Elanco at Stifel Jaws & Paws: Strategic Growth and Innovation

On Thursday, 29 May 2025, Elanco Animal Health (NYSE:ELAN) took the stage at the Stifel Jaws & Paws Conference 2025. The company showcased its strategic focus on growth through innovation and cash generation while addressing challenges like pharmaceutical tariffs. Elanco’s leadership emphasized a proactive approach to leadership changes and debt management, highlighting both achievements and areas for improvement.

Key Takeaways

• Elanco reported 4% constant currency growth in Q1 2025, driven by farm animal and pet segments.
• The company raised its full-year revenue guidance and increased its debt paydown target to $450-500 million.
• New CFO Bob Ben Hinbergen is expected to focus on strategic investments and margin expansion.
• Elanco is actively seeking a tariff exemption, distinguishing animal health from human pharma.
• The company is optimistic about the growth prospects in the animal protein market, driven by sustainability.

Financial Results

• Revenue Growth: Achieved seven consecutive quarters of growth, with a 4% increase in the latest quarter.
• Full-Year Guidance: Projected revenue growth of 4% to 6% for the year.
• Innovation Revenue: $198 million in innovation revenue highlighted as a key driver.
• Debt Management: Increased debt paydown target from $150 million to $450-500 million.
• Leverage Ratio: Aiming for a 3.9 leverage ratio by year-end.

Operational Updates

• CFO Transition: Bob Ben Hinbergen joins from Hillenbrand, with a focus on strategic growth.
• Credelio Quattro Launch: Achieved a 10% market share in the broad spectrum decto category.
• ZYNRELIA Adoption: Adopted by 11,000 vet clinics, with ongoing trials and formulary inclusion.
• Manufacturing Optimization: Sold a New Zealand plant and focused on optimizing existing facilities.
• Sales Force Expansion: Increased by 25% to support new product launches.

Future Outlook

• Accelerated Revenue Growth: Anticipating continued growth in 2025 and 2026.
• Globalization of Innovation: Expanding global reach of products like ZYNRELIA and Credelio Quattro.
• Margin Expansion: Targeting improvements through product mix and manufacturing efficiencies.
• Next Innovation Wave: Expecting USDA approval for a new derm product by year-end.
• Balance Sheet Improvement: Focused on achieving a 3 leverage ratio.

Q&A Highlights

• Credelio Quattro Performance: Rapid market share gain attributed to product differentiation.
• Distributor Inventory: Lean inventories with strong reorder activity.
• ZYNRELIA Pricing: Currently priced at a 20% discount, with potential adjustments as traction increases.
• Tariff Strategy: Collaborating with peers to seek exemption, highlighting industry differences.

Elanco’s leadership remains confident in their growth strategy and ability to deliver shareholder value. For more details, refer to the full transcript below.

Full transcript - Stifel Jaws & Paws Conference 2025:

Jon Block, Analyst, Stifel: All right, guys. Good morning and welcome to day two of the twenty twenty five Stifel Jaws and Paws Conference. Jon Block with Stifel. We really got another great day. 13 total panels, including some of our covered companies, a few veterinary and physician panels and some highly innovative private players as well.

Opening up our conference today, we’re pleased to have Elanco Animal Health and their CEO, Jeff Simmons. Jeff, thanks for participating again in Jaws and Paws this year. I’ll call like a quick audible just based on the news from yesterday morning, and I’ll start there regarding the change with the CFO. Jeff, can you just briefly address that change? And the most common question I’m getting is sort of why now?

And was this from a position of strength? And I’ll turn it over to you.

Jeff Simmons, CEO, Elanco Animal Health: Yes. Thanks, John. Thanks for your coverage. And you do this as well as anybody. And we’re excited to be here at Stifel.

Yes. As I’ve shared with you, this was an intentional move. It was proactive. It was initiated by myself and in collaboration with Todd. As you all know, six years Todd has been never worked with somebody more collaboratively and been through more.

But any key roles, want to be intentional, prudent, proactive. And he’s been in the role for over six years and has is going to lean in and look at opportunities himself. And so I started a little over six months ago looking at who would be the right candidate for the next era that would be a cultural fit that can have the energy to lean in on value creation and work in partnership with me. And I believe Bob Ben Hinbergen from Hillenbrand with his thirty years experience brings exactly what we need. So great developer of people, great value creator, got a real excitement about coming into this space.

