Source: blog by Ron Brakke, President, Brakke Consulting
The leading story this week was the long-awaited announcement by Eli Lilly & Co. that they intend to spin off 20% of Elanco in an IPO in the second half of this year. We believe this is good news for the industry in that for the time being it avoids another major industry consolidation at the top of the list.
Second, an IPO should be less disruptive to the company and employees than the sale of Elanco to another industry player, non-industry company or equity fund. We like the fact that after the IPO two of the top five companies in animal health will be stand-alone public companies.
If the Elanco IPO is successful and follows the road map established by Zoetis, will other large pharma companies decide to explore similar strategies to maximize their shareholders’ value of their animal health businesses? If the Elanco IPO goes well, this will be another indication that the financial community has a continued interest in the animal health industry.