Elan, Ireland’s biggest drug company, has hired investment bankers to carry out a strategic review of its development and manufacturing division, which could see the business floated or sold with a price tag of up to $1.5bn (£755m).

Lehman Brothers and Goldman Sachs are preparing Elan Drug Technology for a listing in London and Dublin, as well as a possible sale to private equity.

Elan will send an information memorandum to prospective bidders in the next few days and ask interested parties to submit first-round bids by the middle of next month. Interested bidders are likely to include Apax, Blackstone, Cinven, KKR and Warburg Pincus, all of which have experience in the healthcare business.

Financing an asset of this size has been possible during the credit crunch, as demonstrated by the $4.1bn buy-out of Bristol Myers’ ConvaTec business last month by Nordic Capital and US-based fund Avista Capital Partners.

The decision to float or sell Elan Drug Technology follows the results of clinical trials last month which could herald a breakthrough in treating Alzheimer’s disease after Elan said its drug slowed the onset of the disease in some patients.

Analysts at Goldman said the trials lowered the risk profile for other drugs in Elan’s research and development pipeline.

The move to separate EDT, which relies on manufacturing revenues and royalties, rather than product sales, will leave Elan focused on biopharmaceuticals – the division that markets Tysabri, its flagship multiple sclerosis drug.

EDT focuses on contract product development using an array of formulation and drug optimisation technologies, as well as scale-up and manufacturing services.

In May, Elan, which is recovering from a brush with bankruptcy in 2002, said the company was expected to return to profitability next year, before making a full-year profit in 2010, due to growing sales of Tysabri.