Lilly Buys Pet Vaccines From Boehringer for $885 Million

  • Purchase brings rabies, bordetella shots for Elanco unit
  • Sale of Boehringer site, vaccine required for Merial purchase

Eli Lilly & Co. will buy a set of animal-health products from Boehringer Ingelheim GmbH’s Vetmedica unit for $885 million, including its U.S. portfolio of feline, canine and rabies vaccines and an Iowa-based manufacturing site.

The deal is the 10th for Lilly’s Elanco animal-health unit since 2007, and the unit’s first major acquisition of pet vaccines during that time. It will add eight product lines, including routine vaccines for bordetella, Lyme disease, rabies and parvovirus, Indianapolis-based Lilly said Wednesday in a statement.

The pet medicines division brought in $919 million last year, and the new additions will add about $200 million, according to the company. That still puts it behind Zoetis Inc., the Florham Park, New Jersey, animal health company spun out from Pfizer Inc. in 2013, which had $1.76 billion in companion animal sales last year.

There has been speculation as to whether Lilly could spin off Elanco, just as Pfizer did with Zoetis in 2013. Elanco President Jeff Simmons said in a telephone interview that Elanco remains a “core business” to Lilly.

“It’s our intention to outgrow the industry, and we have outgrown the industry pretty consistently,” Simmons said. He said the deal was “a nice strategic fit and a longer term part of our strategy,” that will also add to Elanco’s early-stage research efforts.

Growing Business

Lilly shares rose 1.1 percent to $82 at 9:44 a.m. in New York.

Elanco accounted for 16 percent of Lilly’s 2015 revenue and sells popular pet medicines like the flea treatments Cheristin for cats and Trifexis for dogs. In June, the unit opened a 48,000-square-foot research center next to its Greenfield, Indiana, headquarters to develop vaccines for pets and livestock animals.

Boehringer’s sale of the manufacturing and research site is among the requirements for its acquisition of Merial, Sanofi’s animal-health unit, according to the statement. Boehringer, based in Ingelheim, Germany, is getting Merial as part of a 22.8 billion euro ($25.5 billion) asset swap with Sanofi that also includes over-the-counter drugs and consumer health products.

The deal with Lilly is expected to close by early 2017, pending regulatory and antitrust approvals, as well as the completion of Boehringer’s deal with Sanofi. Lilly said the acquisition will add to adjusted earnings in 2018 and GAAP earnings in 2019.

Jefferies LLC served as Lilly’s financial adviser, and Paul Hastings LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP were legal advisers.

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