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How Eli Lilly’s Elanco Performed in 2016

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Elanco

Eli Lilly’s (LLY) Animal Health segment’s company, Elanco, reported a fall of 1% in its revenue to $3.16 billion in 2016, compared to $3.18 billion in 2015. 

The segment contributed ~14.9% of LLY’s total revenue in the year. It deals with products for companion animals, as well as food and other products.

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Revenues in the Animal Health segment

LLY’s US animal health sales rose 1% to $1.6 billion in 2016, while its animal health sales outside the United States fell 3% to $1.6 billion, including revenue from Novartis (NVS) Animal Health. 

The segment’s US revenue rose due to higher sales of new products in its companion animal products portfolio, which were partially offset by lower sales of its swine and dairy products due to market access pressures.

In terms of international revenue, both animal food products and companion animal products reported revenue rises due to increased demand, which was offset by the negative impact of foreign exchange. Excluding the impact of foreign exchange, the segment’s international revenue rose ~1% during 2016.

Companion animal products

Companion animal products reported a revenue rise to $969.6 million in 2016. This rise included a 13.6% rise to $597.4 million in the US sales of companion animal products and a ~5% fall to $372.3 million in the international sales of companion animal products.

Food and other products

The segment’s revenues for food and other products were $2.2 billion in 2016. These products reported a fall of 4.8% to $967.1 million in US sales and a 2% fall to $1.2 billion in international sales in 2016.

Other companies such as Merck & Co. (MRK), Sanofi’s (SNY) Merial, and Pfizer’s (PFE) Zoetis (ZTS) compete with Eli Lilly in terms of certain product mixes.

To divest risk, investors can consider ETFs such as the Healthcare Select Sector SPDR ETF (XLV) which holds ~2.7% of its total assets in Eli Lilly, ~7.1% in Pfizer, ~6.3% in Merck & Co., and ~1.0% in Zoetis.

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