CEO: Elanco Poised for Significant Expansion, Product Growth

For the first time since becoming an independent company, Greenfield-based Elanco Animal Health (NYSE: ELAN) has been added to the Fortune 1000, a list of the largest U.S. incorporated companies published by Fortune magazine.

The company ranks number 768. The list typically draws significant interest from readers who follow the business sector.

The listing comes as the company holds its second annual shareholder’s meeting, following a first full-year of operations as a standalone company. Elanco went public in September 2018 with shares of stock trading on the New York Stock Exchange, following a split of Indianapolis-based Eli Lilly and Co. (NYSE: LLY).

“It’s amazing to think of all we’ve accomplished in just our first full year. We completed an aggressive agenda and delivered strong outcomes despite the challenging environment,” Elanco President and Chief Executive Officer Jeff Simmons said Thursday in a virtual meeting with shareholders.

Although the legacy of Lilly will always be part of the company, as the name ELANCO was inspired in part by the moniker Eli Lilly and Co., the animal health company is quickly making a name for itself.

“In 2019, we grew sales, increased our margins and grew our pipeline,” said Simmons. “We acquired and integrated two companies while planning for a third in Bayer.”

The integration includes the $245 million acquisition of Kansas-based Aratana Therapeutics and the $60 million deal for Canadian vaccine maker Prevtech. While key to company growth, they pale in comparison to the $7.6 billion acquisition of the animal health division of Germany-based Bayer AG announced last August.

The Indiana company is set to explode in size and stature as it completes the deal, perhaps as early as next month.

“The Bayer close is tracking for mid-year and we’re working very much in a collaborative way with both the European authorities and FTC (Federal Trade Commission),” said Simmons, in an exclusive interview with Inside INdiana Business. “They are the final two authorities. And we are in the final stages. So, things are tracking nicely for a mid-year close.”

Pending regulatory approval in the U.S. and Europe, the deal will vault Elanco from the fourth largest animal health company to the second position behind New Jersey-based Zoetis Inc. (NYSE: ZTS)

“There are lots of aspects to acquisitions this large, the largest in the industry. When you put together two companies of this size, both Elanco and Bayer, it brings a lot of complexity,” said Simmons. “But we feel quite confident.”

Simmons said the expanded global scale puts Elanco in a stronger position to weather tough business environments, including the global COVID-19 pandemic. The company was identified as essential during the health crisis as consumers rushed to supermarkets in panic mode.

“It highlighted the complexity and sophistication of animal agriculture today. The global nature of it. The supply chain, the tightness of that supply chain,” reflected Simmons. “I hope people have taken and understood that and paused to see the importance of what animal agriculture means and the vulnerability if not handled appropriately.”

Assuming no regulatory challenges, the combined company’s business model will be evenly split between food animal and companion animal.

“In the vet clinic, on the farm and in the retail chain, that diversity brings durability, it brings sustainability of a large company. We believe the pet industry will continue to grow nicely.”

Simmons said revenue from innovation increased 60% year over year, which he said will “bring momentum with significant runway for growth.” The company intends to launch two dozen more products over the next four years, five of those in 2021 alone.

The Bayer acquisition will increase Elanco’s footprint in the retail and e-commerce sectors as most of its products are purchased over the counter, while Elanco’s previous-core products were acquired through veterinarians.

“To allow pet owners and veterinarians to meet where they want to meet, shop where they want to shop, whether it’s retail, or in the vet clinic or at their front door and to continue to serve farmers all over the world,” Simmons said. “A bigger year in 2020 than it was 2019 and it really sets up an era of opportunity.”