20 Apr

Eli Lilly’s 1Q17 Estimates for Elanco

WRITTEN BY Mike Benson

Animal health segment

Eli Lilly and Company’s (LLY) animal health segment, Elanco, deals with products for companion animals as well as food and other products. The segment, which acquired Novartis (NVS) Animal Health, contributes ~15.0% to Lilly’s total revenues.

Eli Lilly’s 1Q17 Estimates for Elanco

The animal health segment deals with the following products and services:

  • food and other products
  • pets or companion animal products

Revenues for animal health segment

US animal health revenues are expected to rise in 1Q17, mainly due to increased sales of new products added to the companion animal products. It will be partially offset by lower sales of swine and dairy products in US markets. International markets are also expected to report growth for food animal products and companion animal products in 1Q17.

Companion animal products

Revenues for companion animal products in 1Q17 are expected to rise due to increased sales of new products, including Interceptor Plus and Osurnia. International sales for companion animal products are expected to remain positive, resulting in overall revenue growth for companion animal products in 1Q17.

Food and other products

Revenues for food and other products are expected to rise in 1Q17 due to growth in sales of beef and poultry products in US markets. International sales are also expected to rise in 1Q17.

Other companies such as Zoetis (ZTS), the animal health arm of Pfizer (PFE); Merck & Co. (MRK); and Merial, a Sanofi (SNY) company, compete with Eli Lilly for certain product mixes.

To divest the company-specific risks, you can consider ETFs such as the Health Care Select Sector SPDR ETF (XLV), which holds ~2.7% of its total assets in Eli Lilly, ~7.1% in Pfizer (PFE), ~6.3% in Merck & Co. (MRK), and ~1.0% in Zoetis (ZTS). You could also consider the iShares Core S&P 500 (IVV), which holds ~0.50% of its total assets in Eli Lilly.

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