He’s helped transform two of the companies he’s been in. Spent a lot of time in China, global guy. And so it’s the right opportunity. And we’ll talk a little bit today, a little bit of the next era for Elanco and where we’re going and the continuum we’re on. And I think it’s a great opportunity.

Todd will be with us till the August. It will be a nice smooth transition. And again, I’m a big endorser of the guy. And But I think any good company should make intentional moves at the right time, and this is the right time for Todd and the right time for us.

Jon Block, Analyst, Stifel: Okay. That was great. That was a great recap, and I’m sure we’ll go back there a couple of times throughout the I’ll move on to the first quarter results. Posted a solid beat, you absorbed the tariff hit, earmarked $25,000,000 of sort of FX EBITDA tailwind for future potential pharma tariffs. Why don’t we start just maybe the top two or three highlights that you see from the quarter?

And I’m guessing the I think it was the $198,000,000 in innovation revenue might be one of them.

Jeff Simmons, CEO, Elanco Animal Health: Yes. So we’ve been very consistent internally and externally the last two years. You’ve been listening to me. Growth, innovation, cash, they’re the value drivers. It was probably the most robust holistic quarter of proof points that we’ve ever had.

So seven quarters of growth, accelerating growth, so one percent two years ago, 3% constant currency. We had a 4% quarter. We’re guiding 4% to 6% for the year. And as you and I have talked, John, it was farm animal, it was pet, it was international, it was U. S, it was price and volume.

And I think the story behind the story, what we’re seeing behind the curtain is innovation in each portfolio is driving the core. So you’ve been asking me for two years, hey, will the core be stable? And what Experior is doing for our cattle portfolio, it’s making Remensin grow. What AdTab is doing for Seresto and AdTab in Europe in the pet business has made the core grow. We’re seeing that now.

Credelio, Quattro has got 500 new clinics in The U. S. Buying Elanco products that have never bought Elanco products. So I think the innovation is accelerating. It is the contributor of growth.

We are not a one innovation story. Some of us had dinner together last night. It’s the basket of six blockbusters followed by the six to 10 that came over the last three years. So that’s we’ve raised innovation guidance. We’ve raised revenue guidance for the year on the FX.

We’ve kept back the FX $25,000,000 on the EBITDA line for tariffs, which we can talk about. And then the big news a couple of days before earnings was we for the very first time that I’m aware of in thirty five years in animal health, we took an animal health asset into human health with the Lodilan or Credelio compound and we monetized those royalties with Blackstone and that allowed us to come into the year. We raised our cash debt pay down from 150,000,000 to $450,000,000 to 500,000,000 So gross accelerating. Innovation is raising with the basket of innovation led by Experior, Credelio and AdTap, and the cash pay down continues to be a key point with a path to 3.9 leverage EBITDA to debt by the end of the year.

Jon Block, Analyst, Stifel: That was great. Let me ask one more a little bit more near term question and then I want to zoom out and maybe talk bigger picture. In the quarter, you talked about a soft sort of OTC January and February. That was partially a function of comps in the market, I believe. You alluded to a big step up in March.

You guys also called out on the earnings call a solid April as well. I can pull scanner data, which we do. It’s never spot on, but it’s certainly been directionally accurate. It appears OTC momentum persisted, continued into May. Did I lay that out correctly?

And any thoughts on if we did see it continue into May?

Jeff Simmons, CEO, Elanco Animal Health: Yes. And I’ll just back up on Elanco. You did. That’s exactly right. We saw the coldest January, February.

My team that’s in the room here is they gave me tick bites from the CDC were the lowest since 02/2008. That’s the first time I’ve ever put that on an earnings call. But the cold weather definitely impacts the OTC business. I will back up, John, as we’ve talked. The Bayer acquisition has really, really given us everything and more than we wanted.

