By Jessica Toonkel and Soyoung Kim

NEW YORK (Reuters) - Forest Laboratories Inc, the specialty drugmaker that counts investor Carl Icahn as a major shareholder, is among a handful of companies interested in bidding for Irish drugmaker Elan Corp, two people familiar with the situation said.

Elan, which has a market capitalization of nearly $7 billion, put itself up for sale last week in an effort to fend off a hostile offer from U.S. investment firm Royalty Pharma.

Forest is among several mid-size drugmakers keen to bid on Elan, the people said on Wednesday. They asked not to be named because details of the auction have not been made public.

Shares of Forest rose 4 percent on the news to trade at $43.22 on the New York Stock Exchange, valuing the company at about $11.5 billion. Elan's New York-listed shares rose 2.5 percent to $14.10.

Representatives of Forest and Elan declined to comment. Royalty Pharma could not be immediately reached for comment.

News of Forest's interest comes a day after Royalty Pharma dropped its hostile bid for Elan worth up to $8 billion, leaving the Irish drug maker free to court other suitors.

(Editing by Bernadette Baum)