Elan's chairman and chief executive, Mr Donal Geaney, has stepped down from his position, paying the price for the collapse in the company's share price since January.

Mr Geaney is being replaced by a five-member executive committee, headed by Elan's newly-appointed chairman, Dr Garo Armen. The announcement of Mr Geaney's departure came just hours before he was due to address a conference call with investors at midday.

Instead, Dr Armen hosted the call, telling shareholders: "The board decided to change top management because it deemed that it was necessary for the company to take the appropriate steps to strengthen its cash position, restructure itself and reduce its cost base substantially."

Elan's vice-chairman, Mr Tom Lynch, who as chief financial officer oversaw the complex web of accounting policies that have landed Elan in hot water, has also stepped down.

But both men will continue to act as senior advisers to the chairman and support the new executive committee, drawn from Elan's non-executive directors.

Dr Armen, an Elan director since 1994, is chairman and chief executive of Antigenics, a US pharmaceutical company valued at around $270 million.

The other four members of the committee are Bank of Ireland chairman Mr Laurence Crowley; Mr Kyran McLaughlin, former head of equities and corporate finance at Davy Stockbrokers; Mr Daniel Tully, former chairman and chief executive of Merrill Lynch; and Ms Ann Maynard Gray, a director of Duke Energy Corporation and a trustee of JP Morgan Funds.

There was mixed reaction in the market to the news of the departure of Elan's two most senior managers, with some saying it was too late to provide much of a boost to the firm.

Elan shares initially gained 55 cents in Dublin to €2.80 on the announcement, before later slipping back to close unchanged at €2.35.

The committee has already begun the search for a new chief executive, although analysts said it could face a tough task.

"The resignation of Elan's two most senior and experienced officers comes at a difficult time for the company and will leave a gap that it will find hard to fill at present," Goodbody Stockbrokers said.

However, others said it was a necessary step if Elan was to regain its credibility after the steep fall in the share price since the start of the year.

Over this period, Elan's shares have lost around 95 per cent of their value.

"It was one of the only things they could do in the near-term to begin to address investor confidence," said another analyst.

Mr Geaney has been under pressure to relinquish at least one of his roles since Elan's woes began more than six months ago.

An earlier management shake- up, which saw Mr Geaney retain his dual role but Mr Lynch moved aside to take over responsibility for the Securities and Exchange Commission (SEC) investigation into the company, failed to satisfy investors.

Meanwhile, the gap at the top created by the departure of Mr Geaney and Mr Lynch, has caused some speculation that Elan might now be taken over.

But the continuing SEC investigation into the group's accounting policies is seen as a major hurdle in the way of any takeover approach.

Mr David Begg, the general secretary of the Irish Congress of Trade Unions, said yesterday that Mr Geaney should also step down from his position as the chairman of the National Pension Reserve Fund.

Mr Geaney was appointed to this position by the Minister for Finance, Mr McCreevy, last year.

The National Pension Reserve Fund was set up to pre-fund public sector pension liabilities, and the Government is committed to contributing 1 per cent of GDP to the fund each year.