Elan cuts jobs, shelves biofacility

By Phil Taylor

- Last updated on GMT

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Faced with a tougher operating environment, Irish drugmaker Elan has decided to slash staff numbers by 230 – or around 14 per cent of its total workforce – shelve the construction of a new biologics manufacturing facility and shutter fill-and-finish capacity in Ireland.

The aim is to save more than $30m this year and $50m in subsequent years. Elan is facing maturation of debt to the tune of more than $1bn in 2011, a situation made worse by the credit crunch, and has been furiously cutting costs to prepare.

In late 2008, Elan closed its New York and Tokyo offices and consolidated all its commercial and R&D operations in San Francisco. This was followed in early 2009 with a strategic redesign and realignment of Elan’s R&D organisation.

At December 31, 2008, Elan employed 601 people in manufacturing and supply activities, out of a total headcount of 1,687 employees. Over half of the manufacturing staff are located at the firm’s plant in Athlone, Ireland.

The news came shortly after the firm published its 2008 annual results. One again, contract manufacturing made another useful addition to Elan’s revenues last year, helping the firm pull in total net sales of $1.01bn, up 30 per cent year-on-year.

The bulk ($760m) of that total – and sales growth - came from sales of Elan’s biopharmaceutical products, including multiple sclerosis treatment Tysabri (natalizumab).

Manufacturing revenue and royalties advanced 4 per cent to $282m, with non-manufacturing contract revenue – mainly research fees - adding $20m to the company’s tally, around 50 per cent lower than in 2007.

Elan Drug Technologies, Elan’s drug delivery unit which was up for sale for a time last year, generated $302m in revenue and an operating profit of $86m in 2008. CEO Kelly Martin told shareholders in a letter that EDT is an important pillar of the Elan group.

EDT provides Elan Corporation with a diversified source of revenue that further mitigates risk by spreading out business across multiple molecules, therapeutic areas and partners​,” he noted.

The division generates revenue from royalties from sales of products which make use of its drug delivery technologies – such as its NanoCrystal formulation for poorly-soluble actives - as well as manufacturing fees for the production of licensed products, and contract revenues relating to R&D services, license fees and milestones.

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