Elan Reports Record Second Quarter 2001 Financial Results - Total Revenue Up 25% - Product Revenue Up 48% - Diluted Per Share Income Before Other Charges Of 45 Cents for the Quarter an Increase of 45%

Elan Reports Record Second Quarter 2001 Financial Results - Total Revenue Up 25% - Product Revenue Up 48% - Diluted Per Share Income Before Other Charges Of 45 Cents for the Quarter an Increase of 45%

DUBLIN, Ireland, July 24 /PRNewswire/ -- Elan Corporation, plc (NYSE: ELN) ("Elan") today announced net income for the second quarter of 2001 of $163.7 million and $0.45 per diluted share, excluding other charges, compared to net income of $102.9 million and $0.31 per diluted share, excluding other charges, for the second quarter of 2000, representing increases of 59% and 45%, respectively. Revenue increased from $368.8 million in the second quarter of 2000 to $461.2 million in the second quarter of 2001, an increase of 25%, reflecting an increase of 48% in product revenue to $356.3 million. Contract revenue for the second quarter of 2001 of $104.9 million was 18% lower than the comparable quarter of 2000, mainly reflecting the termination of a research and development arrangement in the third quarter of 2000 (Spiros Development Corp II Inc.). Product revenue accounted for 77% of total revenue in the second quarter of 2001 compared to 65% in the comparable quarter of 2000. The gross margin on product revenue improved to 72% in the second quarter of 2001 compared to 68% in the comparable quarter of 2000. Commenting on the results, Donal J. Geaney, Elan's chairman and chief executive officer said, "I am pleased with the performance of the business for the second quarter of 2001. The significant growth in product revenue and the expansion in the gross margin reflects the continuing transformation of the company to a fully integrated pharmaceutical company. Our key products Zanaflex(TM), Skelaxin(TM), Abelcet(TM) and Maxipime(TM) continue to perform strongly. Zanaflex and Skelaxin deserve special mention as they are performing significantly better than we expected at the start of 2001. "Although we are still awaiting approval of the lower dosage strengths of Zonegran(TM), the product continues to perform in line with our expectations. Total prescriptions through the end of May 2001 were over twice those achieved during the period from approval in March 2000 through the end of 2000. Myobloc(TM) continues to build its position in the dystonia market. "We were pleased to announce yesterday that AN-1792, which is being developed in collaboration with American Home Products Corporation, will advance into a Phase IIA clinical study. This study will commence in the third quarter of 2001 and will include approximately 375 patients with mild to moderate Alzheimer's disease. The Phase I study results indicate that AN-1792 is well tolerated and that a portion of patients developed a sufficient immunological response to AN-1792 to warrant initiation of the Phase IIA study. "We presented the positive results of a Phase II study with Antegren(TM) for Crohn's disease at the Digestive Disease Week meeting in May and will provide a full presentation of the data for multiple sclerosis at the Congress of the European Committee for the Treatment and Research in Multiple Sclerosis (ECTRIMS) on September 12-15 in Dublin, Ireland. "The integration of our North American pharmaceutical business is largely complete. During the second quarter of 2001, we announced our decision to centralise the North American pharmaceutical business' commercial functions and the management group in San Diego. The reorganised sales force is focused on marketing our key growth products -- Zanaflex, Skelaxin, Abelcet, Maxipime, Azactam(TM), Zonegran, Myobloc, the dermatology products, and Prialt(TM) and Frovelan(TM) upon their launch," Mr. Geaney concluded. Research and development expenses were $78.4 million in the second quarter of 2001, compared to $83.1 million in the second quarter of 2000. This reflects lower expenditure on terminated drug delivery programmes previously funded by Dura. Selling, general and administrative expenses increased by 19% to $148.7 million in the second quarter of 2001, reflecting the consolidation of The Liposome Company, Inc. (acquired in May 2000), the acquisition of certain dermatology products in the fourth quarter of 2000, and increased marketing expenses associated with the launches of Zonegran and Myobloc. Operating income in the second quarter of 2001 increased 62% to $135.6 million compared to $83.5 million in 2000. Net income after taxes and before other charges in the second quarter of 2001 increased 59% to $163.7 million compared to $102.9 million in the second quarter of 2000, primarily reflecting growth in product revenue and the improved gross margin