IBJNews

Lilly eyes more animal-health acquisitions

Back to TopCommentsE-mailPrintBookmark and Share

Eli Lilly and Co. is interested in animal-health assets that may be offered for sale as a result of Sanofi-Aventis SA and Merck & Co.’s plan to combine their veterinary units.

Indianapolis-based Lilly wants to expand in the $19 billion market for pet and farm animal medicines, as well as make smaller acquisitions in human health as it seeks to replace top-selling drugs that face generic competition beginning next year, said CEO John Lechleiter in an interview in Frankfurt on Thursday.

“If there are future divestitures that we could acquire, we’re going to be looking at those carefully,” said Lechleiter. “We’re watching carefully. We know what our strategy is for our business.”

Lilly’s Elanco veterinary unit agreed this month to buy European rights to a portfolio of Pfizer Inc. products. Sanofi, based in Paris, is likely to have to sell some assets to satisfy regulators over its planned veterinary medicine combination with Merck, CEO Christopher Viehbacher told French daily Les Echos in a March 10 interview.
Elanco is the fastest-growing companion-animal business in the industry, said Lechleiter. Asked specifically about possible Sanofi assets that may come up for sale, he said: “If there’s anything that comes out of that, yes.”

Lechleiter has shunned large takeovers or expansion into markets other than branded pharmaceuticals. Larger competitors chose mergers or acquisitions in generics as a way to compensate for the loss of patent protection on their medicines.

“We believe the key in this industry is innovation,” he said. “We see no correlation between size and the degree of innovation that any one company manifests.”

Lilly spends more than $4 billion a year on research and development. The maker of the Zyprexa antipsychotic medicine is also prepared to use its cash for small acquisitions and to buy rights to new drug candidates, Lechleiter said.

“We think we can fund our pipeline and be productive, introduce new products and grow the business from the base that we have today,” he said. “We have a strong balance sheet. We’ll use the cash that we accumulate to do smaller deals.”

Elanco’s revenue has been growing about 10 percent each year, reaching $1.2 billion in 2009, or about 5.5 percent of Lilly’s nearly $22 billion in annual revenue.

But the drug maker is counting on its animal health division to grow even more to help fill the revenue gap that will begin to widen in October 2011. That’s when Lilly’s bestselling drug, the antipsychotic Zyprexa, will lose its patent protection and face competition from generic versions. Zyprexa is the company’s best-selling product with $4.9 billion of sales last year.

In the ensuing three years, the patents on four more Lilly drugs will expire, which could cause the company to lose half of its current revenue.

Meanwhile, Lilly has few drugs in its late-stage pipeline to try to offset the sales shortfall. So growth in animal health becomes increasingly important.

Lilly began making animal health acquisitions in 2007, when it bought Ivy Animal Health, a Kansas-based developer of pharmaceuticals for animals. And, in 2008, Lilly paid $300 million to acquire Posilac, a controversial hormone, also known as rBGH, given to cows to increase their milk production.

“We have the wherewithal to do those kinds of deals if they can help us generate revenue through this period we call years YZ, where we’re going to be losing patents, or if they can complement our existing therapeutic areas,” the Lilly chief said. “We’re well positioned to do those, but we’re not interested in the large combinations.”
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

ADVERTISEMENT