Will: Elanco Spin-Off ‘Long Overdue’
Will expects Lilly to make further "tweaks" involving its workforce in the coming years.
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowUniversity of Indianapolis Associate Professor of Finance Matt Will calls Indianapolis-based Eli Lilly and Co.’s (NYSE: LLY) decision to spin off Elanco Animal Health as a separate company "long overdue." Will believes Elanco can be more successful outside the Lilly umbrella. He says, since regulations on animal treatments are often less strict, the move can "unleash" Elanco to have more financial success.
Lilly this morning announced plans to complete an IPO involving a less than 20 percent minority stake in Elanco by the end of the year. The decision came after completing a review of options involving the animal health company that began a year ago. The company says details involving price range and the number of shares will be released at a later time.
In an interview with Inside INdiana Business, Will said Eli Lilly Chief Executive Officer David Ricks is performing "deferred maintenance" with Lilly, which he believes should have been done a long time ago. That includes global restructuring plans, first announced in September, involving about 3,500 workers through early retirements and site closures in Iowa, New Jersey and China. At the time, Ricks said the move was necessary to reduce costs and "invest in the next generation of new medicines."
Will expects the company to make further "tweaks" involving its workforce in the coming years, as well as targeted acquisitions of proven treatments. In May, Lilly acquired California-based ARMO BioSciences in a $1.6 billion deal, adding what Lilly Oncology President Sue Mahony called a "promising next-generation clinical immunotherapy asset" to Lilly’s pipeline.
Will believes more restructuring moves are ahead at Lilly.