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Animal Health: Just as Important to Eli Lilly as Human Health

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Elanco

Eli Lilly and Co.’s (LLY) animal health company, Elanco, reported an increase of 2% in revenues at $860 million in 2Q16—compared to $841 million in 2Q15. This segment contributed ~15.9% of Eli Lilly’s total revenues and deals with products for companion animals as well as food and other products.

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Revenues 

US animal health sales rose ~8% to $444.5 million during 2Q16, while animal health sales outside US markets fell 3% to $415.3 million—mainly driven by the inclusion of revenues from Novartis (NVS) Animal Health. US revenues increased due to the strong performance of new products including Interceptor Plus and Osurnia as well as the wholesaler buying pattern for US markets. For international revenues, companion animal products were exposed to generic competition. The negative impact of foreign exchange impacted revenues during 2Q16.

Companion animal products

Companion animal products reported growth in revenues at $309.8 million in 2Q16. This was mainly driven by an increase of 32% in the US sales of companion animal products due to the launch of new products including Interceptor Plus and Osurnia. It was substantially offset by an 8% decline in sales of companion animal products outside the US markets.

Food and other products

The revenues for food and other products were $550 million in 2Q16. The revenues fell due to a decline of 6% in US sales. Outside the US markets, the company reported 3% growth in international sales. This was more than offset by the 4% negative impact of foreign exchange.

Other companies like Merck & Co. (MRK), Merial—a Sanofi (SNY) company, and Zoetis (ZTS)—the animal health arm of Pfizer (PFE), compete with Eli Lilly on certain product mixes. Investors can consider ETFs like the SPDR S&P Pharmaceuticals (XPH). XPH holds ~4.8% of its total assets in Eli Lilly.

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