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Elanco rattles investors with $7.6B Bayer deal; Merck CEO tops pharma pay list

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Elanco Animal Health's $7.6 billion bid for Bayer's animal health business has unsettled investors. The companies have complementary portfolios in animal parasiticides, with products like Advantix, Advantage Multi and Trifexis.

Source: The Associated Press

Elanco Animal Health Inc. will become the No. 2 animal health company behind Zoetis Inc. with its $7.6 billion acquisition of Bayer AG's animal health business.

Evercore analyst Umer Raffat said investors are rattled by the deal, citing Bayer Animal Health's heavy reliance on a few key products and potential antitrust issues stemming from the combined company's portfolio overlap.

The Greenfield, Ind.-based company's stock was trading down about 8.8% to $27.18 as of 2:22 p.m. ET on Aug. 20.

But Elanco CEO Jeffrey Simmons said the "forward-thinking" Bayer deal, slated to close mid-2020, had to be executed now, especially in light of the evolving animal health industry's demand for new products and distribution channels.

"We don't have the luxury to wait and see," Simmons said on a call with investors.

Another Evercore analyst said the acquisition could raise questions about whether Elanco can execute on its growth strategy as an independent company. Elanco spun off from Eli Lilly and Co. in 2018, completing the transaction in March.

Story: Elanco rattles investors with $7.6B buy of Bayer's animal health unit

Chart of the week

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Story: Merck's Frazier tops list of highest-paid US pharma CEOs in 2018

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Source: The Associated Press

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Essential Healthcare is a weekly collection of critical developments across the pharmaceutical, biotechnology, healthcare provider, healthcare technology and medical equipment industries that draws on exclusive analysis and value-added content from the Healthcare News team at S&P Global Market Intelligence. Subscribe now to get Essential Healthcare delivered to your inbox every week.