Investors should take advantage of the current weakness in Elan's share price and buy the shares, according to Merrill Lynch. The broker believes the recent sell off in the shares was unwarranted and that Elan can make further gains going forward.

"There has not been any fundamental change to the story to warrant the dash. We would be buyers of Elan shares at these attractive levels," it states in a recent review of the global healthcare sector. It highlights recent positive developments such as its completion of the merger with Dura Pharmaceuticals last week, which is expected to drive earnings forward substantially.

Elan has also stressed the synergies that are possible to achieve between the two companies. The granting of European Union regulatory approval for its new Neurobloc drug for the treatment of cervical dystonia is further good news. Merrill Lynch points out that Elan still has to negotiate labelling and pricing which will be important in determining its success.

The drug, which will be marketed as Myobloc in the US, is expected to be approved there by year end.

Merril Lynch is also upbeat about the Northern Ireland-based Galen Pharmaceuticals and is recommending the stock as a buy. It recently acquired the US-based Warner Chilcott, which will allow it to enter the lucrative US pharmaceuticals market.