Elan Corporation (NYSE:ELN) is a biotechnology company that makes drugs to treat Alzheimer’s disease, multiple sclerosis, Crohn’s disease and severe bacterial infections.^[1] In 2007, it had revenues of $516 million, up 3.8% from $497 million in 2006.^[2] However, in the same year, it made a net loss of $666 million owing to write downs of its intangible assets and restructuring costs from consolidating its operations in San Francisco.^[2]

Elan Corporation's two business segments are: a) Biopharmaceuticals, which makes treatments for various diseases; and b) Elan Drug Technologies (EDT), which makes systems to deliver drugs to the body.^[1] While Biopharmaceuticals generated 44.6% of the company's revenues in 2007, the segment only has four products, two of which lost basic U.S. patent protection between 2005 and 2008.^[3] The segment's future, thus, hinges on whether it can develop pipeline drugs like Tysabri (a treatment for multiple sclerosis) and Bapineuzumab (a treatment for Alzheimer's disease currently in Phase 3 clinical trials).^[4] Unfortunately, both treatments have been plagued by the emergence of potentially dangerous side effects in clinical trials patients.^[4]

In August 2008, Elan decided to spin off EDT and focus on its Biopharmaceuticals segment.^[5] The company is currently accepting first round bids for EDT and hopes to successfully complete the sale of this unit for as much as $1.4 billion.^[5] Following a successful sale of EDT, Elan Corporation will have to replace the 55.4% of its total revenues that were generated by this segment in 2007.

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