Onethree of pet owners don’t go to the vet, either can’t afford it, they don’t have access or it’s just something they don’t desire. And that OTC business has continued to grow, but it’s probably the most temperature seasonal sensitive. So we did see a decline in January, February. We’ve seen a really nice rebound in March, April, we said and that’s continued into May, so weather dependent. But I would say our distribution points, we’re now in Tractor Supply, in Target, and we can go down.

What that is allowing us to do is meet more pet owners where they want to shop at more price points than any other animal health company, and that’s worked well. But we got to watch the weather. I mean that is a factor. Okay.

Jon Block, Analyst, Stifel: And I’m going get pretty granular in some of the innovation products, and I’ll start with Credelio Quattro. But before I do that, I thought from dinner last night, there were really some themes that came up that were really important that certainly makes sense to set aside time. If you want to address maybe four or five initiatives at Elanco that you’re feeling good and share with the audience.

Jeff Simmons, CEO, Elanco Animal Health: So we’re not letting up here. The growth innovation cash, the seven quarters of growth, our Board has leaned in heavy as I’ve asked them to. But think about us as a continuum of increasing value creation. So let me double down a little bit on the growth innovation cash and just say, what can you see from Elanco in the rest of 2025 and 2026? And I think you’re going to start to see proof points on every quarter going forward.

One is accelerating revenue growth. So that’s in our guide and we continue to see growth accelerating. Two is the globalization of our innovation. We have six blockbusters and those are going to globalize, let me point to ZENRELIA Europe, UK and Australia coming up next. Derm International is a $600 to $700,000,000 business.

We’ve got less restrictive labels. We see this as one of the key growth drivers. We’re also globalizing Xperior and Credelio Quattro. So that’s the second. I think third is the new which we can talk about is really a company wide margin expansion approach.

We brought in PwC and we’re looking at everything from gross to net on the commercial side to we sold a New Zealand manufacturing plant last quarter. We’re going to continue to really look at a margin expansion, what’s in our control beyond the mix benefit we’re going to get initiatives to drive margin expansion. That’s third. I think the fourth is the next round of innovation. The IL-thirty one derm product is coming.

We expect it from the USDA by the end of the year. And that will help ZENRELIA. That will be we will be then at parity, and we believe it’s differentiated from Cytopoint, but at parity with the current derm player. And that’s and then I think lastly is just the balance sheet. The continued focus on cash pay down and really, really driving ourselves.

We think the investor base has changed a lot the last six months and a lot of that is a path to a three lever on debt. And we expect rating agencies and things to continue to work to allow us. So that gives you accelerated growth, globalizing innovation, margin, the next round of innovation and a better balance sheet is really our increase. And that’s where Bob as a new CFO is coming in, heavy focus on how we invest right and how we go after this margin expansion, which we’ve said will expand in 2026.

Jon Block, Analyst, Stifel: Okay, great projects to work on and notably I think the EBITDA margin expansion into 2026 and what that can do to the leverage I’ll shift gears, Credelio Quattro, we had some solid checks on CQ ahead of the quarter, but I think your 10% share comments were certainly better than investors expected. Let me take a moment. Jeff, what do you think sort of led to the fast start? And I think it even might have possibly surprised you guys a bit. Well, I

Jeff Simmons, CEO, Elanco Animal Health: think first the category. There’s no faster category right now in animal health than broad spectrum and decto products. So you’ve got two products in that category now. We’re the third product in the category. 70% of puppies in The United States are being started on an oral broad spectrum.

So it is a fast growing market, which we are coming into. That’s number one. Number two is we think we’re best medicine with really now four dimensions of differentiation and that’s getting played back to us. I’ll start with the one that we may be underestimated and that’s just some of the independent research on tick kill. And we’ve seen actually the speed of tick kill on the Lotta Lantern asset has been a differentiator.

One month heartworm control against one of the incumbents is another differentiator. The broader spectrum, we’re the first FDA product with four active ingredients in a pill. That CMC was difficult work, but we’ve conquered it and that’s given us what we believe differentiation. And then the new one is the palatability. The acceptance by a dog matters.

And I’m getting videos sent to me where us versus an incumbent, the palatability and acceptance by the dog. So category growth, differentiation and we’re leaning in. We increased our sales force twenty five percent. We’ve shifted most of our DTC money heavy and multimedia approach to Credelio Cuatro. And we’ve said we captured 10% share out of the gate quickly in the first couple of months of dollar share in clinic.

