Elanco Animal Health Incorporated (ELAN: NYSE) and Royal DSM have created a strategic alliance connecting two leading, sustainability-focused companies to address one of society’s most significant opportunities of the decade, mitigating climate change by reducing greenhouse gas emissions from farming. Elanco has secured the exclusive U.S. licensing rights to develop, manufacture and commercialize Bovaer for beef and dairy cattle.
Bovaer is a first-in-class methane-reducing product for beef and dairy cattle approved in Europe, Brazil, Chile and Australia. As part of its authorization in those countries, 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 cattle1.
DSM and Elanco intend to seek U.S. authorization for the product 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 ESG efforts and helping secure a sustainable future for the planet. Based on published research, the methane reduction from feeding a million cows Bovaer is equivalent to planting 45 million trees or removing 300,000 cars from the road. With 9 million dairy cows and 14 million beef cattle on feed in the U.S. alone, the product, if authorized in the U.S., would contribute to a significant and immediate reduction of the environmental footprint of meat and dairy products, supporting the Global Methane Pledge to cut emissions 30% by 2030.2
The strategic alliance is expected to enable both parties to maximize the opportunity for the product in the U.S. market, once approved, while also nearly doubling previously announced Bovaer production capacity globally. Elanco will be responsible for the U.S. approval process, commercialization strategy and product supply, supporting DSM supply in markets outside the U.S. Elanco will assess and evaluate the regulatory submission and manufacturing options with the intent to bring Bovaer to the U.S. market as quickly as possible.
Already the State of Indiana, for example, has indicated its support for expanded manufacturing investment in the state as it continues to build public-private partnerships supporting the state’s growing agriculture economy.
“We are excited to partner with DSM to start the process of bringing this game-changing innovation to U.S. livestock producers,” said Jeff Simmons, president and CEO 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 monetize 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 U.S. 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 U.S. We believe Elanco, as a company that shares our determination to revolutionize 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 U.S. This alliance will help us realize 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 monetize our long-term innovation faster.”
With an estimated global market opportunity for livestock methane reduction of $1 billion to $2 billion, Elanco expects Bovaer to have blockbuster annual revenue potential in excess of US$200 million in the U.S. market with initial contribution by mid-decade. This alliance is not expected to impact Elanco’s previously stated financial commitments.