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BUSINESS & PROTEINS: Eli Lilly and Company to acquire Monsanto’s POSILAC brand dairy product and related business



                                  PART 1


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TITLE:  ELI LILLY AND COMPANY TO ACQUIRE MONSANTO?S POSILAC BRAND DAIRY PRODUCT AND RELATED BUSINESS

SOURCE: Monsanto, USA

AUTHOR: Press Release

URL:    http://monsanto.mediaroom.com/index.php?s=43&item=629

DATE:   20.08.2008

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ELI LILLY AND COMPANY TO ACQUIRE MONSANTO?S POSILAC BRAND DAIRY PRODUCT AND RELATED BUSINESS

ST. LOUIS, Aug. 20 /PRNewswire-FirstCall/ -- Monsanto Company announced today that it has entered into an agreement to sell its POSILAC® bovine somatotropin brand and related business to Eli Lilly and Company. Lilly?s animal health division, Elanco, headquartered in Greenfield, Indiana, is the seventh largest animal health company on a global sales basis.

Under the terms of the agreement, Lilly will purchase assets and liabilities of Monsanto associated with the POSILAC brand and related business for an upfront payment of $300 million, plus additional contingent consideration. The transaction will be completed as soon as practical. Additional terms of the agreement were not disclosed. Elanco has been marketing recombinant bovine somatotropin for Monsanto over the last decade outside the United States under a licensing agreement.

?We?re pleased Elanco is acquiring this business and will continue to provide dairy farmers with this important production tool,? said Carl Casale, Monsanto?s Executive Vice-President of Strategy and Operations. ?Elanco is fully focused on animal health and productivity and is committed to the importance of POSILAC in both the domestic and the international marketplace.?

POSILAC bovine somatotropin is an FDA-approved animal pharmaceutical used by U.S. dairy farmers to increase productivity. Since it was first sold in the United States in 1994, POSILAC has become the country?s leading dairy animal supplement. POSILAC safely increases productivity of dairy cows thereby allowing family farm owners to more easily provide for their family and employees, reinvest in their farms, and conserve resources like land, water and energy. Over the past 14 years, more than a half billion units of POSILAC have been successfully and safely used by tens of thousands of dairy producers on millions of cows to produce wholesome, nutritious, safe and affordable milk and dairy products.

About Monsanto Company

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. For more information, please visit the company?s web site at http://www.monsanto.com/.

POSILAC® is a registered trademark of Monsanto Company and its wholly-owned subsidiaries.



                                  PART 2

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TITLE:  LILLY TO BUY MONSANTO?S COW-MILK STIMULATING HORMONE (UPDATE3)

SOURCE: Bloomberg, USA

AUTHOR: Elizabeth Lopatto

URL:    http://www.bloomberg.com/apps/news?pid=20601103&sid=aOBViPDaXYmg&refer=us

DATE:   20.08.2008

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LILLY TO BUY MONSANTO?S COW-MILK STIMULATING HORMONE (UPDATE3)

Aug. 20 (Bloomberg) -- Eli Lilly & Co. agreed to pay at least $300 million for Monsanto Co.?s Posilac, a synthetic hormone used to boost milk production in cows.

The agreement, announced today by both companies, will expand Lilly?s veterinary operations and enable Monsanto, a maker of pesticides and seeds, to focus on genetically modified crops.

Posilac has been on the market since 1994. Lilly, the maker of the antipsychotic drug Zyprexa, gains the U.S. sales force for Posilac and the manufacturing plant in Augusta, Georgia. It also inherits opposition to the hormone from consumer advocates who question its safety and from dairy processors, such as Dean Foods Co., which has labeled its milk as hormone-free.

?You?d assume the controversy is part of the price, so there must be some other reason Lilly wants this asset,? said Charles Anthony Butler, an analyst for Lehman Brothers in New York, in a telephone interview today. ?Maybe it?ll help them sell other products to those farmers. Animal health as a component for all pharma companies is a business they want to grow.?

Monsanto, of St. Louis, the world?s biggest seed producer, said earlier this month it planned to sell the dairy hormone business. It doesn?t disclose sales or profits from Posilac. Lilly, based in Indianapolis, said Monsanto will receive ?contingent consideration? in addition to the $300 million. The purchase is expected to be completed this year and won?t change the forecast for 2008 earnings, Lilly said.

Monsanto rose $5.22, or 4.6 percent, to $118.08 at 4:05 p.m. in New York Stock Exchange composite trading. Lilly fell 39 cents to $47.41.

