Elan to have 7% Job Cuts, Close Offices After Unit Sale Fails

Elan Corp., the Irish maker of medicines whose shares have fallen 66 percent this year, will cut 114 jobs and close its New York and Tokyo offices after the credit crunch ended the planned sale of the drug technology unit.

Ireland’s biggest drugmaker will eliminate about 7 percent of the workforce, resulting in as much as $25 million in cost savings per year, external spokeswoman Niamh Lyons said from Dublin, where the company is based. Elan said the cuts will free up funding to develop its treatments for Alzheimer’s.

Elan, maker of the Tysabri multiple sclerosis medicine, earlier this year shelved plans to sell its EDT drug technology division as global financial turmoil dried up financing opportunities. By the end of this month, Elan will have $450 million in cash and investments, Chief Executive Officer Kelly Martin said in October. The Irish company has $1.15 billion in debt coming due in 2011.

“That EDT sale would have put them in a nice cash position to develop their Alzheimer’s pipeline,” Goodbody Stockbrokers analyst Ian Hunter said in an interview. “They need to conserve as much cash as possible now.” Hunter estimates the EDT unit is valued from $1 billion to $1.3 billion.

Elan employs 1,700 workers, mostly in Ireland and San Francisco, Lyons said.

Elan fell 34 cents, or 6.3 percent, to 5.06 euros in Dublin trading. The stock is the worst performer of the 18-member Bloomberg Europe Pharmaceutical Index, which has fallen 18 percent this year.

Source : Bloomberg
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]