Merck is poised to secure Elanco Animal Health's aqua business in $1.3 billion deal

By Jane Byrne

- Last updated on GMT

© GettyImages/franckreporter
© GettyImages/franckreporter

Related tags Elanco Animal Health Merck Animal Health vaccines Salmon Bovaer Aquaculture

Merck Animal Health is set to acquire Elanco Animal Health Inc’s aqua business for $1.3bn in cash.

Elanco's aquaculture division encompasses a range of medicines, vaccines, nutritional products, and supplements tailored for both warm-water and cold-water aquatic species.

The divestiture, anticipated to be finalized by mid-year 2024, pending regulatory approvals and adherence to customary closing conditions, includes current marketed brands, aqua R&D projects, the transfer of manufacturing sites in Prince Edward Island, Canada and Dong Nai, Vietnam and 280 commercial and manufacturing employees.

Elanco's aqua division generated an estimated $175m in revenue and around $92m in adjusted EBITDA, excluding the allocation of corporate costs, based on 2023 preliminary results.

Focus on pet and livestock for higher ROI

The company's strategic shift is driven by a desire for enhanced returns on investment in pet health and livestock sustainability, according to CEO Jeff Simmons.

That heigthened focus on pet health and livestock sustainability is evident in Elanco's six late-stage products slated for launch in the US market by 2025, contingent upon approval. Indeed, the firm is leading the development and commercialization of DSM’s methane emissions​ blocker, Bovaer, in the US market. The additive is expected to generate blockbuster revenue potential for Elanco in the US in excess of $200m. DSM will receive royalty income from sales of Bovaer in that market, including a single-digit millions upfront payment.

The addition of Elanco's cold water and warm water aqua product portfolio will position Merck as a leader in the aquaculture sector, reckons Merck Animal Health president, Rick DeLuca.

Elanco’s notable contributions to salmon health include a diverse range of vaccines and pharmaceutical products designed to combat prevalent and costly diseases worldwide. Its scientists have been at the forefront, developing groundbreaking solutions such as CLYNAV, a DNA-based vaccine licensed for Infectious Salmon Anemia virus (ISAV) and Infectious Hematopoietic Necrosis virus (IHNV). Noteworthy products also include IMVIXA, an anti-parasitic sea lice treatment. The company has also been involved in several local initiatives and collaborations across the salmon production regions in the world, participating in collaborative research with different institutions, universities, and industry stakeholders. 

Aquaculture targeted tie-ups

This acquisition follows Merck Animal Health's trend of strategic moves in the aquaculture domain. In March 2019, it acquired Scan Aqua, a Norwegian fish health and welfare company. Subsequently, in April of the same year, Merck purchased Antelliq Corporation, incorporating tagging and tracking technology for monitoring fish and wildlife. In December 2019, the acquisition of Vaki added real-time video monitoring technology for fish counting and size estimation across freshwater to saltwater rearing, complemented by data collection and analytics for each stage of fish production.

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