 

10 Pounds a Day

Posilac, known chemically as recombinant bovine somatotropin or rBST, is used on about one-third of U.S. dairy herds, according to Monsanto. It boosts the average cow?s milk production by about 10 pounds a day, or about 15 percent.

Though Posilac is not sold in Canada or parts of the European Union, the Food and Agriculture Organization of the United Nations said in 1998 that the hormone is safe.

The Center for Food Safety, an advocacy group, says the drug causes increases in the risks of lameness, udder infections, and infertility in cows and may pose health risks to humans. The group has said it wants the Food and Drug Administration to remove the drug from the market ?through all available legal means.?

Monsanto Chief Executive Officer Hugh Grant is selling smaller, animal-agriculture units amid surging sales of crop products such as Roundup herbicide and engineered corn and soybean seeds. Monsanto in September sold its Choice Genetics unit, which mapped swine genes.



                                  PART 3

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TITLE:  LILLY TO BUY MONSANTO ARTIFICIAL DAIRY HORMONE

SOURCE: Reuters, UK

AUTHOR: Ransdell Pierson

URL:    http://www.reuters.com/article/marketsNews/idUSN2038983320080820

DATE:   20.08.2008

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LILLY TO BUY MONSANTO ARTIFICIAL DAIRY HORMONE

NEW YORK, Aug 20 (Reuters) - Eli Lilly and Co on Wednesday said it would pay $300 million for global rights to Posilac, the widely used Monsanto Co artificial hormone to boost milk production, whose safety has been questioned by some consumer advocates.

Indianapolis-based Lilly, like many rival drugmakers, has an animal health business. Its Elanco unit has exclusively been selling Posilac overseas for Monsanto over the last decade, under a licensing agreement.

But Monsanto earlier this month said it wanted to sell its dairy hormone business, a move that came after many retailers and dairy industry participants across the United States rejected the biotech agricultural product due to consumer concerns.

?Since it was first sold in the United States in 1994, Posilac has become the country?s leading dairy animal supplement,? Monsanto said in a release.

Monsanto, an agricultural products company that is also a global leader in biotech crops, said Posilac has safely boosted milk production in millions of cows around the world.

Lilly said Posilac would expand its line of animal health products, provide dairy farmers more options and give consumers affordable choices.

?We remain focused on the health and care of the cow in working with farmers to increase global milk supply,? Lilly said in a release.

In addition to its $300 million upfront payment, Lilly said it would pay Monsanto additional contingent consideration for Posilac, the brand?s U.S. sales force and its manufacturing plant in Augusta, Georgia. The deal is expected to close near the beginning of the fourth quarter, Lilly said.

Monsanto has battled with consumer activists for more than a decade over whether Posilac, also known as rbST or rBGH, is harmful to human and animal health. The debate has heated up over the past two years, as a growing number of dairy and food companies have demanded that milk be free of Posilac.

In August 2007, Kroger Co, one of the nation?s largest retail grocery chains, said it was switching to supplies from cows free of synthetic hormones.

Among others now rejecting rbST-milk is Dean Foods Co., the nation?s largest milk processor and distributor, and the Starbucks Corp chain of coffee houses.

For more than a decade the European Union also has rejected imports of meat derived from hormone-treated cattle, sparking a long-running World Trade Organization dispute. (Editing by Maureen Bavdek)



                                  PART 4

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TITLE:  ANTI-POSILAC CELEBRATION IS PREMATURE

SOURCE: St. Louis Post-Dispatch, USA

AUTHOR: David Nicklaus

URL:    http://www.stltoday.com/stltoday/business/columnists.nsf/davidnicklaus/story/59CD50594E3F9818862574AD000C17FD?OpenDocument

DATE:   22.08.2008

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ANTI-POSILAC CELEBRATION IS PREMATURE

When Monsanto announced two weeks ago that it was getting out of the milk-hormone business, anti-biotechnology groups were quick to take credit.

Greenpeace declared the exit ?a big victory for consumers.? The Center for Food Safety crowed that Monsanto was leaving ?the failing artificial growth hormone business.?

Now that the rest of the story is in, the groups? victory celebrations seem premature. Not only did Monsanto get a good price ? $300 million plus an opportunity to participate in future profits ? but it sold its Posilac business to a company that?s deeply involved in animal agriculture.

