Indiana pharmaceuticals giant Elanco Animal Health has sold its Prince Edward Island operation, a stalwart of the province’s life sciences cluster, to Merck & Co. for US$1.3 billion, or C$1.75 billion.
Elanco’s business unit for aquaculture pharmaceuticals, which began as one of P.E.I.’s earliest startups in the 1980s, employs more than 140 people on the island and generated about $175 million in revenue last year, the company said in a statement.
Originally called AquaHealth and later renamed Elanco Aqua, the business was spun off from drugmaker Connaught Labs, a former public health entity that at the time was still newly privatized. It has since grown to employ a total of 280 people across its two bases of operations in Charlottetown and Dong Nai, Vietnam. It was also one of the founding members of industry group the P.E.I. BioAlliance in 2005.
Among the intellectual property Merck is buying is Elanco Aqua’s suite of vaccines for warm water fish, as well as DNA vaccine technology that can act as a platform for developing novel fish vaccines.
Elanco, meanwhile, was founded as part of Eli Lilly and Company in the 1950s, before being spun off in 2019. The veterinary pharmaceuticals-maker brought in more than US$4.3 billion of revenue in the fiscal year ended Sept. 30, 2023. Its shares trade on the New York Stock Exchange, with a market cap of just under US$7.8 billion.
“Following a robust process over the last year, Merck Animal Health emerged as the right strategic buyer for the aquaculture business,” said Elanco CEO Jeff Simmons. “I am confident they will continue to deliver value to the aqua customers that rely on these products and create opportunities for our team to continue to grow."
Indiana-based Elanco expects the sale of the aquaculture business unit to generate between US$1.05 billion and US$1.1 billion after tax, some of which it will use to pay down existing debts.
“The addition of this innovative portfolio of cold water and warm water aqua products across vaccines, anti-parasitic treatments, water supplements and nutrition, will establish Merck Animal Health as a leader in aqua,” said Merck Animal Health President Rick DeLuca.
The Elanco buyout is part of a broader push by Merck to expand its aquaculture operations. In 2019 it bought Norway’s Scan Aqua AS, as well as France’s Antelliq Group.