Lilly Spinoff Elanco Animal Health Seeks to Raise $1.45 Billion in Initial Public Offering

Eli Lilly and Company (LLY) spinoff Elanco Animal Health Inc. said in a regulatory filing on Thursday that it will raise up to $1.45 billion in its initial public offering.

The company said in a filing with the Securities and Exchange Commission that it will offer 62.9 million shares of common stock for $20 to $23 per unit under the ticker ELAN. Including underwriters, the IPO could garner as much as $1.66 billion.

Lilly on July 24 announced it would separate Elanco after a strategic review of the company. Chief Executive David Ricks said at the time that the move would “allow Elanco to efficiently deploy its resources to those growth opportunities that best serve its customers” and allow Lilly to focus on human pharmaceuticals.

Elanco was founded in 1954 as part of Eli Lilly and Co. and develops, manufactures and markets health products for animals. The company said it’s the fourth-largest animal health company in the world and had $2.9 billion in revenue in 2017. By revenue, it’s the second-largest poultry health company and third-largest in cattle, Elanco said.

In the first half of 2018, revenue was reported at $1.5 billion with net-income of $9.9 million while earnings before items came in at $306.2 million.

The company said global animal health industry revenue is expected to grow at a compound annual growth rate of 5% through 2023, citing data from Vetnosis.

“Importantly, this growing industry, which includes both food and companion animals, benefits billions of people worldwide,” Elanco said in the SEC filling. “The food animal sector focuses on species raised to provide animal protein, such as cattle, other ruminants (sheep and goats), swine, poultry and aqua. The companion animal — or pet — sector focuses primarily on dogs and cats.”

The global market for animal health medications, vaccines and nutritionals is seen at an estimated $34.3 billion with medicines and vaccines representing a market of $32 billion. The growth rate for medicines and vaccines grew at a rate of 4% annually from 2007 to 2017, Elanco said. Management expects the rate to continue through at least 2023 based on industry projections.