Elan looks outside lab to recruit new chief

Elan, the troubled Dublin-listed pharmaceuticals firm, has appointed a former Wall Street stockbroker with no experience of the drugs industry as chief executive.

The appointment of Kelly Martin, who worked at Merrill Lynch for more than 21 years before his resignation last month, appears to ignore previous criticism of Elan's management for being dominated by executives with more experience of financial circles than of drug development.

Mr Martin, former head of international brokerage at Merrill Lynch, said: "I am sensitive to what people might think [of my background] based on appearances . . . but I think I have demonstrated my ability at running a business at Merrill Lynch."

Elan, once Ireland's biggest quoted company, valued at $20bn, was criticised last year because of its complex accounting methods. The company still faces class action lawsuits in the US as well as an ongoing investigation by the securities and exchange commission.

In particular, there has been concern about off-balance sheet arrangements between Elan and two special purpose vehicles which are guaranteed by Elan but not owned directly.

Last year, some rights over royalties on Elan's best performing products were sold to the two SPVs, one of which was set up and initially part-owned by Merrill Lynch.

Some analysts have estimated that buying back these rights could cost Elan more than $800m (£500m) by the end of 2005. This would be on top of Elan's direct debt repayment obligations of about $2bn over the same period.

Mr Martin said he was confident that Elan had an arm's length relationship with Merrill Lynch, its former financial adviser, and confirmed he had had no dealings with Elan while at the investment bank. "I was a bit familiar with the company name, but had absolutely no involvement with them."

Elan has also been linked to Merrill Lynch through another director, Dan Tully, chairman emeritus at the investment bank until 1997. Elan said yesterday that Merrill Lynch stopped acting as its financial adviser about a year ago.

The appointment of Mr Martin, who takes up his post next month, comes six months after his predecessor, Donal Geaney, was ousted amid the questioning of the company's accounting methods.

Mr Martin said yesterday he would continue with Elan's recovery plan, which involves focusing on Antegren, a drug for multiple sclerosis and Crohn's disease sufferers, and on a number of Alzheimer's treatments.

A programme to sell other assets to meet debt repayments had already generated $680m and was "ahead of schedule".

Mr Martin brushed aside suggestions that his involvement signalled a positioning of Elan for a sale or break-up. "I didn't leave a long career at Merrill Lynch for any short-term assignment at Elan," he said.

He declined to comment on speculation that the company's disposal programme would drive the business into the red in the medium term.

Ronan Wallace, an analyst at Dolmen Securities, said: "Mr Martin has high-profile capital markets experience, which is important to the company in the current climate. But, from a perspective of Elan as a pharmaceutical company going forward, it is a surprise. It raises the question of where the strategy is coming from."