Elan has reported strong growth in the first quarter of 2001 and said the outlook for the rest of the year remained positive.

The Dublin-based pharmaceutical and biotechnology company posted an 89 per cent rise in first-quarter net income after tax and before other charges of $144.4 million (€161 million), compared with net income of $76.5 million for the same period in 2000. Diluted earnings per share rose by 71 per cent to 41 US cents.

Total revenues rose by 27 per cent to $429.3 million, reflecting strong product sales. Product revenue surged by 39 per cent to $324.1 million. Contract revenue for the first quarter was $105.3 million, a slight decrease on the $105.5 million for the same period last year.

Product revenue accounted for 75 per cent of total revenue, compared with 69 per cent for the first quarter of 2000. The gross margin on product revenue rose to 72 per cent, compared with 68 per cent last year.

The company said it remained confident of meeting revenue targets for its main products.

It said its three largest products - Zanaflex, for spasticity, Skelaxin, for muscular pain, and Abelcet for fungal infections - had performed in line with expectations for the first quarter and that it anticipated revenue of $100 million for each product in 2001.

"Earnings per share came in ahead of forecasts and product sales were better than expected. That's a really good sign. The main driver of growth will be product sales," said Mr Jack Gorman, an analyst with Davy Stockbrokers.

But he expressed concern that the US Food and Drug Administration (FDA) had yet to give approval to two new products - Frovelan, for migraine, and Ziconotide, for severe pain.

"The results are good. The only disappointment is there is no news in the pipeline on the new products. Existing products are showing strong growth, but new products are the key to Elan getting a better rating in the pharmaceutical sector in the US," said Mr Gorman.

He said Elan was trading at a 20 per cent discount to the speciality pharmaceutical sector. "Once they get new products, that gap will close," Mr Gorman said.

A spokesman for Elan said there had been perceptions of a slowdown in approvals from the FDA across the board, but that it was continuing to have discussions with the FDA on both products. However, he could not give a date for when approval was expected.

"We do have approvable letters on both. We have been in discussions with the FDA and we hope and expect to hear from them in the near term," he said.

Elan also said it had made "significant progress" in its clinical development efforts during the quarter.