The dramatic collapse in the price of drug company Elan wiped out half the gain of Irish pension funds last month.

Group pension managed funds returned an average of 1.1 per cent in February. The figure would have been about 2.1 per cent but for the 68 per cent slide in Elan last Monday - the last day of the month - after the lunchtime announcement that it was suspending all sales and trials of its multiple sclerosis drug Tysabri.

Industry figures show that companies with a full weighting in Elan suffered a hit of around 1.2 per cent as a result of its slide. These included Montgomery Oppenheim, Standard Life, Hibernian and Eagle Star.

Bank of Ireland Asset Managers held no Elan stock and Canada Life/Setanta Asset Managers is thought to have held little or none of the company's stock.

The impact of Elan saw Montgomery Oppenheim and Standard Life produce the worst performance among Irish managers in February - with growth of 0.5 and 0.6 per cent respectively.

KBC Asset Management produced the best performance with a monthly return of 1.9 per cent. However, this was skewed by the fact that this fund's performance is taken at midday - just before the Elan news broke.

Mr Tom Murphy, the head of Mercer Investment Consulting in Ireland said initial projections of a €700 million hit for pension funds from the slide of Elan were likely to be excessive. "It looks like the figure will be closer to €500 million and when you consider that Bank of Ireland, which is one of the larger players, had no exposure, it could be down to around €300 million," he said.

Elan's troubles undermined the ISEQ's bright start to 2005. The index was 2.2 per cent off in February, bringing its year-to-date gain back to 1.2 per cent.