The buyer, Eli Lilly?s Elanco division, sold nearly $1 billion worth of animal medicines, feed additives and related products last year, including other ?productivity enhancers? for the dairy industry. The company said the deal ?means farmers have continued access to this vital technology, and that consumers can continue to have access to affordable, wholesome milk.?

For its part, Monsanto has sharpened its focus on genetically modified seeds. The anti-biotech crowd doesn?t like those products, either, but they?ve been phenomenally successful for the company. By helping corn, soybean and cotton farmers fight pests and increase yields, Monsanto has been able to triple its profits, and more than triple its share price, in the last three years.

This isn?t a company, in short, that needs to retreat from anything. ?Essentially, we are going to focus on what we do best,? Monsanto spokeswoman ­Danielle Jany said in explaining the Posilac sale. ?We?re really excited that it is going to a business focused on animal agriculture and to a business that has a history with the product.? Elanco has distributed Posilac outside the United States for more than a decade.

To be sure, controversy has limited sales of the product. Posilac, also known as recombinant bovine somatotropin or rBST, is banned in Canada and many European countries. Some big U.S. milk producers, such as Dean Foods, don?t use it.

Consumer skepticism has led some states to allow milk to be labeled as rBST-free, even though Monsanto complains that such labels are misleading. All available scientific evidence, the company says, shows that milk from Posilac-treated cows is indistinguishable from any other milk.

Monsanto doesn?t break out Posilac?s financial results, but Jany says it?s a profitable and growing business.

The stock market seemed to react positively to the $300 million sale price: Monsanto?s shares rose nearly 5 percent on Wednesday, the day the deal with Elanco was announced.

?I think strategically it?s a good move,? said Ben Johnson, an analyst with Morningstar in Chicago. ?Financially, it doesn?t move the needle much, but $300 million is a fair price considering some of the headwinds the business is facing. They?ve got plenty of higher-growth, higher-margin opportunities available to reinvest that $300 million in.?

Is a stronger, more focused Monsanto really what the anti-biotech crowd wants? Is putting Posilac in the hands of Elanco, which knows the dairy market well, going to slow the hormone?s sales or accelerate them?

Josh Brandon, a Vancouver-based agriculture campaigner for Greenpeace, vows to continue the fight against rBST. ?They?ll face similar opposition and consumer resistance across North America,? he said of Elanco. ?They?ll be looking back on this in a year or two?s time and saying that it was a mistake.?

Those are brave words, but the folks at Eli Lilly are no dummies. They?ve just placed a nine-figure bet on the notion that this product is in the food chain to stay.



                                  PART 5

------------------------------- GENET-news -------------------------------

TITLE:  FARMERS PLEASED MONSANTO IS GETTING OUT OF COW HORMONE BUSINESS

SOURCE: Canadian Broadcasting Corporation, Canada

AUTHOR: 

URL:    http://www.cbc.ca/consumer/story/2008/08/22/monsanto-sale.html

DATE:   22.08.2008

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FARMERS PLEASED MONSANTO IS GETTING OUT OF COW HORMONE BUSINESS

A group of Ontario farmers is claiming victory after Monsanto Co. agreed to sell its Posilac brand of synthetic cow hormones to drug maker Eli Lilly and Co. for $300 million.

Dave Mackay, president of the Renfrew County chapter of the National Farmers Union (NFU) and a former dairy farmer in Beachburg, Ont., told CBC News Friday that the sale is good news. Mackay, now a sheep farmer with a flock of 300, speaks for 150 farmers in Renfrew County.

?We think it?s a bit of a victory,? he said from his 200-acre farm near Pembroke, Ont. ?We are pleased. I think we have won. Obviously, these guys are moving on.?

Monsanto, an agricultural chemical company, announced the sale on Wednesday. It said the Posilac brand will become part of Lilly?s Elanco animal health unit.

Posilac is the trade name of recombinant bovine somatotropin, or rBST, a hormone that increases milk production in cows. Monsanto has called it the leading dairy animal supplement in the U.S., with more than half a billion units used by dairy farmers since the product was approved for use in the U.S. in 1994.

Health Canada banned the use of rBST in 1998.

Mackay said he thinks Monsanto is getting out of the hormone business because of ongoing public opposition.

He said the NFU opposed the introduction of the hormone and took part in a national campaign, involving about 60 organizations, to convince the federal government to ban its use on Canadian dairy farms.

He said the campaign in the 1980s and 1990s raised public awareness of the dangers of rBST and helped convince Health Canada that it should not be used in this country.

