Ireland’s Elan Corp has announced plans to cut 230 jobs at its biopharmaceuticals business in a bid to reduce costs and “direct additional investment toward its promising and late-stage pipeline”.
The Dublin-based group says that the restructuring, which will affect 14% of the workforce, will see 115 jobs go in Ireland, where Elan’s biological manufacturing and related fill finish activities are based. The same number of positions, mainly in research, corporate and administrative services, will go in the USA.
Chief executive Kelly Martin said that the moves “will further strengthen our core business areas that bring the greatest potential value to patients and shareholders and enable us to invest in our most valuable programs within the biopharmaceuticals and Elan Drug Technologies businesses”. The cuts, which were the result of an internal analysis led by the firm’s president Carlos Paya, is in addition to a wider strategic review that is being carried out by Citigroup and could lead to a sale or merger of the company.
The jobs cuts will reduce operating expenses by $30-$35 million in 2009 and $50 million in a full year. Severance payments are expected to be cost $15 million and will be recorded as a charge in the first half of this year.
Taking into account these changes, Elan reiterated its full-year financial guidance of double-digit percentage increases in revenue and adjusted operating profit. The firm expects to end the year with cash and equivalents of $200 million.
Dr Paya said the moves would enable Elan “to leverage a highly-focused and cost-advantaged organisation, with a foundation to become the world’s leading neuroscience company”. It will also help the company focus on its four priorities. They are: driving uptake of the multiple sclerosis drug Tysabri (natalizumab), advancing its Alzheimer’s programmess, “harnessing the value of our pipeline and maximizing the growth of EDT”.
Ian Hunter, an analyst at Dublin-based stockbroker Goodbody, noted that the restructuring is not unexpected “and in the overall scheme of things does not drive large changes in the company”. Elan has to repay $1.1 billion of debt in November 2011 and among the strategic alternatives being looking at, “we understand that sale of up to 20% of the company to a third party is still the preferred option”, he added.
When the Citigroup review was announced, Elan said that there could be a decision on the process within 10 weeks. “We are now six weeks into that timeframe,” Mr Hunter added.
