Elanco to reduce global workforce by 4.3%

The company is cutting costs as it prepares to acquire the animal health division of Germany-based Bayer for $7.6 billion.

Greenfield-based Elanco Animal Health announced late Monday afternoon that it is eliminating about 250 jobs across its global footprint, the company’s latest move to increase efficiency and boost profit margins.

The cuts will involve multiple locations and functions, including discontinuing its R&D operations in Prince Edward Island, Canada, and scaling back operations in Wusi, China, and Speke, England.

The cuts equate to 4.3% of Elanco’s workforce of 5,800. An Elanco spokeswoman said “today’s announcements are primarily outside of Greenfield,” where the company employs 800. “We are continuing to grow here in central Indiana as we build new capabilities required as an independent company.”

Elanco was wholly owned by Indianapolis-based Eli Lilly and Co. until September 2018, when it was spun off in an initial public offering. Since then, Elanco has focused on boosting productivity and profit margins, which are thinner than those of New Jersey-based Zoetis, the largest animal health company.

“While decisions that affect our team are difficult, today’s action will tighten our focus, centralize and strengthen key capabilities, and increase our agility to quickly meet the changing needs of our customers in a dynamic, global market,” Elanco Chief Financial Officer Todd Young said in a written statement.

Elanco said it expects to realize at least $12 million in savings in 2020 from the restructuring, which will cost about $50 million, with $30 million stemming from non-cash asset write-downs.

The belt-tightening comes at a time Elanco is in the process of buying the animal health business of Germany-based Bayer for $7.6 billion—a deal that’s set to make Elanco the No. 2 animal health firm. Bayer’s animal health business has 4,250 employees.

Elanco competes in two business segments—food animals and companion animals. Vaccines and other products for food animals, such as cattle, sheep and swine, are aimed at keeping the animals healthy and delivering more food while using fewer resources. The company’s companion-animal products—such as Interceptor Plus, which prevents heartworm in dogs—target the pet market.