Eli Lilly's Elanco division will pay more than $300 million for Monsanto's artificial dairy cow hormone that increases milk production but faces mounting public concerns over its safety.
The Indianapolis drug maker, which has been investing more heavily in its animal health business in the past two years, said it is ready to take on the task of promoting the BST hormone, called Posilac, as a farming tool that can boost milk supplies for a world hungry for more dairy products.
Posilac opponents point to studies that show cows given Posilac have higher rates of udder infections. They also say the hormone increases a substance, called bovine insulin-like growth factor 1, that has been linked to cancer and is passed on to humans through the milk.
"We are very familiar with it (Posilac), and we are familiar with the controversy," said Elanco spokeswoman Joan Todd after the deal was announced Wednesday. "We've got to feed a growing global population. This is a recognized, safe and effective way to do it."
Monsanto said last week that it was putting the product up for sale after marketing it for 14 years. The genetically engineered protein is injected into dairy cows to boost milk production an average of 15 percent by preventing mammary cell death.
The sale agreement gives Lilly worldwide rights to the product, the Posilac sales force and the sole production plant in Augusta, Ga. Some of the more than 200 Monsanto employees who will join Lilly will be moved to Elanco's offices in Hancock County.
Lilly knows the product well. It has been selling Posilac outside the United States the past 10 years under a marketing agreement with St. Louis-based Monsanto.
Expected to be final in October, the deal is the largest product acquisition Elanco has made. The upfront price amounts to about a third of Elanco's $1 billion in annual sales from all its animal health products. Lilly also will pay Monsanto a portion of future Posilac sales, plus assume royalty payments Monsanto makes to the University of California related to the product.
Food activists who have depicted Posilac as unsafe for cows and for humans who drink the cows' milk vowed to include Lilly in their anti-Posilac campaigns.
"We're definitely going to set our sights on Eli Lilly right now," said Ronnie Cummins, national director of the Minnesota-based Organic Consumers Association. "One of the most hated products in the world is now going to be tarnishing the image of Eli Lilly."