Elan has announced a restructuring of its MS drug Tysabri collaboration with Biogen Idec.
The deal will see Elan sell its interest in the drug for $3.25 billion to Biogen to give the US firm full ownership and control of the drug.
Elan has co-marketed the drug with the larger US company for 12 years.
It said it would receive a royalty of 12% of Tysabri global net sales for the first 12 months after the restructuring closes.
A tiered royalty structure will kick in after that, it said, with Elan receiving 18% on up to $2 billion of global net sales and 25% on any sales over that amount.
Sales of Tysabri, which provides Elan with almost all of its revenue, rose 8% to $1.6 billion last year. The number of patients using the drug rose by 12%.
A filing last month for approval to sell the drug as a first-line treatment for could boost sales further.
Elan chief executive Kelly Martin said the Tysabri move provides for a meaningful de-risking of the business.
"The restructuring of this business collaboration provides Elan with significant strategic flexibility. The risk of one asset and a single collaborator was not ideal," Mr Martin said in a statement.
"We are enthusiastic about the market opportunities around the globe and remain flexible and creative about the manner in which we would participate in those opportunities,'' he added.
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The company today reported total revenues of $1.202 billion for the year to the end of December, up 13% on the previous year. It said that adjusted EBITDA rose by 31% to $220m from $168.6m mainly due to the continued growth of Tsabri.
It said it expects to complete the Tysabri deal in the first half of this year. It said it expects Tysabri in-market sales to rise by about 15% in 2013 over the $1.6 billion seen in 2012.