Elan Corporation has announced a 38 per cent increase in first quarter net income before exceptional items to a record $75.1 million (€80 million). The rise in profits reflects strong growth in product sales, increased research revenue and royalties and fees. But the results failed to impress the market and on the NYSE, the shares - which have rebounded in the last week - took another hammering and were trading as low as $59 before closing down $6.06 1/4 at $59.93 3/4. The pharmaceuticals group said revenues in the three months to March 31st, 1999 rose by 73 per cent to $233.1 million with product sales surging by 104 per cent to $127.5 million to account for more than half of the total. Sales of directly-marketed products in the US and Britain grew particularly strongly, increasing by 150 per cent.

Royalties and fees rose by 31 per cent to $67.3 million in the first three months of the year, reflecting the execution of several new licence arrangements and receipt of milestone payments from pre-existing agreements, Elan said.

Research revenue rose to $38.3 million from $20.8 million. But the rise here was more than offset by an increase in research and development expenditure to $58 million, from $33.8 million, in the first quarter of 1998, Elan said. This was due to the costs associated with clinical trials for several drugs including Ziconotide, Antegren and NeuroBloc.

Overall operating expenses rose by 79 per cent to $162.3 million, partly due to the continued expansion of the company's marketing and selling infrastructure in the US and the inclusion of costs associated with 1998 acquisitions. Elan's chairman and chief executive, Mr Donal Geaney, said he was satisfied with the company's start to 1999 and looked forward to achieving revenues of $2 billion by 2003.