The hormone, manufactured from genetically modified bacteria, is injected into dairy cows once or twice a month to boost their milk production. The increased production is said to cause cows to have a higher rate of illnesses, including mastitis, udder infections, and digestive problems.

Mackay said a group of NFU farmers travelled to the U.S. in the late 1990s to assess the health effects of the hormone on animal health. They interviewed farmers who use rBST on their herds.

?They said it burned the animals out,? he said. ?We think it affects the health of the cow, they don?t breed back, it causes mastitis problems, the cows become disposable.?

Mackay said on a recent trip to the U.S., he found that many farmers with small farms are no longer using the hormone because it is too hard on the cows but it is still popular on large farms with thousands of animals.

The NFU will continue to monitor the use of the hormone south of the border even though it is in the hands of Eli Lilly.

?We will keep an eye on them,? Mackay said. ?These guys have big money for lobbyists and scientists. They might try to reintroduce it [in Canada].

?They have a lot more money to spend than a bunch of farmers from Renfrew County.?



                                  PART 6

------------------------------- GENET-news -------------------------------

TITLE:  IT?S BUSINESS AS USUAL FOR FARMERS USING POSILAC

SOURCE: Lancaster Farming, USA

AUTHOR: Chris Torres

URL:    http://www.lancasterfarming.com/node/1419

DATE:   15.08.2008

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IT?S BUSINESS AS USUAL FOR FARMERS USING POSILAC

Some Fear Ramifications From Monsanto Sale Announcement

Monsanto?s decision last week to sell its Posilac business has been met with disappointment and fear from farmers who say they use the product to more efficiently run their business.

The company announced last week that it was getting out of the recombinant bovine somatotropin (rbST) business, even though, according to a company representative, the business was ?growing? and profits from the product have been increasing.

Danielle Jany, spokesperson for Monsanto, said Monday that the company?s focus has shifted to improving it?s genetically modified (GMO) crops business and that the decision to sell Posilac was in no way a result of increased scrutiny of the product by consumers and retailers.

Last year, the company sold it?s swine gene business, Choice Genetics.

?It really comes down to our core business,? Jany said. ?Posilac is a positive and successful product and we hope to reposition it with a successful buyer.?

Even though the company hasn?t found any suitors, Jany said Posilac would be an attractive investment for any company willing to buy it.

Monsanto has a policy of not releasing the exact number of dairy farmers using the product, citing privacy issues. However, Jany did estimate that the product is used on about one-third of the dairy herds in the country.

The rbST issue has generated a lot of controversy at a time when the local and ?sustainable? ag movement has grown and more dairy processors have demanded milk be labeled to differentiate milk produced from cows not injected with the hormone.

Many countries have even banned the use of the hormone, pending more testing on its long term effects.

Posilac, the brand name for rbST, first came on the market in 1994.

Farmers in the area said they received notices last week by mail and by local representatives of the company of the decision to sell Posilac. Company officials assured farmers that the product would still be available for them to use.

Most say it is business as usual. But some can?t help to think of a future without Posilac and what they would have to do to keep their operations going.

Alfred Wanner of Wanner?s Pride and Joy Farm in Lancaster County said he has seen daily production from his 600 cows increase by eight to 10 pounds per cow as a result of using Posilac.

He said he would have to increase his herd by about 75 cows to maintain the kind of production he has now.

Logan Bower, a dairy farmer from Perry County and president of the Professional Dairy Managers of Pennsylvania (PDMP), questions the company?s decision in light of the product?s success.

?Big business is buying and selling all the time. But I think this is some sort of signal. What kind of signal it is, I don?t really know,? Bower said, adding that he would have to add at least 35 more cows to his 500 cow operation in order to maintain his current production.

With dairy prices dropping and his input costs increasing, dairy farmer Rod Hissong of Mercer County doesn?t like the idea of possibly not being able to use Posilac to maintain his herd?s production.

?I just can?t imagine in today?s market trying to deal with that decrease in milk production,? Hissong said. ?I hope to keep using it as long as I can. But it?s a scary thing.?

Duane Hershey, a 500-head dairy farmer from Chester County, said he would likely have to increase his herd size if he wasn?t able to use rbST but cringes at the idea of having to expand his farm any further.

?I don?t know if I would want to expand on this site much more than right now,? Hershey said. ?We would have to milk more cows to produce the same amount to pay the bills.?


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