Elan tumbles as US probe launches

TROUBLED Irish pharmaceuticals group Elan Corporation is to face an investigation by the powerful US Securities and Exchange Commission. This follows a series of American shareholder lawsuits that allege concealment of financial information.

Elan said that it 'welcomes the opportunity to resolve all matters raised by the SEC in the light of recent allegations made against the company in the media and in shareholder lawsuits'.

Elan shares, quoted in Dublin, New York and London, dropped to 927 1/2p, down 52 1/2p on the session.

The row centres around another alleged accounting scam following a series of joint ventures set up by Elan with other research partners in the biotech field. Elan made initial investments with the joint venture partners, who in turn are alleged to have spent most of the cash on purchasing licences and research from Elan. Elan is then alleged to have booked such payments as revenue.

Meanwhile, the initial payment made to the joint venture company does not cut into the group's earnings because it is classified as an investment and therefore appears on the balance sheet as an asset.