Lilly picks up BI’s pet vaccines for $885M ahead of BI-Sanofi asset swap

Eli Lilly will strengthen its presence in the market for pet products by picking up BI's vaccines for dogs and cats.

Eli Lilly rocketed into the No. 3 spot among the world’s top animal health companies when it picked up Novartis ($NVS) Animal Health for $5.4 billion last year--and now it’s set to strengthen its position even more. The company’s Elanco division will acquire Boehringer Ingelheim’s dog and cat vaccines, along with a manufacturing and R&D site in Fort Dodge, Iowa, for $885 million. The deal is subject to FTC approval and the successful closing of a deal BI struck with Sanofi in June to swap its consumer health business for Sanofi’s Merial animal health unit.

Albrecht Kissel, president and CEO of BI’s Vetmedica unit, said in a press release announcing the deal that it wasn’t easy for the company to give up the vaccines. "This was a highly complex decision from a business and from an emotional perspective,” he said. "This agreement is an important step toward a successful acquisition of Merial."

BI’s vaccine portfolio includes products that protect against rabies, as well as two vaccines launched this year: Ultra Hybrid FVRCP, which prevents herpes virus and distemper in cats, and Ultra Duramune Lyme to prevent Lyme disease in dogs. For the feline product, BI’s researchers developed a “non-adjuvanted” approach that they reported resulted in fewer side effects than are typically seen with other vaccines.

Those products will help Lilly boost its presence in the companion segment of animal health. The move to balance out Elanco’s portfolio between products for pets and those for food animals started with the Novartis acquisition, which brought in anti-flea-and-tick meds, anti-inflammatories and other products for dogs and cats.

The deal will also diversify Lilly’s revenue streams, which have been under pressure ever since the company weathered the loss of patent protection on its blockbusters Cymbalta and Evista. Its diabetes unit continues to innovate, but some investors have voiced worries about pricing pressures holding back growth. Lilly expects the BI deal to add to its adjusted earnings in 2018, according to Reuters.

As for BI, the Sanofi asset swap will go a long way toward launching it well above its current No. 6 position in animal health. The company has long been a leader in livestock health, but the deal will bring it such companion-animal blockbusters as Heartgard and NexGard for controlling parasites in dogs. BI expects to double its animal health sales to €3.8 billion ($4.2 billion) a year.

Assuming no antitrust concerns, the Lilly deal should close in early 2017, BI said. The asset swap with Sanofi, valued at $12.5 billion, is expected to close by the end of this year.

- here’s the press release
- read more at Reuters

Special Report – Top 10 Animal Health Companies of 2015 – Eli Lilly’s Elanco
Special Report – Top 10 Animal Health Companies of 2015 – Boehringer Ingelheim Vetmedica

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