Eli Lilly & Co. agreed to acquire privately held animal
health products company Lohmann SE in a deal that aims to expand
the U.S. drug maker's presence in the global poultry market.
Financial terms of the deal weren't provided. The deal for the
German-based company also is expected to provide an entry into the
global poultry vaccine market.
As a result of the transaction, expected to close during the
second quarter, Lilly lowered its 2014 per-share earnings outlook
by a nickel to $2.72 to $2.80.
Lohmann's assets include a range of vaccines and feed additives,
commercial capabilities, and manufacturing sites in Cuxhaven,
Germany and Winslow, Maine.
Lilly's animal-health unit, Elanco, "has continued to invest
significantly in animal health in the past few years, growing
businesses and expanding our pipeline," stated Jeff Simmons,
president of Elanco and senior vice president at Lilly.
"Effectively competing in the animal vaccine segment is a
cornerstone of Elanco's long-term strategy," Mr. Simmons said.
The deal aims to support growth in the animal-health division's
pipeline and to support its track record for innovation and
integrating acquisitions, he added. The company plans to continue
to seek opportunities that support its efforts.
William Weldon, vice president of research-and-development at
the Elanco unit, noted that demand for eggs and other sources of
protein has been rising as the middle class expands globally.
However, individual hens, on average, have been laying fewer eggs
in recent years.
A Lilly spokesman said egg layer productivity has been declining
since the late 1990s, by nearly one egg per hen annually after
increasing for decades. To meet growing demand, the egg industry
has been adding hens, which also brings added expenses.
"Delivering innovation to this industry is critical." Mr. Weldon
added, to meet expected growth in long-term demand globally.
During January, Lilly reported that its animal-health division
posted fourth-quarter sales of $578.4 million, up 4% from a year
earlier. Lilly has relied on growth on its animal-health division
to help soften the impact of patent expirations in its core
human-health business.
Lilly expects to report its first-quarter financial results on
April 24.
Write to Tess Stynes at tess.stynes@wsj.com
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