Shares in Galen Holdings, the Northern Irish pharmaceutical company, fell sharply when trading in the stock resumed yesterday following the collapse of merger talks involving the company.

Analysts said the fall reflected the downturn in equity markets in the period since the shares were suspended last June. Since then, UK pharmaceutical stocks have fallen by over 20 per cent.

Galen's shares were suspended at 437.5 pence sterling pending the outcome of talks with the much larger Ferring Pharmaceuticals, a privately-owned Dutch company. But Galen announced on Monday that the companies had ended their merger discussions which would have led, in effect, to a reverse takeover of the Northern Irish group.

When Galen's shares resumed trading yesterday morning, they fell to 300p, their lowest level this year, on the London Stock Exchange before recovering some ground to close at 337.5p, nearly 23 per cent down on the pre-suspension price.

But analysts said the outlook for the company remained positive despite the collapse of the £1.5 billion merger plan. They believe Galen should be able to continue to deliver double digit growth in the future. The Craigavon-based company announces full-year results on November 5th and is expected to report pre-tax profits of more than £14 million, a 35 per cent increase on last year. "The underlying business is very strong," said Mr Philip Molloy, analyst at ABN AMRO, adding that he regarded the shares as buy below 350p.

However, analysts are unsure what costs Galen may have incurred during the merger talks.