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Eli Lilly and Co.’s 3Q16: Expectations for Elanco

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Animal health segment

Eli Lilly and Co.’s (LLY) animal health company, Elanco, deals with products for companion animals, as well as food and other products. This segment has acquired Novartis’s (NVS) Animal Health segment, and it now contributes ~15% of total revenues for the company.

The segment deals with the following products and services:

  • Food and Other products
  • Pets or companion animal products
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Revenues for the animal health segment

US animal health revenues are expected to increase in 3Q16 due to the inclusion of revenues from Novartis’s (NVS) Animal health portfolio. For international markets, revenues for 3Q16 are expected to grow operationally, but the foreign exchange will have a substantial negative impact on international revenues for the animal health segment.

Food and other products

Revenues for food and other products are expected to increase in 3Q16 due to the growth in sales of beef and poultry products in the US markets. However, foreign exchange will have a negative impact on revenues from the international markets.

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Companion animal products

Companion animal product revenues for 3Q16 are expected to grow due to increased sales in US markets and the performance of new products, including Interceptor Plus and Osurnia. However, international sales for companion animal products are expected to decline and substantially offset the growth in US revenues in 3Q16. The company announced the acquisition of Boehringer Ingelheim Vetmedica’s Feline, Canine, and Rabies vaccines portfolio for the US region in October 2016.

Other companies like Zoetis (ZTS)—the animal health arm of Pfizer (PFE), Merck and Company (MRK), and Merial—a Sanofi (SNY) company, compete with Lilly on certain product mixes. Investors can consider ETFs like the Healthcare Select Sector SPDR (XLV), which invests ~2.8% of its total assets in Lilly.

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