Inside the world of business
Elan achieves long-term goal
IT HAS taken three years but Elan has finally achieved its long-term goal of selling off its drug technology business.
The move, which will significantly reduce Elan’s outstanding debt, increases its room for manoeuvre and turns it finally into a neurology-based biotech business. In the process, it cuts the final link with the original business started by Don Panoz in Athlone over 40 years ago.
Elan will get a 25 per cent stake, valued at $450 million, in the reconstituted Alkermes but, as Kelly Martin noted yesterday, shareholders will expect it to “monetise” its holding over the next couple of years – once the six-month lock-in is out of the way.
Market analysts welcomed the deal and shares in both companies rose yesterday. At first glance, it certainly appears that both sides have gained from the transaction.
Elan has argued consistently that much as it admires its drug technology business, it is a fundamentally discrete operation from the biotech side. With any money available going to develop biotech, particularly multiple sclerosis drug Tysabri and its Alzheimer’s pipeline, the EDT business would best get access to capital elsewhere – either as a standalone business or in a sale. Back in 2008, before the financial crash, it got a valuation of $1 billion on the business. It has effectively secured that with this deal.
The money will allow it to cut net debt by over a third and still allow resources for investing in new areas. The company will, for the first time in its recent past, boast revenues of €1 billion and be both profitable and cash positive. In the short term, it also gets to benefit from any upside in the Alkermes price as the deal settles down.
For its part, Alkermes gets an extensive portfolio of products that is expected immediately to boost revenues from about $180 million per annum to about $450 million. As much of the portfolio, like EDT’s Ampyra, is new and holding long-term patents, the forecast is that figure should rise strongly.
The bottom line, though, is Elan’s faith in Tysabri. The company recorded year-on-year sales growth of 20 per cent in the first quarter and, with more reliable safety indicators and tests now in place, sees no reason for this to subside. “Our confidence around the business of Tysabri has grown exponentially in the last six months,” Mr Martin said yesterday.
That, ultimately, was the catalyst for finally doing a deal that had been over six months in gestation.
Hopes that jobs plan will lead to on-job training
WHEN THE carefully drafted statements accompanying today’s launch of the Fine Gael-Labour jobs initiative make their inevitable nods towards “training”, “skills” and “innovation”, it is worth remembering that political and public relations sops of this kind in recent years have yet to translate into an explosion of on-the-job training opportunities in the typical Irish workplace.
“Despite the strong policy focus on skills, the proportion of employees who had recently participated in employer- provided training remained virtually unchanged between 2003 and 2009, standing at just under 50 per cent,” write the ESRI’s Dorothy Watson, Helen Russell and Philip O’Connell in a recent research bulletin, called The Changing Workplace.
Training provision was lowest in the hotel and restaurant sector; at small firms; among older workers and among employees with low initial qualifications, the 2009 National Workplace Survey of 5,110 public and private sector employees indicated.
However, as the ESRI researchers note, employment practices such as human capital development (which mostly means training), employee involvement (tendencies to consult and devolve decision-making to employees) and co-working (working across divisions, reducing hierarchy) all tend to be positively associated with innovation.
Add together all the pieces of these fuzzy concepts and the big picture comes into focus.
Using the 2009 National Workplace Survey of 2,668 private sector and 259 public sector employers as their base, the ESRI researchers found that 82 per cent of employers who combined these practices had introduced new products or services in the previous two years, compared to just 45 per cent of employers who had a low adoption rate, sticking their fingers in their ears and running away as soon as an employee came within sniffing distance of head office.
Better business outcomes and an emphasis on innovation may be the cause of rather than the result of more modern workplace practices, the ESRI notes, but they do suggest the importance of paying attention to workplace practices in the first place – and following through on them too.
CarTrawler sale was typically under the radar
THE WEEKEND reports that the sale of CarTrawler may have netted brothers Greg and Niall Turley between €30-40 million each for anywhere between 50 and 100 per cent of the company’s equity is typical of the way the firm operated.
Despite having revenues of €141 million last year and the company attracting significant interest before British private equity house ECI Partners invested at a €100 million valuation, CarTrawler has largely flown under the radar since it was founded in 2004.
The online car rental broker changed to unlimited status a couple of years ago, which meant the media and competitors didn’t see its accounts. The Turleys also avoided the media spotlight.
CarTrawler grew out of the family car hire business Argus Car Hire, which was disposed of in 2007 as the online business started to take off.
Chief executive Greg Turley is stepping back and taking on a non-executive director role.
After his success he is likely to be much in demand as an angel investor and mentor to other internet start-ups.
Speaking to this newspaper in February, Turley talked about the power of the internet to shake up the distribution model in the car rental industry which had previously been dominated by a small number of global players. He said he had repeatedly been asked why he did not apply his model to other industries but decided to stick to the knitting.
There will be plenty of interest in seeing where Turley decides to focus his attentions next.
ONLINE:
For regular commentary on business and economic issues visit our blog, Current Account, at irishtimes.com/ blogs/business
Twitter users can receive links to the latest business news and blog posts by following us at twitter.com/IrishTimesBiz