So what we’re saying is vet clinics are saying, I’m bringing this on as one of my one or two products and that’s been beneficial.

Jon Block, Analyst, Stifel: And let me build up that 10% comment. So we’re all trying to quantify certain parts of the innovation I know you guys aren’t going to spell that out for us. But when I just look at my Zoetis model, Zoetis U. S. Trio, I have over $1,000,000,000 this year.

They did $240,000,000 in the first quarter. NexGard Plus probably pushes it between those two players, 1,200,000,000.0, dollars 1 point 3 billion. We hear that 10% number, is Credelio Quattro blockbuster status here in 2025?

Jeff Simmons, CEO, Elanco Animal Health: Yes. I’m going to stay away from byproduct, by quarter, by year. I think there’s no value in that. I will keep coming back to the basket that we’re measuring and raising guidance on. But I do believe the way the framework, the way you’re looking at those numbers is exactly right.

I think what we got to watch is, I like this puppy start data, which says the category continues to have lags and a long runway of growth. The Para category continues to grow really robustly. I think that’s important. And look, we are I’ve said from the beginning, John, we are not going to have any regrets on these launches. So why did we actually hold back on EBITDA guide in the second quarter?

It’s because of spend, primarily on AdTab in Europe and Quattro in The U. S. So we believe we’re best medicine, we’re going to act that way and we’re going to lean in heavily. And we are third to market. We got to remember that.

But I do think the differentiation, the category growth gives us more upside and we’re ahead of expectations early. And ahead

Jon Block, Analyst, Stifel: of expectations, certainly, the main question I’m getting from investors and again everyone was surprised to the upside is, hey, you guys mentioned the inventory at the distributors appears lean. So we know it’s going from you guys to disties, disties to the practice per your prior comments, right? The distributors have reordered multiple times. Your confidence, Jeff, it’s just not the stock into the vet practice and that you’re seeing it go out of the practice to the actual pet owner?

Jeff Simmons, CEO, Elanco Animal Health: Yes. So I think the first is exactly right. We were very clear to say lean inventories in the system is this is not a loading deal. I mean we’ve seen distributors order multiple times. That’s continued here in the second quarter.

But the pull through is key. So you’ve got to activate pet owners with multimedia done very differently than we did it five years ago. And we’re looking at that data very carefully to get pet owners activated to say it’s an uninvolved category. People don’t think about their heartworm, their tick, their flea, a little bit in the spring, but it’s to activate them to get in. And we’re investing accordingly.

We’re seeing that, but that’s the next key metric that we’re looking at. And things are trending well. We reiterated our guidance yesterday in the press release on the CFO change. But is the next thing is the pull through. And we’re confident we’re seeing that.

I like the differentiation. Vets are seeing this. Vets are pulling this into their clinic. They only pull it into their clinic if they’re going to push it out. Does that make sense?

Jon Block, Analyst, Stifel: Certainly does. Another key theme coming off the 1Q earnings call I thought was, let’s move to ZYNRELIA and a lot to talk about. And there was sort of the language versus label and one is more near term being the language, one is a little bit longer term being the label. Let’s start with the language for ZYNRELIA. Can you give us some color on that?

What do you think would actually change? And do you expect it to have a commercial impact, if you would?

Jeff Simmons, CEO, Elanco Animal Health: Yes. So the language change with the CVM is we’ve made a submission with existing data to look at changing wording on the label that also we think vets are looking for. We can’t be any more specific than that. That is on an PDUFA time line, which would be one hundred and eighty days. And the intention would be in the second half, we would get some response to that.

And if so, that would move quite quickly. The second is actually taking vaccine naive dogs and starting a more robust study that would be a longer period of time. That is a more wholesale label change. So both of those paths are already started and activated and we should have a signal. Then I back that up, what does that mean?

What’s the meaning of that? The so what is really this. If you think about 30,000 vet clinics right now in The United States, Eleven Thousand have brought ZENRELIA on. 8,000, it’s part of the formulary, 3,000 are trialing the product. So one out of three.

