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Is Elan a turnaround?

Nature Biotechnology volume 21, page 985 (2003)Cite this article

Kudos to embattled Ireland-based drugmaker Elan (Dublin; NYSE:ELN). Saddled with the financial shenanigans of booted managers (Nat. Biotechnol. 20, 429, 2002), in July 2002 the company said it would 'create a new Elan' and implement a recovery plan to become EBITDA (earnings before interest, taxes, depreciation and amortization)-positive by the end of 2003. It's made enormous progress. But is it a business turnaround worthy of investment?

A typical turnaround involves a sleepy or poorly run business that hires new management to improve financial management, existing product lines and marketing. This is rare in biotech. Although management can raise cash, determine which research to pursue, and strike favorable deals, the best managers can't make a profitable company out of failed drugs, and even the worst may not kill a company with promising candidates or successful drugs on the market.

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Authors
  1. Tom Jacobs
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Additional information

Tom Jacobs, a writer and senior analyst at the Motley Fool (), provides his angle on biotechnology investments. He welcomes your comments at , but cannot give individual investment advice. He owns no shares of companies mentioned in this month's column.

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Jacobs, T. Is Elan a turnaround?. Nat Biotechnol 21, 985 (2003). https://doi.org/10.1038/nbt0903-985

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