The Irish pharmaceutical concern released third-quarter results Thursday. In the period, Elan lost about $122 million, versus a $103 million loss in 2003's third quarter. Revenue likewise slipped, coming in at $108 million compared with $91 million in the same period last year. For a conventional company, Elan's earnings report would be bad news indeed. But not in the drug world.
Elan, along with partner Biogen IDEC
Unfortunately, like all biotech and pharmaceutical outfits, Elan is only as exciting as the next experimental medicine in its pipeline. Investors have already richly rewarded the firm for the expected return on Antegren, while Elan's other drugs in development are in the fairly early stages. The company is also performing contract manufacturing, but this is a business that isn't likely to get investors very charged up.
Still, Elan's turnaround from near collapse shows that a pharmaceutical company serious about operating a tight ship can achieve impressive results. The firm was forced to make some painful cuts and divestitures and continues to keep a close watch on operating expenses. If it can maintain its lean structure as the good times roll, the outlook for fat profit margins looks good.
Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.