April 27, 2022
Elanco and DSM announce alliance in US for Bovaer® feed additive for cattle
Elanco Animal Health Incorporated and Royal DSM have created a strategic alliance connecting both companies to address the mitigation of climate change's impact by reducing greenhouse gas emissions from farming.
Elanco has secured the exclusive US licensing rights to develop, manufacture and commercialise Bovaer® for beef and dairy cattle.
Bovaer® is DSM's methane-reducing feed additive for beef and dairy cattle and is already available in Europe, Brazil, Chile and Australia. More than 50 peer-reviewed studies and 48 on-farm trials in 14 countries show Bovaer® consistently reduces enteric methane emissions by approximately 30% for dairy cows and even higher percentages for beef cattle.
DSM and Elanco intend to provide farmers, dairy and beef companies, and retailers with a solution to substantially lower the carbon footprint of beef and dairy production, supporting the animal protein industry's environmental, social, and governance (ESG) efforts and helping secure a sustainable future for the planet.
Both companies' strategic alliance is expected to enable them to maximise the opportunity for the product in the US market, once approved, while also nearly doubling previously announced Bovaer® production capacity globally.
Elanco will be responsible for the US approval process, commercialisation strategy and product supply, supporting DSM's supply in markets outside the United States. Elanco will assess and evaluate the regulatory submission and manufacturing options with the intent to bring Bovaer® to the US market as quickly as possible.
"We are excited to partner with DSM to start the process of bringing this game-changing innovation to US livestock producers," said Jeff Simmons, president and chief executive officer of Elanco. "It will further strengthen Elanco's efforts to create the livestock sustainability market and the next era of value for farmers by adding to our efforts to reduce, measure and monetise emission reductions, including Experior™, Uplook™ and Athian. We are eager to work with regulators to bring a unique innovation like DSM's Bovaer® to the US market as quickly as possible to support farmers and positively impact the climate crisis."
Geraldine Matchett and Dimitri de Vreeze, co-CEOs of Royal DSM, commented: "This agreement marks an important milestone for DSM, Elanco and the climate change mitigation efforts of the US. We believe Elanco, as a company that shares our determination to revolutionise the sustainability of the cattle industry, is the ideal partner to help us increase and accelerate the total impact of our game-changing feed additive by bringing us closer to customers across the US.
"This alliance will help us realise Bovaer®'s potential as a powerful solution with a significantly positive impact on the planet. In addition, and fully aligned with our purpose-led performance-driven strategy, the alliance enables us as DSM to monetise our long-term innovation faster."
With an estimated global market opportunity for livestock methane reduction of US$1 billion to US$2 billion, Elanco expects Bovaer® to have record annual revenue potential in excess of US$200 million in the US market with initial contribution by mid-decade.
The alliance is not expected to impact Elanco's previously stated financial commitments.