN Corporation has reported continued strong growth in the third quarter of its financial year despite incurring heavy launch costs associated with its Naprelan anti arthritis drug.

Third quarter profits were up almost 29 per cent to £14.4 million, with profits for the nine months to the end of December up almost 25 per cent to £38.4 million.

Sales in the third quarter increased 14 per cent to £34.5 million, largely due to a sharp increase in royalty and fee income from £9.1 million to £16.8 million. Research revenues fell from £7.3 million to £4.5 million with product sales almost unchanged at £13.6 million.

In the nine months, sales increased from £89.1 million to £94.6 million, largely due to a big increase in royalty and fee income to £38.5 million.

Chief executive, Mr Donal Geaney, said the increase in fee income reflected the attainment of milestone payments on existing licence agreements, some new agreements signed in the third quarter and increased royalties.

Gross margins fell sharply year on year from 51 per cent to 32 per cent. This was mainly due to the pre launch costs and manufacture of its Naprelan anti arthritis drug.