Optimistic Elan sees 46% growth in profits in first quarter

Elan Corporation's share price has surged after the group reported strong growth in the first quarter of this year. In Dublin its share price traded up 230p to £47.32 and in New York it rose by $2 1/2 to $66 3/4, after it reported a 46 per cent rise in pre-tax profit from $37.5 million to $54.9 million (£39.17 million). Diluted earnings per share rose from $0.35 to $0.46, broadly in line with brokers' predictions.

The rise in revenue from $89 million to $134.7 million is attributed to increases in product sales, research revenue, royalties and fees. Increased sales of directly marketed products in the US and Britain, together with manufacturing revenues for certain drug delivery products were offset, in part, by reduced shipments of Cardizem CD (R) and Verelan (R), to its licensees, said Elan.

Revenue from research went up from $9.7 million to $20.8 million. A breakdown shows a rise from $5.7 million to $14.4 million from Axogen. The increase however was offset by research and development expenditure. This expenditure reflects costs associated with clinical trials. Operating income increased from $31.5 million to $44 million reflecting a better contribution from product sales, royalties and fees. Elan's chairman and chief executive officer, Mr Donal Geaney, said the strong growth underlined the strength of its emerging pharmaceutical business in the US and Britain, together with a very strong performance by Elan Pharmaceutical Technologies.

Referring to the acquisitions of Carnrick and Mysoline and the inclusion of the results from its British and Irish operations, he said Elan had now established a pro-forma 1997 business base of nearly $200 million in direct pharmaceutical product revenues.

"We now look forward to growing this business throughout the remainder of this year."

Sano, which was acquired last February, "has already made a significant contribution to the revenues and profitability of our drug delivery division".

Mr Geaney said he was pleased with the successful completion of phase III clinical studies for Neurobloc in patients with cervical dystonia. On the future, the group said "our pipeline will provide the basis for significant growth in Elan's revenue and profitability through the year 2002".