Ireland’s Elan joins drug merger frenzy

Merger talks in the pharmaceuticals industry are continuing at a frenzied pace.

Ireland's biggest drug firm, Elan, today hired Citigroup to conduct a review of the business, potentially leading to a sale or merger.

Rumours last week suggested that Pfizer, the world's largest company in the sector, was planning to mount a £3.6 billion bid for Elan, which owns multiple-sclerosis drug Tysabri, which is forecast to generate sales of more than £680 million per year.

A loss-maker at present, Elan has £1 billion of debt due to be repaid in 2011.

Its share price has fallen by two-thirds over the past six months and it has closed its Tokyo and New York offices while cutting 114 jobs.

"This is an appropriate time for the board to explore potential alternative paths forward for the company," said chairman Kyran McLaughlin.

Traders were also speculating about pharma giant GlaxoSmithKline, which may be bidding for Danish biotech firm Genmab. GSK is rumoured to have made an unofficial approach to Genmab in the region of 500 kroner per share, twice the current share price of 247 kroner.