Elan plans to raise $1 billion (€1 billion) through asset sales over the next nine months while also embarking on a cost-cutting programme to ensure the company's long-term survival.

The new executive committee, which has taken over the running of the company, said yesterday it had two goals. "One is to shore up our balance sheet so there is absolutely no concern whatsoever about liquidity," Elan's newly-appointed chairman, Dr Garo Armen, told investors yesterday.

"We also want to streamline our balance sheet, we want to simplify our balance sheet and we want to be transparent so that you don't have to go through 55 footnotes in order to be able to interpret what our cash level is, what our earnings are and what our future looks like."

Although the company offered no guidance on earnings in yesterday's briefing, Dr Armen promised to provide investors with more details at the end of July.

Elan will also provide specifics on its cost-cutting programme at the end of the month, a spokesman said yesterday. But Elan indicated there would be "no sacred cows" when it came to review its cost base and consider which products, businesses and sites it would sell off.

As a result, its Irish operations, which Elan had previously said would not be affected by the changes, are now under review along with the rest of the company's portfolio. Elan employs 900 staff in Athlone while it also has plans to develop the former GSI plant in Macroom, Co Cork, with the creation of up to 300 jobs over the next five years. This may not now go ahead.

But despite the difficulties at Elan, Dr Armen said there were no plans to liquidate the company although he conceded that unless action was taken, Elan could be facing liquidity issues down the line.

Shares in Elan, which initially rose on news that chief executive and chairman Mr Donal Geaney had stepped down, later fell back to close unchanged at €2.35 in Dublin.

In New York, where they are more heavily traded, they finished almost 17 per cent lower at $1.80 as analysts remained downbeat about the company and its prospects.

Shares in drug companies across the board fell in afternoon trading with bad news from another drug company Wyeth.

"Investors should avoid the shares, which have been pummelled in recent months as investors' confidence in them have plummeted," said Morningstar stock analyst Ms Jill Kiersky yesterday. Morningstar said Elan was struggling to keep its head above water as the Securities and Exchange Commission investigates its accounting methods.

Investors have no confidence in drug companies, said Cummins Catherwood, who helps oversee $750 million for Walnut Asset Management in Philadelphia, after Wyeth plunged on news of a study suggesting its hormone- replacement therapy may raise the risk of breast cancer and heart disease. "Wyeth is the tragedy today, and who knows what's next?" he said.

Despite Dr Armen's attempts to allay fears of a liquidity crunch, analysts continue to believe Elan faces a tall task if it is to meet obligations of more than $900 million between now and the end of next year. "I don't think it's lifted the clouds surrounding Elan. It's only made them darker," said Mr Peter Frawley, analyst at Merrion Stockbrokers.

In addition to a revolving credit facility of $325 million, which it plans to pay before the end of this month, Elan has to repay a further $63 million of debt due this month and short-term guarantees of $148 million that come due in September. It also faces $420 million in deferred acquisition payments.

Looming further down the line is a $1 billion convertible bond which falls due in December 2003. Elan said yesterday it was premature to say how it would satisfy this debt, which can be paid in cash or shares.

Analysts also said Elan's hopes of raising $1 billion from selling off investments looked optimistic in the current environment, particularly as Elan was a forced seller.

"It's an aggressive target," Mr Frawley said, especially as Elan says it expects to take a non-cash writedown of $600 million on its assets in the second quarter.

Others believe that selling off bits of the company to meet the debt payments does not augur well for the future. "It is like selling the furniture to meet the mortgage payments," said Mr David Maris, the Credit Suisse First Boston analyst who first raised the issue of a cash crunch at the company, triggering the recent heavy selling of the shares.