Lilly Says It Has ‘No Intention’ to Spin Off Animal Health Unit
2015-06-10 01:01:59.963 GMT
By Drew Armstrong
(Bloomberg) -- Eli Lilly & Co. has no plans to divest its
animal health unit, the company said after its stock rose more
than any other in the Standard & Poor’s 500 Index following an
analyst’s question about potential spinoff plans.
“We have no intention of divesting our Elanco Animal
Health business,” spokeswoman Lauren Zierke said in an e-mail.
“We continue to believe Lilly’s model for running Elanco is the
best one for creating strong business performance and
shareholder value. Furthermore, we expect Elanco to be an
important driver of growth for Lilly in the coming years.”
Lilly’s Elanco unit makes drugs for livestock and pets,
generating sales of $2.35 billion last year. The stock rose 5.4
percent to $82.77 at the close in New York, the most since March
2009, after Elanco President Jeffrey Simmons was asked if Lilly
might one day shed the unit in an initial public offering.
“We’ll see, but we are very intentional about a business
model that we think works,” Simmons said at an investor
conference hosted by Goldman Sachs Group Inc. “And we think the
IPO story hasn’t necessarily fully played out; there’s some
distraction in that model.”
Lilly, based in Indianapolis, got 86 percent of its revenue
last year from drugs for people. It’s seeking to rebound from
what it has called a low point in sales in 2014, after losing
exclusive rights to blockbuster medicines including Cymbalta and
Zyprexa.
Simmons said the company regularly discusses whether the
Elanco unit works better inside or outside Lilly. The animal
health business has many of its own plants and systems, and also
splits some services with Lilly’s human drug operations. There
are advantages to each, he said.
“We need to be as fast and autonomous as any competitor
that has been spun out,” he said. “The board and Lilly and the
executive officers are all saying, ‘Is there anything we’re
doing to slow us down and be less competitive?’”
In 2013, Pfizer spun off its Zoetis animal health unit
through an initial public offering. Since then, Zoetis shares
have gained 89 percent. The company reported $4.79 billion in
sales last year.
For Related News and Information:
Today’s most read health-care stories: MNI HEA <GO>
Bloomberg Intelligence Pharma dashboard: BI PHRM <GO>
Bloomberg Intelligence Biotechnology dashboard: BI BIOT <GO>
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Top health news: HTOP <GO>
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--With assistance from Catherine Larkin in Chicago and Caroline
Chen in San Francisco.
To contact the reporter on this story:
Drew Armstrong in New York at +1-212-617-8933 or
darmstrong17@bloomberg.net
To contact the editors responsible for this story:
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net
Stephen West, Elizabeth Wollman
2015-06-10 01:01:59.963 GMT
By Drew Armstrong
(Bloomberg) -- Eli Lilly & Co. has no plans to divest its
animal health unit, the company said after its stock rose more
than any other in the Standard & Poor’s 500 Index following an
analyst’s question about potential spinoff plans.
“We have no intention of divesting our Elanco Animal
Health business,” spokeswoman Lauren Zierke said in an e-mail.
“We continue to believe Lilly’s model for running Elanco is the
best one for creating strong business performance and
shareholder value. Furthermore, we expect Elanco to be an
important driver of growth for Lilly in the coming years.”
Lilly’s Elanco unit makes drugs for livestock and pets,
generating sales of $2.35 billion last year. The stock rose 5.4
percent to $82.77 at the close in New York, the most since March
2009, after Elanco President Jeffrey Simmons was asked if Lilly
might one day shed the unit in an initial public offering.
“We’ll see, but we are very intentional about a business
model that we think works,” Simmons said at an investor
conference hosted by Goldman Sachs Group Inc. “And we think the
IPO story hasn’t necessarily fully played out; there’s some
distraction in that model.”
Lilly, based in Indianapolis, got 86 percent of its revenue
last year from drugs for people. It’s seeking to rebound from
what it has called a low point in sales in 2014, after losing
exclusive rights to blockbuster medicines including Cymbalta and
Zyprexa.
Simmons said the company regularly discusses whether the
Elanco unit works better inside or outside Lilly. The animal
health business has many of its own plants and systems, and also
splits some services with Lilly’s human drug operations. There
are advantages to each, he said.
“We need to be as fast and autonomous as any competitor
that has been spun out,” he said. “The board and Lilly and the
executive officers are all saying, ‘Is there anything we’re
doing to slow us down and be less competitive?’”
In 2013, Pfizer spun off its Zoetis animal health unit
through an initial public offering. Since then, Zoetis shares
have gained 89 percent. The company reported $4.79 billion in
sales last year.
For Related News and Information:
Today’s most read health-care stories: MNI HEA <GO>
Bloomberg Intelligence Pharma dashboard: BI PHRM <GO>
Bloomberg Intelligence Biotechnology dashboard: BI BIOT <GO>
S&P’s Pharmaceuticals Index: S5PHAR <INDEX> MRR 10 <GO>
Top health news: HTOP <GO>
Top Bloomberg news: N <GO>
--With assistance from Catherine Larkin in Chicago and Caroline
Chen in San Francisco.
To contact the reporter on this story:
Drew Armstrong in New York at +1-212-617-8933 or
darmstrong17@bloomberg.net
To contact the editors responsible for this story:
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net
Stephen West, Elizabeth Wollman