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| Elan Implements Action Plan to Streamline Operations And Strengthen Corporate Governance |
Company to Focus on Three Core Therapeutic Areas and Create Elan Enterprises
To Simplify Business and Enhance Transparency
DUBLIN, Ireland, June 10 /PRNewswire-FirstCall/ -- Elan Corporation, plc
(NYSE: ELN) ("Elan") announced today that its board of directors has approved
management's action plan and has taken a number of significant steps to
strengthen its corporate governance practices.
"As a follow up to the action plan announced in May along with our first
quarter results, we are now reorganising the structure of Elan's business,
enabling us to focus on core areas that will drive the future growth of the
company. This will also make it easier for our shareholders to track the
progress of our business. In addition, Elan and its board are committed to
ensuring the company's corporate governance practices continue to meet the
rigorous standards applicable to a global company. The significant steps
taken, including the appointment of a Lead Independent Director and the
establishment of a separate Nominating Committee, is indicative of that
commitment." said Mr. Donal Geaney, Elan's chairman and chief executive
officer.
ACTION PLAN KEY HIGHLIGHTS
Mr. Geaney continued "Elan recognises that it faces a number of
significant challenges in the short term including regaining its credibility
with shareholders and other stakeholders. Elan is committed to delivering on
its action plan and achieving its strategic objective of becoming a market
leader in terms of market share and product pipeline, in each of the company's
core therapeutic areas of neurology, pain management and autoimmune diseases."
Following is a summary of the key components of the company's action plan.
Management will be providing additional detail on this action plan and its
implications, including a comprehensive presentation at the company's annual
general meeting to be held on July 31, 2002.
Elan's action plan has the following objectives:
* Focus management and resources on its fully integrated pharmaceutical
operations and core therapeutic areas of neurology, pain management and
autoimmune diseases
* Simplify operations through divestitures
* Reduce complexity of balance sheet
Focus on three core therapeutic areas
Going forward, the company will focus on three core therapeutic areas
where it is fully integrated and possesses world class science: neurology,
pain management and autoimmune diseases. Elan's fully integrated activities
in neurology and pain management will encompass the discovery, development,
manufacturing and marketing of novel therapies for the treatment of pain
management and of new disease modifying therapies for disorders of the nervous
system, including diseases such as Alzheimer's disease, Parkinson's disease
and epilepsy. In the autoimmune area, Elan will pursue novel treatments for
disorders of the immune system such as multiple sclerosis, Crohn's disease and
rheumatoid arthritis.
In its core therapeutic areas, Elan's strategic objective is to be a
market leader in terms of market share and product pipeline in the United
States and major European markets.
Outside of these core therapeutic areas, the company will continue to
capitalise on its existing strong market position in areas such as acute care
and dermatology in the United States and oncology in Europe. This will enable
Elan to continue to realise the value it has created with its commercial
presence in these areas.
In neurology, pain management and autoimmune diseases, the company will
continue to pursue the acquisition of in-market products with sales potential
of greater than $100 million for the U.S. market and $50 million for European
markets. However, Elan's objective to retain maximum financial flexibility
and liquidity will temper its acquisition program. Elan also continues to
monitor the industry for molecules in development that could be in-licensed to
further enhance its existing strong development pipeline within its core
therapeutic areas.
With respect to investment in research and development, Elan seeks to
maximise the potential return on its key development programmes such as Prialt
and Antegren as well as the product enhancement activities and application of
its drug delivery technologies to several of its marketed products such as
Zonegran, Myobloc, Zanaflex, Skelaxin and Sonata. The company is also
committed to the advancement of its broad Alzheimer's programmes with Wyeth
and Pharmacia, its cell trafficking programme with Wyeth and its internal
discovery programmes in the core therapeutic areas of neurology, pain
management and autoimmune diseases.
Reposition Drug Delivery
Elan is a world leader in the provision of drug delivery services and
technologies to the biotechnology and pharmaceutical industry. Elan is
repositioning its contract drug delivery service business to be a stand alone
discrete business within Elan operating from a single site (King of Prussia,
Pennsylvania) focused primarily on the provision of NanoCrystal and
complementary drug delivery technologies to its client base. Elan recognises
the value of its drug delivery technology and know-how for enhancing its own
marketed and pipeline products. Those drug delivery resources that are
integral to Elan's own development and product enhancement activities will be
integrated into Elan's global research and development organisation based
primarily in Ireland; Gainesville Georgia; and San Diego and San Francisco,
California.
Create Elan Enterprises, a new stand-alone business unit
Elan is creating a discrete business unit called Elan Enterprises with its
own dedicated management team led by Seamus Mulligan, executive vice
president, business and corporate development. Elan Enterprises has two
objectives:
1. To optimise the value of Elan's business ventures. Elan has
approximately 50 business ventures with approximately 30 products in
clinical development, four in Phase III/pivotal trials. Business
venture products in Elan's core therapeutic areas will continue to be
evaluated and positioned for launch by Elan. Those products outside
Elan's core therapeutic areas will, on an ongoing basis, be evaluated
for further investment and eventual out-licensing to suitable
marketing partners. Elan and its business venture partners will be
very active in seeking marketing partners to ensure full value is
derived from this valuable pipeline of products. Elan is committed to
all of its business venture partners and will continue to collaborate
very closely with them in the development and future marketing of
these products.
