Alien Grenade
The alien grenade is pretty much the ultimate grenade in the game, combining power with light weight and small size. It is the second most powerful grenade in the game next to the High Explosive but is much more convenient with its smaller size and weight, making heavy firepower the standard of all troopers instead of only a few soldiers carrying the high explosive. However, the increased firepower comes with an increased price-tag, with a single alien grenade being able to buy 49.5 standard grenades or 9.9 high explosives when sold.
Scrounge enough of these from the battlefield and you shouldn't have to manufacture any, unless your tactics always involve grenades and big explosions.
This weapon appears in UFO: Enemy Unknown. For the Terror from the Deep equivalent, refer to the Sonic Pulser.
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Tips
As you can end up having a lot of them it may be a good idea to sell some off. If you intend to use some however, keep an ample supply of salvaged grenades instead of using Elerium to manufacture new ones.
This weapon is the number one reason you shouldn't bunch your soldiers together; the aliens prefer to toss a grenade directly to the feet of the nearest soldier who happens to have at least one friend within the blast radius.
Aliens always set their grenades' timer to zero before throwing it, leaving the target no chance to escape the blast.