Elan Recovery Slowed By King

When Elan Corp. PLC announced in late January 2003 the sale of its primary care franchise to King Pharmaceuticals Inc. , the $850 million (€775 million) deal put the Irish group comfortably past its goal of raising $1.5 billion by the end of 2003 to avoid a looming debt crunch—with a few months to spare [See Deal]. Elan agreed to sell zaleplon (Sonata), an insomnia treatment, and the muscle relaxant metaxalone (Skelaxin) along with its 400-strong US primary care sales force for $650 million, and King agreed to assume Elan's product-related payments for Sonata. The terms also called for Elan to continue its development of enhanced formulations of the sleep-aid, for which it might earn up to $60 million in clinical and regulatory milestone payments from King.

Skelaxin and Sonata had been substantial revenue generators for Elan, selling $145 million and $93 million in 2002 respectively. But...