That’s more than Credelio today. So I’m happy with that. We’re going deeper with those one third clinics. The remaining twothree are either saying, Boy, you got to show me more or I want to get into the derm season. We get twenty five percent more dogs that have an itching response in this June, July to September period.

As we lean in there, we have 26% in our market research saying, we will script this product or we have a belief we’re going to script this product. So a language change, I think, will really mean a lot to that 26% that maybe aren’t scripting at this point in time. And our real focus right now is going deeper and expanding more use with the third that have put this into

Jon Block, Analyst, Stifel: their clinics. So language might give you some tailwinds on the commercial side. I do have a clarifying question on label. Think on the earnings call you talked about, look, that’s going to take some time. It’s beyond one year, likely closer to two years.

Is that benchmarked as of the earnings call or is that benchmarked as of label date, if you would? Yes. Got a nine month spread in there. That’s why

Jeff Simmons, CEO, Elanco Animal Health: I say let’s talk about the things that are really material, like international approvals of ZENRELIA. I think that’s going to be what’s material. But you’re thinking about it right. We aren’t going to get into designating the exact time line. And we continue to believe that even with all the changes in the FDA right now, we’ve got good stability around the reviewers.

People ask me that on a common basis. So that’s but I would point to ZENRELIA, there’s three things that matter. This derm category continues to grow double digits. Dollars 1,800,000,000.0 will eclipse $2,000,000,000 With us coming in, the category is only growing. That’s we’re bringing IL-thirty one.

We hope to have that by the end of the year. We have a differentiated competitor product, and we’ll launch that in 2026. Third is international approval. We are expecting ZENRELIA to come into that $600 to $700,000,000 And boy, when you get Europe and UK, you’ve got a very big opportunity. And we intend and we’re hopeful for less restrictive labels.

I never know what you do, but at this point in time, we’re feeling very good. All of that is second half loaded. And then hopefully, a label improvement in The U. S. Would be our intention.

That’s we’re set up well. And I don’t see why in this decade, Elanco can’t be the derm leader or a very major player in derm given our monoclonal antibody background.

Jon Block, Analyst, Stifel: And just to ask for a little further clarity, that was one of the parts coming off the call. I had a little bit of uncertainty was on ZYNRELIA and some of those international markets, the type of label. U. S. Restrictive, Canada seemingly stepped out from The U.

It did. Less restrictive, Brazil less restrictive. In your ongoing dialogues with EU, Australia, you feel again, you never know, but it’s going down more the less restrictive route than U. S. Per

Jeff Simmons, CEO, Elanco Animal Health: Relative to our experiences with the FDA, we’re in a different place on the other markets. But again, we don’t want to be definitive until is there a question?

Unidentified speaker: Please, sorry. Jeff, just on that your optimism for EU, maybe UK less restrictive, is that based on new data that you’re providing them? And the faster way in The U. S, is that based on that same data, not the long version, which is much better? Is that are they all sort of tied

Jeff Simmons, CEO, Elanco Animal Health: to that? Yes. I think you’re thinking about it right. I think Europe has a different approach, a different regulatory process, a little different than a DUFA. Their initial requests were different.

And then I think with our history, we have probably a better approach to the response. And so yes, I would say all of that. We wouldn’t be at this stage saying what we’re saying without what we believe is what they’ve requested and what they’ve asked has given us the confidence relative to the label, but work. It’s the right question. At this point in time, we haven’t really talked about the medium and long term pricing strategy.

Right now, it still is at about 20% discount to the incumbent, and that’s playing nicely. I think the one pill convenience, the price and the efficacy, I haven’t really talked about, but the ZENRELIA efficacy has been very consistent in terms of its differentiated, more response and we got thrown into the tough cases early. But it’s definitely something we will look at. Right now, I want more global approvals in this $6 to $700,000,000 and our pet team internationally has done really well. AdTab is an example.

Might be our best launch we’ve ever had is AdTab, and it’s now going to be a blockbuster in Europe. And that team is ready to launch in really. They’re trained, they’re ready, the sales forces are right sized. We’re ready to go. A lot of differing opinions.

