Pharmaceutical group Elan Corporation, which has announced a big rise in profits for the second quarter of the year, has formed a second technology transfer agreement with drugs giant Merck under which it will receive up to $30 million (€28 million) as well as royalty payments on products Merck develops using Elan's Nano Crystal technology.

Nano Crystal technology improves the delivery of poorly water-soluble medicines by transforming the drug compounds into particles that can be incorporated into oral, injectable, aerosol and topical formulations.

Merck executive vice-president Mr Edward Scolnick said: "This technology looks very promising. It will help Merck achieve our laboratories' goal of discovering and developing innovative medicines that be taken orally once a day, and are well tolerated."

Elan has reported booming sales and profits for the second quarter, with turnover up 50 per cent to $234.4 million and after-tax profits up 34 per cent to $80.1 million.

The increase in second quarter turnover was primarily due to a 71 per cent increase in product sales from $75.5 million to $129.3 million and a doubling of research revenue from $21.9 million to $44.3 million. The increase in product sales reflected strong performances in American and European markets for a variety of Elan products. A large part of the increase in royalty income was down to a $30.3 million payment from Axogen and Neuralab.

Gross margins increased from 54 per cent in second quarter 1998 to 64 per cent, mainly due to a shift towards directly marketed products. Elan chairman and chief executive Mr Donal Geaney said: "These second quarter results represent a quarter of solid achievement with the continuing transition of Elan's business to a company deriving its revenues primarily from product sales.

"Additionally, we reported significant progress in our research programmes and continue to establish marketing infrastructure in North America and Europe," he said.