Elan's stake in Galen holds

Galen Holdings does not believe the resignation of Elan's chief financial officer from its board of directors will have a material impact on the company's 4 per cent stake in the Northern Ireland specialist pharmaceutical group.

Announcing record first-quarter results for Galen in London yesterday, Dr John King, the chairman of the specialist pharmaceutical group, said Mr Tom Lynch had simply stepped down from the board of Galen because of his other work commitments.

"We clearly appreciate Tom's other commitments and we wish him well. Elan's shareholding in Galen is not directly related to Tom Lynch. Elan came on board when Galen acquired Warner Chilcott in the United States," Dr King said.

Elan is preparing to defend a possible securities class action lawsuit in the US in relation to claims over alleged misleading statements regarding its financial condition and for a SEC investigation into its accounting practices.

The uncertainty posed by these investigations has had a major impact on Elan's share price in recent weeks. In contrast, Galen's share price rose by more than 8 per cent on the London Stock Exchange and by 7 per cent in Dublin yesterday on the back of yet another set of good results from the Portadown-based group.

Pre-tax profit rose to £12.9 million sterling (€21.17 million) from £2.8 million in the same period last year while operating profit increased by 31 per cent to £16.5 million. The group also grew its total revenue by more than 28 per cent to £53.7 million with sales of pharmaceutical products amounting to more than 70 per cent of its turnover.

Dr King said the results reflected Galen's determination to push ahead with its ambitions for the US market: "We have had a very strong set of results from the US in this quarter and we are on course to build on that position."

Galen is sitting on a £250 million war chest, which it said would be used to fund acquisitions in the US. Industry sources say the group is in talks regarding a number of potential American product acquisitions, most likely in dermatology. Analysts say the latest set of results underline Galen's strategic objective of becoming a US-focused specialty pharma group.

In a separate move, Galen confirmed yesterday that it was in talks to divest its clinical trials business. The Irish Times revealed last month that the group's former president Dr Allen McClay was among the potential buyers.