Eli Lilly (LLY), through its animal health division, Elanco, has recently acquired the European rights to some of Pfizer’s (PFE) animal health products, consisting of vaccines, parasiticides and feed additives for both companion and production animals. In addition, Lilly will acquire a manufacturing facility in Ireland that is currently used in the production of animal vaccines. The financial details of the deal are not known.

The acquired products used to be marketed by Pfizer and Wyeth’s Fort Dodge operations. Pfizer had to divest these products following a directive from the European Commission following its acquisition of Wyeth last year. Pfizer and Lilly have signed a manufacturing supply agreement to ensure an uninterrupted supply of product to the customers.

Companion animals include dogs, cats, other pets and horses, while production animals include cattle and other food-producing animals. We believe this is a large market with an attractive growth profile in the companion animal segment as increased spending is driven by the rising number of households with pets, enhanced human-animal bonding, aging pet population, more focus on animal health or preventative care, advancements in pharmaceuticals and diagnostic testing, and extensive marketing programs sponsored by companion animal nutrition and pharmaceutical companies.

The potential of the production animal segment is primarily based on disease prevention, improved productivity as well as a growing focus on food safety.

Eli Lilly is keen on improving its top line as some of its key products are slated to lose patent exclusivity in the next few years. In order to achieve this, the company has entered into several deals in the past few months.

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