Since its September 2018 initial public offering, Elanco Animal Health Inc. has continued to evaluate its capabilities, structure and staffing to meet its goal of being an agile, stand-alone company focused exclusively on animal health and delivering on its Innovation, Portfolio & Productivity strategy, according to an announcement.
As part of this effort, Elanco said it is implementing actions to enhance productivity and drive efficiency. The company announced Sept. 30 its intent to eliminate approximately 250 positions across multiple locations and functions. This includes exiting research and development operations in Prince Edward Island, Canada; ceasing certain operations at its site in Wusi, China, and streamlining operations at the Speke, England, location.
The proposed actions are another step in Elanco's journey to build a stronger, more competitive animal health company and build on its productivity agenda, which has included consolidating suppliers and contract manufacturers as well as rationalizing products, the company said.
“Our board and management team continually assess our organization to identify and execute opportunities to become a fit-for-purpose animal health company,” said Todd Young, Elanco executive vice president and chief financial officer. “While decisions that affect our team are difficult, today's action will tighten our focus, centralize and strengthen key capabilities and increase our agility to quickly meet the changing needs of our customers in a dynamic, global market. At the same time, these actions advance our productivity agenda and our margin expansion efforts, driving greater efficiency within our global footprint and allowing Elanco to focus investments in our growth areas.”
This restructuring will cost approximately $50 million, with roughly $30 million related to non-cash asset write-downs. Elanco said it expects to realize at least $12 million of savings in 2020 from this restructuring. An estimated restructuring charge of $38 million will be incurred in the third quarter of 2019, with the remaining $12 million to be incurred in 2020.
Elanco said it continues to make significant progress on its efforts to build new capabilities and systems required to complete its standup as a fully independent business.
Elanco is a global animal health company that develops products and knowledge services to prevent and treat disease in food animals and pets in more than 90 countries.