Scandal-hit drugs firm Elan is to axe more than a fifth of its workforce in a shake-up aimed at reviving investor support.

The Dublin-based firm said it would axe 1,000 of its 4,500 workers by the end of the year.

Garo Armen: "Tough decisions"

The move is part of a shake-up aimed at saving $300m in annual operating costs, and restoring faith in a firm which has seen its share price plunge by 95% this year.

Elan has suffered product setbacks, and has since February been under investigation by the US Securities and Exchange Commission over accounting methods.

The firm's top two executives resigned earlier this month, hours before they were due to meet investors to discuss Elan debts estimated at $4.5bn.

Investor reaction

But interim chairman Garo Armen said the action plan would allow Elan to "secure [its] long-term future".

"We are implementing tough decisions to make the new Elan a stronger company... and rebuild our credibility," Mr Armen said.

The plan was well received by investors, with Elan shares surging 11.6% to 2.40 euros in Dublin.

Research effort

The recovery scheme will also see Elan focus its operations on three treatment areas - neurology, pain management and auto-immune diseases.

The move will allow the firm to sell off $1.5bn of non-core assets and businesses, helping ease its debt burden.

Elan pledged that the shake-up would not undermine its efforts to develop treatments for afflictions such as Parkinson's disease, multiple sclerosis and rheumatoid arthritis.

"The cost reduction programme will not impact Elan's investment in its core research and development pipeline," the plan said.

Elan also on Wednesday revealed a pre-tax loss of $801m for the April to June quarter, compared with a $139m profit a year before.