Elan Corp is to shed 114 jobs, or 7% of its workforce, as part of what the Ireland-based group calls a “realignment” to direct more cash into its “innovative pipeline”.

Elan said that the decision will lead to "additional refinement” to commercial activities for Tysabri (natalizumab) for Crohn's disease. The company has also announced plans to close its offices in New York and Tokyo in the first quarter of 2009 and cutting the workforce is expected to save $20-$25 million.

Kelly Martin, Elan’s chief executive, said that for the past several months the company has been assessing “several options to ensure sufficient resources are directed toward its most promising R&D opportunities”. The firm’s president, Carlos Paya, added that the company will “shift its current traditional sales commercial model to a model based on clinical support and education”.

Specifically, Dr Paya claimed that Elan “will continue providing the appropriate clinical information and scientific data to support the key gastroenterologist relationships we have established in the USA”.

Analysts welcomed the move as Elan needs to sort out its cash position seeing as the company recently abandoned plans to sell off its drug delivery unit due to the uncertainty in the financial and credit markets. Selling Elan Drug Technologies would have brought in around $1.4 billion.

Some investors are not so happy with the way things are going and in a letter to Elan chairman Kyran McLaughlin, Crabtree Partners co-founder Jack Schuler, who has about a 1% stake in Elan, called for Mr Martin to step down. "Investors have completely lost confidence in your CEO and his management team. The combination of management incompetence and misuse of company resources have caused Elan to lose more than $13 billion in value in the last four months," Mr Schuler wrote.

In response, Mr McLaughlin wrote back saying that “we reject your assertions about our management team. As to Kelly, he has been highly effective in streamlining our operations and positioning us to make the most of our pipeline."