Drugs group slashing 1,000 jobs

TROUBLED Irish pharmaceuticals group Elan has unveiled a radical restructuring that will see it try to raise $1.5bn (£953m) through asset sales and slash 1,000 jobs - more than a fifth of its workforce - by Christmas.

Elan, hit by fears of a cash crisis and worries over its accounting, also revealed it had just booked almost $800m of writedowns relating to investments and the values attributed to pharmaceutical assets. This left it with a $750m pre-tax loss for the six months to 30 June, compared with $218.7m profit previously, from revenue of $906m.

Elan said the restructuring would turn it into a biopharmaceutical company focused on neurology, pain and autoimmune diseases - areas it believed offered the most growth potential.

Under the plan, it has bought royalty rights to products from Autoimmune Disease Research and Development Corp, a related company at the centre of many of the accounting concerns. Elan has paid $121m for the rights, but has received $38.5m in return for its stake in Autoimmune. Elan has also terminated all revenue-sharing agreements with the company.

Elan plans to sell businesses, assets and products considered non-core. It aims to raise $1bn in the next nine months and a further $500m by the end of next year.

The company employs 4,500 staff. It forecast the cost-cutting would save $300m a year and generate a one-off cash charge of no more than $200m. Elan said it believed this strategy would enable it to meet its financial commitments.