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Elanco Contributed ~15% of Total Revenues for Eli Lilly

Mike Benson

Expect Growth from Eli Lilly's 4Q15 Revenue Estimates

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Animal health segment

Eli Lilly’s (LLY) animal health segment Elanco has acquired Novartis’s (NVS) animal health segment, and now contributes ~15% of total revenues for Lilly.

The segment deals in the following products and services:

  • food and other products
  • pets or companion animal products

Food and other products

Elanco’s food and other products include antibacterials, anticoccidials, vaccines, and parasiticides that aim make food safer. This franchise serves beef, dairy, swine and poultry animals.

The productivity enhancers aim to make food affordable and abundant by increasing the amount of meat, milk, or eggs from each animal. These technologies are developed to help producers deliver more food by using fewer resources. Estimates suggest positive growth for the franchise for 4Q15, considering the rising demand of productivity enhancers, vaccines, and other animal drugs across the globe.

Pets or companion animal products

The pets franchise sells products for veterinarians and pet owners. These products are for companion animals like cats and dogs. The products in this segment aim to help pets live longer and healthier lives. The 4Q15 revenues are expected to fall due to the lower demand of companion animal products.

Overall, during 4Q15, the animal health segment is expected to have a positive growth worldwide that’s driven by food and other products. Companion products will likely offset the growth of the segment.

Companies like Zoetis (ZTS), the animal health arm of Pfizer (PFE), and Merial, a Sanofi (SNY) company, compete with Lilly on various animal health products. Investors can consider ETFs like the iShares Core S&P 500 ETF (IVV) that holds ~0.5% of its total assets in Lilly.

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