Elanco Narrows Guidance Amid Spread of African Swine Fever


    Pig disease has led China to cull millions of animals

    Company is said to be talking with Bayer about deal for unit


By Riley Griffin, Bloomberg

August 13, 2019


Elanco Animal Health Inc. narrowed its sales forecast for the year as a worsening outbreak of a deadly swine flu ravages the pork industry in Asia.


The company, which was spun off last year from drugmaker Eli Lilly & Co., reined in the higher end of its revenue outlook, saying it now sees 2019 sales of $3.08 billion to $3.12 billion, compared with the $3.08 billion to $3.14 billion it had forecast in May.


African swine fever has led to the slaughter of millions of animals in China as officials seek to contain the outbreak and limit the damage to the country’s pork producers. The virulent flu jumped from Africa to Europe and spread quickly in Asia. For companies like Elanco, the culling of livestock has led to lower demand for medicines and other products.


“I haven’t seen something like this in my 30 years working in animal health,” said Elanco Chief Executive Officer Jeff Simmons in a telephone interview. He said that swine fever is the most significant headwind the company faces. The disease is expected to cut into Elanco’s sales by $40 million to $50 million this year, the company said.


Elanco is meanwhile weighing steps to get bigger. Last week, Bloomberg reported that Elanco is attempting to reach a deal to combine with Bayer AG’s animal-health unit.


Chief Financial Officer Todd Young said on a conference call that Elanco is postponing the initiation of a dividend so the company can use its cash “in the most productive way possible.”


Shares of Elanco gained as much as 2.9% to $30.40 in New York on Tuesday.


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