Eli Lilly unit raises prices on ractopamine, farm animal drugs


By P.J. Huffstutter

CHICAGO, Nov 13 (Reuters) - Eli Lilly & Co.'s Elanco AnimalHealth unit will raise the price of its beta-agonist feedsupplements by 2 to 3 percent on Nov. 26 amid strong demand frombeef feedlots, a company spokeswoman told Reuters on Wednesday.

The price increase - which the company said will apply toall of Eli Lilly's products for cattle, hogs and otherfood animals - comes amid strong demand for its Optaflexxractopamine-based feed additive for cattle, which helps bulk upthe amount of meat on a beef carcass prior to slaughter.

The move is part of a review of its agricultural productpricing, market conditions and production costs that Elancoregularly conducts for all products, said company spokeswomanColleen Parr Dekker. The price increase, though, will not applyto newer non-betagonist products released in 2012 or this year,she said.

Sales of Elanco's cattle feed additive Optaflexx in theUnited States began surging in late August, after rival Merck &Co. announced its decision to temporarily suspend salesof its Zilmax beta-agonist additive. Merck's announcement cameafter meat processor Tyson Foods said it would stop buyingZilmax-fed cattle amid concerns the livestock drug waspotentially causing health problems for some cattle.

Elanco's price increase will likely not have much of animpact on meat producers, nor cool demand for the drug-maker'sbeta-agonist feed products - particularly among cattle feedlotowners. Retail beef prices remain at record highs, while thenation's cattle herd is the lowest level in more than 60 years.

Elanco "is clearly taking advantage of the lack ofcompetition" for beta-agonists," said Jim Robb, director of theLivestock Marketing Information Center in Denver, Colorado.

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