Elan sells primary care business unit to King Pharmaceuticals

Elan Corporation has agreed to sell its primary care franchise to King Pharmaceuticals for a cash payment of US$650m (€601m).

The deal covers princi-pally Elan's rights to Sonata (zaleplon) and Skelaxin (metaxalone) and related rights to enhanced formulations of these products, and includes an estimated $40m (€37m ) payment for its Sonata and Skelaxin in-ventory. Under the terms of the agreement, which is subject to Elan's shareholder approval, King will as-sume Elan's product-related payments for Sonata of approximately $240m (€222m).

As part of the deal, Elan will also continue its de-velopment programmes for enhanced formulations of Sonata and Skelaxin using its proprietary drug delivery technologies on behalf of King. Under the Sonata formulation development agreement, Elan will receive development fees and, if successful, net milestone payments of up to $60m (€55m). Elan will manufacture the products under a royalty-bearing license and will also retain the commercialisation rights to enhanced formulations utilising its technology outside the US for both products.

Dr Garo Armen, chairman of Elan, said 'With the sale of our primary care franchise we have exceeded our target of raising $1.5bn (€1.4bn) from the divestiture program, a year ahead of schedule. This completes the first stage of Elan's recovery plan and allows us to concentrate on our core development pipeline which we expect to start launching in 2004.

'While the primary care franchise is no longer core to our business, we are pleased to have reached this agreement with King, which is in a strong position to leverage the talents of our primary care team and product portfolio.'