I would say the anecdotes and you’re hearing them and you see them on Chewy and you can go out and look at the commentary, the efficacy and the consistency of the efficacy of this product, ZENRELIA is truly a highly efficacious product. And so that’s bringing the willingness in to say, hey, how do we manage this within a one year, two year regime with a vaccine program? I think there’s much more willingness to determine that. Different approach is taken, but the willingness is increasing given the efficacy.

Jon Block, Analyst, Stifel: That was great. Maybe ten minutes left, let’s see what we can get to. So I do want to pivot to twenty twenty six leverage. And I know we’re not going to get full 2026 guidance this morning, but you did talk to margin expansion next year. Where should our heads be at?

Should it be a function of gross margin expansion? You’ve got these new products that might have with them greater price realization and or you’re also spending with no regrets in 2025 behind some of these launches and we see OpEx leverage coming to the equation next year, both one or the other? Please elaborate.

Jeff Simmons, CEO, Elanco Animal Health: Yes. I think it’s what’s exciting about our margin story is it’s multi levers and a lot of controllables. So one is mix. I think everything but Beauvaire and Beauvaire will get there, but everything in our basket today of innovation is accretive to the current gross margin of Helaneco. So that’s one.

Two is, Grace has come in to manufacturing and really we are looking across the board company wide and saying, hey, Fuller plants, you take our Hanang, France plant that makes Zanrelia, that makes Credelio, now making Credelio Quattro, our absorption factor is really a key driver right now. And you saw that in the quarterly results and a driver. So that’s the second. Now we’re looking at company wide margin. And what Pricewaterhouse did for us is we’ve done it many times is, hey, how do we look at the thresholds of our footprint?

How do we look at gross to net? And PAT continues to be an opportunity to actually manage that difference between gross and net on pricing. That’s another pocket. Picturement is another pocket of opportunity. So look for Bob coming in as a CFO fresh, looking at a company wide margin expansion opportunity.

Now with that, you guys have seen us do this over the years with many acquisitions, margin always comes at a little bit of a cost. Is there a restructuring cost? Is there a get rid of a couple of products and what that does? So we be careful and measured relative to the cost versus the margin. Margin.

But multiple levers, think about it as mix and controllable margin actions would be the two big ones that I think are the opportunity. And you combine that with a just a accelerating growth line with more pet U. S. Pet business, it puts us in a much better position.

Jon Block, Analyst, Stifel: And we had IDEXX up here yesterday, well Zoetis in a bid. It seems like their price realization, if anything, is subsiding a bit. It was sort of hyper pricing back in 2020 ’3, ’20 You were never at their level of price realization. I think it’s like about 2% this year. Can you actually move a little bit the other way, Jeff, because you’re going to have these innovative products out there in 2025, a full year in 2026.

If we look at where Zoetis took price in the past, it wasn’t uniform across the board. It was outsized price specific to innovation. So do you think you can move almost the opposite way within the industry?

Jeff Simmons, CEO, Elanco Animal Health: Yes. I think it’s our time, and we are lapping right now, I’m getting no pricing on these new products. So you’ll get that as you come into 2026, a comparison. Our percentage of our portfolio will be higher innovation. But I do come back though to the simple fundamental, the willingness to spend for something differentiated and valuable continues to be very buoyant and resilient.

I was yesterday talking to Bloomberg and economists and everything is this is the one trend to watch is less kids, the Gen Zs and the alphas, and the willingness to spend the data is very consistent. I’m not worried about vet visits and probably wouldn’t need to be as much as a diagnostic company. But if we execute our innovation and show a differentiation and have strong portfolios, absolutely. And here we are with four minutes to go and we haven’t talked about farm animal, maybe our most valuable part.

Jon Block, Analyst, Stifel: We’re about to get there.

Jeff Simmons, CEO, Elanco Animal Health: And I would say we’re adding a lot of value on the protein side, and that’s a very value based. What we’re doing right now in the cattle industry gives us also the liberty and the ability to take more price than maybe we have.

Jon Block, Analyst, Stifel: And let’s spend a couple of minutes there, and maybe we’ll conclude with with with tariffs if we get there. So, Beauvaire, in your mind, a question of when, not if, and maybe if you want to elaborate. And then let’s quickly pivot to Experior, and let’s make sure we hit on what Experior is doing to the overall portfolio, not just the product.