2. To divest non-strategic businesses and assets. In the 5 year period
from mid 1996 to mid 2001, Elan acquired 15 different companies in the
US and Europe. As a result, Elan has over 26 sites world-wide and an
overly complex geographic and business structure. Elan Enterprises
will reduce the complexity of Elan's operations over time by divesting
businesses and assets that are not strategic to Elan's long term goals
in neurology, pain management and autoimmune diseases. The company's
divestiture plans will significantly reduce the number of sites that
Elan has world-wide and streamline the business operations. Overall
this programme should have a beneficial impact on Elan's financial
performance.
The creation of Elan Enterprises with its dedicated management team will
enable Elan's executive and operational management to focus on the company's
core pharmaceutical business.
Reduce the complexity of Elan's balance sheet
Elan is committed to reducing the complexity of its balance sheet and is
carefully examining and determining, with its advisors, the optimal financial
structure in the context of the implementation of its action plan. Elan will
focus on maintaining strong cash balances and supplementing these cash
resources with proceeds from the sale of non-strategic businesses and assets.
CORPORATE GOVERNANCE HIGHLIGHTS
The company's board of directors has also taken a number of steps to
strengthen and enhance its corporate governance practices. These include:
-- Creation of a position of Lead Independent Director, which will be
filled by The Honorable Richard Thornburgh, a current Elan Director
and former Governor of Pennsylvania, Attorney General of the United
States and Under-Secretary General of the United Nations.
Shareholders and the financial community increasingly value the
stewardship that Lead Independent Directors provide a company.
Moreover, appointing a Lead Independent Director furthers Elan's long-
standing commitment to conforming to evolving best governance
practices.
-- Establishment of a separate Nominating Committee, chaired by Mr.
Thornburgh and comprised entirely of Independent Directors. The
Nominating Committee will take the responsibility for nominating
directors and monitoring compliance with Elan's newly enhanced
governance guidelines. The Nominating Committee is a new separate and
distinct committee from the previously created Compensation Committee
that is also comprised entirely of Independent Directors.
As Lead Independent Director and chair of the Nominating Committee, Mr.
Thornburgh will be responsible for leading the board functions relating to the
company's corporate governance policies.
In addition to the separate and distinct Nominating Committee and
Compensation Committee, Elan's board has an Audit Committee that is also
comprised entirely of Independent Directors and is responsible for the
appointment of Elan's external auditors. The Audit Committee oversees the
company's accounting and reporting practices and periodically reviews the
effectiveness of the system of internal financial control. It monitors the
adequacy of internal accounting practices, procedures and controls and reviews
all significant changes in accounting policies. It also addresses all issues
raised and recommendations made by the external auditors.
The board also approved a proposed amendment to the company's charter so
that all directors, including the Chairman will stand for election by
rotation. The proposal will be presented for shareholder approval at Elan's
next Annual General Meeting. If adopted, this amendment will take effect at
the company's 2003 annual general meeting.
With respect to the overall composition of the board, Elan has a clear
majority of Independent Directors with a total of 14 Directors, 11 of whom are
independent.
"The board of directors and the company's chairman and chief executive
officer have always been committed to ethical practices that promote
shareholders' interests. The creation of the position of Lead Independent
Director and the other positive initiatives taken by the board are indications
of our continuing commitment to this goal," said Mr. Thornburgh.
"Best practices in corporate governance continue to evolve, and we are
pleased that the company and the board reviewed and updated our governance
practices. Our actions and the proposals submitted to shareholders should
reassure them that Elan is committed to delivering on its promise and
potential," said Mr. Geaney.
About Elan
Elan is a leading worldwide, fully integrated biopharmaceutical company
headquartered in Ireland, with its principal facilities located in Ireland and
the U.S. Elan is focused on the discovery, development, manufacturing,
selling and marketing of novel therapeutic products in neurology, pain
management and autoimmune diseases and the development and commercialisation
of products using its extensive range of proprietary drug delivery
technologies. Elan shares trade on the New York, London and Dublin Stock
Exchanges.
This document and the attachments contain forward-looking statements about
Elan's financial results and estimates, business prospects and products under
development that involve substantial risks and uncertainties. You can
identify these statements by the fact that they use words such as
"anticipate", "estimate", "project", "envisage", "intend", "plan", "believe"
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance. Among the factors that could
cause actual results to differ materially from those described herein are the
following: the success of research and development activities and the speed
with which regulatory authorisations and product launches may be achieved;
competitive developments affecting Elan's current products; the ability to
successfully market both new and existing products domestically and
internationally; difficulties or delays in manufacturing; the ability to meet
generic and branded competition after the expiration of Elan's patents; trends
towards managed care and health care cost containment; possible legislation
affecting pharmaceutical pricing; exposure to product liability and other
types of lawsuits; Elan's ability to protect its intellectual property both
domestically and internationally; interest rate and foreign currency exchange
rate fluctuations; governmental laws and regulations affecting domestic and
foreign operations, including tax obligations; general changes in US and Irish
generally accepted accounting principles; growth in costs and expenses;
changes in product mix; the outcome of the ongoing SEC investigation and
shareholder litigation, and the impact of acquisitions, divestitures,
restructurings, product withdrawals and other unusual items. A further list
and description of these risks, uncertainties and other matters can be found
in Elan's Annual Report on Form 20-F/A1 for the fiscal year ended December 31,
2000, and in its Reports of Foreign Issuer on Form 6-K. Elan assumes no
obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise.
SOURCE Elan Corporation, plc
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+1-212-407-5740, or +1-800-252-3526, or Emer Reynolds, Investors
(Europe), +353-1-709-4000, or +00800-28352600, or Max Gershenoff,
Media, +1-212-704-8173, all of Elan
