Markets

Elan Silent on Corporate Jets as 230 Are Laid Off

By Jim Edwards

Updated on: February 26, 2009 / 5:14 PM EST / MoneyWatch

The 230 people being laid off by Elan Pharmaceuticals as part of its "further alignment of resources" and "on-going strategic review process" might want to ask whether Elan's three corporate jets are being laid off too.

Elan's use of corporate jets is an issue for Jack Schuler, the investor who has become a professional thorn in Elan's side. On Feb. 8 he wrote to the company:

The Company appears to continue to maintain the use of corporate jets for the CEO and Board, this being a completely inappropriate and excessive cost for an organization of Elan's size. With Fortune 100 companies canceling their corporate jets, Elan has no place preserving them.

But in Elan's statement on the layoffs, er, "further alignment," the jets aren't mentioned. BNET contacted Elan spokesperson Mary Stutts twice for comment, but she didn't respond.

Usually, investors cheer layoffs because the people being axed tend to be sales reps, administrators and managers -- folks who don't themselves create products that can be sold. But in Elan's case, the company is cutting the people who actually make and study the drugs:

... 115 positions will be affected in the United States, mainly in the areas of research, clinical development, biopharmaceutical development, and related corporate support and administrative services.

That's doubly significant at Elan because one of their drugs, bapineuzumab for Alzheimer's, isn't approved yet; and the other, Tysabri for MS, has only a secondary FDA approval for use, not the first-line approval that would bring in the big bucks.

Given that Schuler believes that none of the 20 most senior execs at Elan have any relevant pharma experience between them, it raises the question of who, exactly, is left at the company that can pilot these drugs through these approvals?