Elan, the Irish domiciled pharmaceuticals company, suffered a sharp setback in its recapitalisation plans when a US judge ruled on Thursday that a planned $1.5bn deal with Johnson & Johnson violated the terms of an existing partnership with Biogen Idec.

Deborah Batts, a Manhattan federal court judge, ruled that Elan had breached the terms of its contract with Biogen Idec for its pivotal multiple sclerosis drug Tysabri and had 23 days to repair the damage.