Eli Lilly and Company’s (LLY) Animal Health segment company, Elanco, reported a 9% YoY (year-over-year) fall in revenues at $706 million in 3Q16, as compared to $779 million in 3Q15. This segment contributed ~14.6% of total revenues for Lilly and deals with products for companion animals, as well as food and other products.
Animal Health revenues
Lilly’s US Animal Health sales fell 14% YoY to $338.6 million in 3Q16, while the segment’s sales outside US markets fell only 5% YoY to $367.6 million, including revenues from Novartis (NVS) Animal Health.
US revenues fell due to market access pressures for food animal products and wholesaler buying patterns for companion animal products. In the segment’s international revenues, food animal product revenues were impacted by macroeconomic conditions in Latin America.
Companion animal products
Companion animal products reported a YoY revenue fall at $186.9 million in 3Q16. This includes a 23% fall in US sales of companion animal products and a 1% fall in sales of companion animal products outside US markets.
Food and other products
Revenues from food and other products reached $519.3 million in 3Q16, reflecting a 9% fall in US sales. Outside US markets, the company reported a 6% fall in international sales, including a 4% operational decline and a 2% negative impact from foreign exchange.
Notably, Merck (MRK), Sanofi (SNY), and Zoetis (ZTS) compete with Lilly on certain product mixes. To divest risk, investors can consider ETFs like the Healthcare Select Sector SPDR (XLV), which has ~2.8% of its total assets in Lilly, ~7.8% in Pfizer (PFE), ~5.7% in Merck (MRK), and ~0.8% in Zoetis (ZTS).