Troubled pharmaceutical group Elan has put its three anti-infective drugs up for sale as part of its drive to raise $1.5 billion (€1.55 billion) from asset disposals over the next 18 months.
Investment bank Morgan Stanley, which is advising Elan on the disposals, has begun to prepare offer documents on the three drugs for prospective bidders. But it is unlikely to conclude a deal before the end of the year, sources close to the company said.
Meanwhile, Elan began consultations on Wednesday with employees at its manufacturing facility in Athlone about achieving 250 job cuts there.
The company plans to cut 1,000 jobs, or more than one-fifth of its global workforce, by the end of the year.
Around 300 jobs are expected to be lost from its operations in Dublin and Athlone as part of a restructuring plan to ensure the company's long-term survival.
The plan also involves Elan focusing on its core areas of neurology, pain management and auto-immune diseases. The three drugs that are being sold, Abelcet, Azactam and Maxipime, fall outside these areas and were widely expected to be sold.
Elan, which expects to receive first round bids in November, is understood to be hoping to realise at least $750 million, or half its stated target, for the drugs.
Goodbody recently estimated that the products were worth between $400 million and $840 million.
Analysts said the three drugs, acquired either singly or as a package, could prove attractive to a US-based specialty pharmaceutical company or a larger drugmaker looking to build up its hospital drug franchise, such as Eli Lilly or Abbot Laboratories.
Sales of Abelcet, acquired two years ago and the most valuable of the three products, totalled $77 million last year. Maxipime brought in $86.3 million and Azactam sales were $46.4 million.
Elan, which is raising the $1.5 billion to help satisfy its debt obligations to the end of 2003, has not specified which assets will be sold. But it is also expected to dispose of its drug delivery arm, the company's original business, and its diagnostic business. Given their complexity, the sale of these units is expected to take longer than the sale of the simpler products.
Analysts believe that Elan, whose shares have fallen by more than 95 per cent this year amid accounting concerns, faces a tough task if it is to survive.
Raising the $1.5 billion through disposals has become key if it is to avoid a credit crunch over the medium term.
But analysts are concerned that the poor economic backdrop, the fact that the company is seen to be a forced seller and uncertainty over the value of some of the assets mean the sales process is far from easy.
Among the obligations facing the company is repayment of a $1 billion convertible bond, due in December 2003, which can be satisfied in either cash or shares.
Shares in the company lost one cent in Dublin yesterday to close at €1.89 but in New York, where they are mainly traded, they closed 5.62 per cent lower at $1.68.
