ATN: Elanco has completed serial acquisitions of different businesses in different geographies in the last few years. Merck Animal Health, known as MSD Animal Health outside North America, recently completed its acquisition of Elanco's aqua business. What are your learnings from that so far?
EDB: We are on track to launch a potential blockbuster product in each of the next three quarters. The ability to execute this unprecedented level of innovation requires deliberate focus on markets where we can make the most impact. The divesture of our Aqua business was a significant milestone in concentrating our focus on high-value opportunities in pet health and livestock sustainability.
We saw in the second quarter of 2024 that this was an important bet. Elanco’s International Pet Health showed 11% growth for the first half and our US Farm Animal business was bolstered to 17% growth by new innovation and the realisation of our focus on livestock sustainability. The opportunities in livestock sustainability and a broader portfolio in particular drove exciting growth in our base business, like Rumensin (the feed ingredient for cows that increases milk production efficiency), in the previous quarter.
ATN: Bovaer is currently available for sale in over 59 countries and includes regions such as the European Union, the UK Australia, Brazil and Mexico. It is now approved in the US and set to enter the market soon. What’s been the reaction from the US dairy industry about using it? How confident are you that it will create new revenue streams for farmers through carbon credits and sustainability incentives?
EDB: We are seeing strong interest in Bovaer as we finalise the ecosystem of value that surrounds it. The first step to creating value for farmers is verifying the data and tracking emissions. To date, we have approximately 500,000 dairy cows activated in our UpLook database which tracks methane reduction based on an approved protocol. Once you have the data, you need state approvals and CPG adoption. The majority of state registrations are complete; however, we are still awaiting California – a key dairy state.
Athian, the first-of-its-kind carbon inset marketplace, is negotiating contracts with several consumer goods companies to purchase carbon credits based on the feeding of Bovaer and Rumensin to dairy cows.
While the overall process is complex, we believe this creates a sustained competitive advantage and will enable our next era of farm animal growth from innovation. Overall, we are encouraged by the progress and expect producers to begin feeding Bovaer to dairy cows in the coming months.
As animal, human and now environmental health continue to converge, Bovaer is one of the most significant innovations that considers this intersection and provides consumers, farmers and society what they want for our future. Feeding one tablespoon of Bovaer per lactating dairy cow per day can reduce methane emissions about 30% or about 1.2 metric tonnes of carbon dioxide equivalent (CO2e) emissions annually, while creating opportunity for dairy farmers to be financially rewarded for reducing their dairy’s carbon footprint.
Feeding one million cows Bovaer would reduce emissions equivalent to removing more than 285,000 cars from the road for a year. By mitigating methane, the livestock industry can reduce the rate of climate warming and allow food companies and retailers to make meaningful progress toward their Scope 3 emissions goals.
ATN: More generally, we see a lot of innovation in the human pharma space, which receives more funding and attention. What’s holding back innovation in animal health?
EDB: Animal health has untapped innovation potential. It is a highly regulated industry with many challenges to get products approved – only a few companies have the capability to develop and get approval for new, breakthrough innovations.
Our Elanco R&D strategy is focused on delivering a consistent flow of high impact innovation to our customers and in key markets – both in Pet Health and Farm Animal.
These innovations come from our labs and a variety of partnerships. We seek to be an innovator’s partner of choice with the right capabilities they might need at whatever stage they might need it to bring a product from idea to commercialization Reaching these key markets, and moving innovation quickly from idea to commercialisation, requires the right ecosystem. And Elanco is better positioned than ever – from infrastructure and talent – to deliver these innovations and approvals.
In the last three years we have launched key innovations in the US – Experior for cattle, Bexacat and Zorbium for cats and Canine Parvovirus Monoclonal Antibody (CPMA) for dogs. And we plan to continue to build on this momentum we’ve generated in our innovation pipeline with the approval of Zenrelia and Credelio Quattro for dogs expected in the coming quarters in the U.S, with Zenrelia already being approved in Brazil. We are at the same time delivering on our existing pipeline while building out our next wave of innovation to refill the pipeline.
That's why we're so excited about the One Health District we've recently announced in Indianapolis. As part of this we are establishing a globally recognised research innovation district dedicated to optimising the health of people, animals, plants and the planet in partnership with Purdue University.
One Health Innovation District is part of the consortium of Indiana stakeholders successful in securing that Regional Technology and Innovation Hub (Tech Hub) designation, which recognises regions poised to ensure the US is globally competitive in areas that are key to national security.
Any implementation funding from the Economic Development Administration (EDA) would support and greatly accelerate the district’s capability to translate innovative ideas into real-world products and job opportunities. With awards expected this summer, Heartland BioWorks now awaits word on whether it will be chosen for the next phase of funding that will invest another $50 million to $75 million in five to 10 designated hubs around the country.
For life-changing innovations to move from idea to reality, they must be given the right environment to thrive. Here, research interests will include understanding of the microbiome, antimicrobial resistance, computational biology, comparative genomics and livestock sustainability, among others. No other place in the country offers all that the One Health District and Animal Health Epicenter will offer, helping researchers tackle one of the biggest challenges in bringing innovation from concept to reality – scale up.
And as one of the few companies with the ability to reach the world’s animals – we will be able to be the catalyst with share of voice on the ground in countries across the globe to deliver product into commercialisation and to the customer.
