Lilly/Novartis Animal Health
Deal value: $5.4 billion
Deal status: Closed
Novartis ($NVS) decided to shed its animal-health unit as part of a more extensive effort to trim down and focus on areas where it could be a key player. With the $5.4 billion acquisition, Eli Lilly's ($LLY) Elanco became just that, a key player in animal health. It catapulted past Merial and Merck ($MRK) Animal Health to become number two in the world by sales, second only to Pfizer ($PFE) spinoff Zoetis ($ZTS). Elanco had 2013 sales of about $2.2 billion, while the Novartis unit reported $1.1 billion in annual sales.
Lilly has been seeing solid growth in animal health at about 6% in the year ahead of the deal, which was three times what its human drug business has been producing, but it expects to pick up momentum with the expanded operation. It picked up some substantial swine products, helping it balance out its mix of companion and food animal products. It also expands its manufacturing capabilities. It now has 17 manufacturing sites and 14 R&D locations.
Lilly has a ways to go, however, if it ever hopes to catch Zoetis, which in 2013 had $4.6 billion in revenues. Still, it's hard to know what may happen, given that Pershing Square's Bill Ackman bought up $1.5 billion worth of Zoetis' shares in mid-November, leading to talk that Zoetis could end up in play.
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--Eric Palmer (email | Twitter)