on product revenue. In the second quarter of 2001, Elan incurred a net non-recurring charge of $29.4 million for rationalisation and integration activities, arising from merger and acquisitions concluded during 2000. Rationalisation and integration activities were substantially completed at the end of the second quarter of 2001. This included the head-count reductions in US operations, the facility relocation decisions and the rationalisation of the product portfolio to concentrate detailing efforts on the key products. The net non-recurring charge for the quarter can be analysed as follows: Item description (dollars, in millions) Integration and rationalisation charges 12.2 * Asset write-off and other 7.4 Severance 9.8 Total 29.4 * Net of revenue received In 2000, Elan implemented the SEC's Staff Accounting Bulletin No. 101 ("SAB 101"), which requires certain initial fees to be deferred and amortized over future periods. As a result of the implementation of SAB 101, certain initial fees recognized in prior periods have been deferred and are being amortized over the terms of the relevant agreements. In the first quarter of 2000, Elan recorded a charge of $344.0 million for the cumulative effect (i.e., for the period to December 31, 1999) of this accounting change relating to fee income recognized in prior years. Previously reported results for the second quarter of 2000 now reflect the implementation of SAB 101. Elan is a leading worldwide fully integrated pharmaceutical company headquartered in Ireland, with its principal research, development, manufacturing and marketing facilities located in Ireland, the United States and Israel. Elan is focused on the discovery, development and marketing of therapeutic products and services in neurology, pain management, oncology, infectious disease and dermatology and on 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 communication includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations but actual results may vary materially due to various factors. The forward-looking statements in this communication include statements about future operating results. Certain factors, including Elan's inability to successfully integrate the acquired companies, attain milestone payments, develop products, gain approvals, launch and market its products and other economic, competitive, business and/or regulatory factors affecting Elan's business generally, could cause actual results to differ materially from those described herein. More detailed information about these factors is set forth in Elan's filings with the Securities and Exchange Commission, including Elan's Annual Report on Form 20- F for the fiscal year ended December 31, 2000. Elan is under no obligation to (and expressly disclaims any obligation to) update or alter these forward-looking statements, whether as a result of new information, future events or otherwise. Elan Corporation, plc Consolidated Statement of Income Three months ended June 30, Six months ended June 30, 2000 2001 2000 2001 US$m US$m US$m US$m Revenues 241.2 356.3 Product revenues 473.6 680.5 127.6 104.9 Contract revenues 233.1 210.1 368.8 461.2 Total revenues 706.7 890.6 Costs and Expenses 83.1 78.4 Research & development 169.1 152.5 77.3 98.5 Cost of goods sold 150.6 187.7 124.9 148.7 Selling, general & administrative 243.7 298.6 285.3 325.6 Total operating expenses 563.4 638.8 83.5 135.6 Total operating income 143.3 251.8 22.9 32.8 Interest and other income (net) 42.1 64.3 Net income before tax and 106.4 168.4 other charges 185.4 316.1 (3.5) (4.7) Taxation (6.0) (8.0) 102.9 163.7 Net income before other charges 179.4 308.1 (226.4) (29.4) Other charges (226.4) (97.4) Cumulative effect of accounting -- -- change (344.0) -- (123.5) 134.3 Net income / (loss) (391.0) 210.7 Weighted average number of 308,676 336,408 Ordinary shares outstanding (in thousands) 303,889 332,008 Diluted earnings per ordinary $0.31 $0.45 Share before other charges $0.55 $0.85 Diluted earnings per ordinary ($0.40) $0.37 Share after other charges ($1.29) $0.59 Elan Corporation, plc Consolidated Balance Sheet As at As at December 31, June 30, 2000 2001 Assets US$m US$m Current Assets Cash and marketable investment securities 1,161.2 1,550.5 Other current assets 495.8 515.5 1,657.0 2,066.0 Intangible assets 1,999.9 2,032.8 Property, plant and equipment 353.5 363.5 Investments and marketable investment securities 642.6 993.1 Total Assets 4,653.0 5,455.4 Liabilities and Shareholders' Equity Shareholders' equity 2,276.9 2,866.9 Accounts payable and accrued liabilities 1,067.5 939.7 4.75% exchangeable notes 324.7 -- 7.25% senior notes -- 650.0 3.25% zero coupon subordinated exchangeable notes 921.3 936.2 3.5% convertible subordinated notes 62.6 62.6 Total Liabilities and Shareholders' Equity 4,653.0 5,455.4