Novartis deal will boost Elanco's cattle vaccine portfolio

By Jane Byrne contact

- Last updated on GMT

Novartis deal will boost Elanco's cattle vaccine portfolio

Related tags: Animal health

Elanco said its purchase of the Novartis animal health division will boost its cattle vaccines portfolio, and expand its presence in China and emerging markets.

In a deal worth $5.4 billion, Elanco Animal Health, a division of pharmaceutical giant Eli Lilly, is set to take over all assets of Novartis Animal Health.

The transaction, announced today, is set to close by the end of the first quarter of 2015.

The Novartis acquisition comes on the back of Elanco’s purchase of Lohmann in February this year, which bolstered the company's poultry vaccine segment.

Maria Zampaglione, a communciations spokesperson for Elanco, told the Novartis animal health product range will "​complement our cattle vaccines, and combined with the Lohmann business, will allow us to emerge as a global leader in poultry."

The acquistion of the Swiss firm will also support Elanco’s expansion plans for Europe and China, while solidifying its position in North America and other emerging markets.

"Furthermore, it enhances expertise and capabilities across the organization, allowing us to deliver an even stronger, sustained pipeline of innovation along with enhanced capabilities in vaccines and parasiticide discovery.

It also provides Elanco with a greater commercial portfolio and presence in the companion animal and swine markets, expands our presence in the equine and vaccines areas, and creates an entry into the rapidly growing aquaculture market,” ​said Zampaglione.

The Novartis business unit, which had revenue of around $1.1bn last year, is headquartered in Basel, Switzerland and is present in around 40 countries.

Cattle vaccine brands

With six major production sites globally - in France, China, the US, Canada and the UK -​ the animal health division of Novartis has a strong focus on cattle and sheep brands, as well as a range of companion animal parasiticides.

Denagard is the company's leading livestock brand by sales.

Other key animal health products for Novartis are the beef and dairy cattle respiratory and reproductive disease vaccine, ViraShield, the oral liver fluke treatment, Fasinex, for use in cattle, sheep and goats, a range of aquaculture brands as well as a fly control product, CLiK (dicyclanil), against blowfly strike in sheep.

The firm's aquaculture division is reported to be working on vaccines for salmonids.

Elanco moves into top-tier of animal health firms

Lilly said it plans to fund the Novartis acquisition with $3.4bn of cash-on-hand and $2bn in debt to be issued.

The deal, said John Lechleiter, Lilly's president and CEO, puts Elanco into the top-tier of animal health product manufacturers.

"Significant investments in our animal health business in recent years have enabled Elanco to double its revenue since 2008, leading the industry in growth.

Global trends suggest continued sustained demand for animal health products in the years ahead.

We intend to keep Elanco and to take advantage of the substantial synergies between our animal health and human health businesses,”​ added the CEO.

Lilly said it expects to achieve estimated cost savings of approximately $200 million on an annual basis within three years of the deal closing, which equates to over 10% of operating expenses from the combined animal health businesses.



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