A new name in the sector, Elanco Animal Health (NYSE:ELAN), recently appeared in the Fund as the result of its spin-off from Eli Lilly and Co (NYSE:LLY). It holds a strong market position with a diverse product portfolio across both production animals (cattle, pigs, etc.) and pets, giving the company an attractive durable competitive advantage. In addition, the animal health and veterinary medicine market enjoys greater pricing power and less competition than in the pharmaceutical market for humans. With the spin-off, management has the opportunity to improve margins as a smaller standalone company. As a result, we expect strong earnings growth. We also expect to add to our Elanco position over time.
From Mairs and Power (Trades, Portfolio)s Growth Fund's second-quarter 2019 commentary.
