The new owner of a Dundee vaccine plant says it was drawn to the £3.2 billion acquisition because it needs to increase manufacturing capacity.
US-based Prozac-maker Lilly bought Novartis’ Dunsinane Industrial Estate animal health unit as part of a massive deal which saw it snap up a total of nine manufacturing plants and six research and development units during a period of consolidation in the pharmaceutical sector.
But it did not offer guarantees over the future of a workforce understood to run to around 100, and revealed plans to make cost savings running to hundreds of millions of dollars.
Now the group has revealed an expert “integration team” will run the rule over the Dundee operation before deciding whether it will be folded into its own animal health business, Elanco.
“The two companies’ capabilities are complementary and, as announced in the press release, Lilly expects to achieve estimated cost savings of approximately $200 million per year within three years by improving efficiencies and reducing costs across both Elanco and Novartis Animal Health,” Lilly said in response to questions from Courier Business.
“We have a good degree of flexibility on exactly how we accomplish this and while it is premature to speculate about any specific plans, part of our interest in the deal was the expanded manufacturing capabilities it offers.
“An integration team will assess needs and capabilities to ensure the most successful company in the future.”
The company had earlier said employees would benefit from “joining a large, global business” but warned it was too early to say what the integrated entity might look like.
Chairman and chief executive John C Lechleiter said the combination would move Elanco into the industry’s “top-tier” and create value for shareholders.
“Combining these two great companies will enable us to provide more diversified brands, reach more market segments, expand our global footprint, and strengthen our pipeline, capabilities and expertise,” Lilly added.
“Best of all, it will enable Elanco to better fulfill our important mission of enriching people’s lives through safe, nutritious, affordable food and healthier pets. And that directly supports Lilly’s mission to make life better for people around the world.”
The deal was announced as Novartis also revealed a multi-billion pound tie-up with GSK, designed to create a new joint venture focussed on the consumer healthcare market.
Meanwhile, GSK sold its cancer products business after reaching a $9.5bn agreement with Novartis and picked up its rivals global vaccines division for a little over £4bn.