Jeff Simmons, CEO, Elanco Animal Health: Yes. Dollars 104,000,000,000 in animal protein last year in The U. S, the most in history. We consume more animal protein. The protein animal protein alternatives are down 20%.

And the MAHA report that came out over the weekend shows you need about a gram of protein for every pound of weight of a body. And, so look at cottage cheese growth. Dairy industry just batted $10,000,000,000. We have a tailwind in animal protein and animal health can play a major role in giving consumers what they want, cottage cheese, milkshakes, animals what they need. What we’re seeing with an Experior is you get in a feeding program, you can be the difference between a high percentage of the margin and the EBITDA of these major companies.

So we like the cattle shortage and the cattle herd coming back has helped Experior, helped the portfolio. Our global poultry business, number one in poultry, number one in The U. S. Farm animal, and now Beauvaire is really allowing CPG companies to say, hey, we can help. This next generation is leaning back in animal protein, wants the animal taken care of and wants less environment.

And the money is coming from CPG companies, not the government. That’s that’s the key thing. So Beauvaire will ramp. We doubled cows, watch for that on every earnings call. It will be sticky like Experior.

Nobody that’s gone on to Beauvaire is coming off. We got to lean in. We got to take up the manufacturing capacity a little bit more. But I love Farm Animal because it’s sticky and the ramps are a lot longer and a lot more steady, and it’s really our marketplace.

Jon Block, Analyst, Stifel: And how about for Experior? I mean you’re further along in that ramp and further inflection that we saw in 1Q.

Jeff Simmons, CEO, Elanco Animal Health: Yes. We see a $350,000,000 North American market. We’ll expand that beyond what Elanco does well as we put the analytics with the FEED formulas and we show and demonstrate the value. And again, we see, as we said, a 200% growth in Experior. And again, that’s really kind of our market.

The heifer clearance really allowed more feed yards to say, now I can put it in everything.

Jon Block, Analyst, Stifel: So the 200% number was huge in 1Q. Anything that we should be cognizant of, I think they have for clearance I believe was fall of twenty four is like, look John, it’s all incremental. I mean, I don’t mind if you decel from 200 to 150%, but anything that you want to call out that we should be cognizant of once you begin to lap that later this year?

Jeff Simmons, CEO, Elanco Animal Health: Yes. You more head of cattle. You need more days of duration. You need to continue to look at dose and then price. Those are always the four levers in farm animal, and those would be the things that we’ll be leaning into.

Jon Block, Analyst, Stifel: Okay. A quick one with a minute or so left. Can you talk about what’s going on in Washington? I know that can change by the second as we saw last night. But maybe just the industry working together in hopes of getting an exemption from pharma tariffs and update us there, please.

Jeff Simmons, CEO, Elanco Animal Health: Our animal health agenda, very aligned. All of the major companies, ones you’ll hear from today, we’re all aligned on really two big initiatives. And we have a very agenda that I think is working right now. On regulatory reform, we like the streamlined regulatory efforts, but we will say the FDA has to do better. We are not at the parity.

I mean Europe approved twice as many drugs as The U. S. Last year, and they’re thirteen months faster. So I think that we need a more efficient predictable body both at CVM and CVB. And I think there’s a willingness within that to streamline.

So less is okay if it’s streamlined. And we need predictable. That’s key. And then the second is the exemption. I mean we are different than pharma.

We’re more like feed and food maybe than pharma. We’re a cash based business. We’re smaller. We can help the American economy by the vibrancy of farms and vet clinics. And I believe we are we’re we’re being heard and we’re attempting to be separated from that.

Elanco, let me emphasize, we’ve taken a holistic approach on these tariffs. It’s inside the guidance really. Any scenario we see is inside the current tariff guidance that we put out. And I think you’ve written about that appropriately. If we don’t get an exemption or there are some things beneficial like China, we’ll be given back some of that $25,000,000 of EBITDA that we had from the FX.

Jon Block, Analyst, Stifel: Based on where you were on the FX rate

Jeff Simmons, CEO, Elanco Animal Health: Think you can say, hey, there’s not a lot of scenarios that change. This presentation has now finished. Please check back shortly for the archive.

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