PHARMACEUTICALS group Elan has continued to show strong profit growth in the second quarter but operating margins have fallen sharply.
The fall in margins reflects increased research from which no payments have been achieved and the early stages of production of Elan's Naprelan product.
In the first quarter of Elan's financial year, ending June, profits were up 51 per cent to $27.98 million (£17.4 million) while total revenue was up 30 per cent to $67.62 million.
Elan changed its reporting currency from pounds to US dollars at the beginning of April and is also changing its year end from March to December.
Sales of products rose 39 per cent to $33.3 million, largely reflecting the launch of Naprelan on the US market in April 1996. Royalty and fee income was up 27 per cent to $22.15 million, reflecting six new agreements entered into during the first quarter and revenue from agreements where milestone payments were earned in the quarter.
Research revenue jumped over 30 per cent to $12.16 million and this included $10.6 million from Advanced Therapeutic Systems. Interest income from Elan's cash pile jumped 64 per cent to just over $7 million, reflecting the higher level of cash on the balance sheet during the period.
The results do not include any contribution from the £400 million acquisition of Athena Neurosciences but Athena will be consolidated into the results from July 1st.
Elan chief executive Mr Donal Geaney said Naprelan was continuing to build up market share in the US while the group was also excited about the prospects for its products in markets in the Far East, in particular Japan.
