Good afternoon, everyone. Welcome to day one of Bank of America Healthcare Conference in London. My name is Lu, and I am part of the U.S. Life Science Tools. We are very fortunate to have Jeff Simmons with Elanco Animal Health, President and CEO. Maybe Jeff has some opening statement to begin with, and then we can go from there.
Yeah. We will obviously note the disclaimers that we normally do in a conference like this. Thanks to Bank of America. It has been great to be in Europe with a lot of our customers and traveling to a lot of our operations here and to be able to have the opportunity here with investors. So thanks for the interest. I would just make a couple comments. We noted our eighth year anniversary as an independent company coming out of Lilly on Friday. It has been a very intentional journey as we have stood up, as we have acquired Bayer, as we have built an omni channel, built a pipeline. We have been very focused the last three years, especially on growth, innovation, cash.
We just finished a great quarter where we delivered 10% reported growth that came from Farm Animal Pet for a 50/50 split, U.S. International, 50/50 price volume.
So we really had high-quality growth that came from the quarter. I think the second priority is all around innovation. We have got a basket of six innovations, six blockbuster products that are in big markets where we are in early days, but we have a clear differentiation. We believe medical differentiation that is taking really great share. Zenrelia, Quattro, Experior, across a lot of markets. Now as I am out here traveling, we are just starting to globalize those innovations. Then third is cash. We have delevered the company after acquiring Bayer. We were 6 x- 7x levered. We will be at approximately 3x by the end of the year, headed into the 2x next year. We know that will unlock even more investors. Then in December, we had an investor day to talk about the next three years.
We have been a steady beat raise per quarter the last three years. The next three years, we have an algorithm where we have committed to mid-single-digit revenue, high single-digit EBITDA, low double-digit EPS, $1 billion of cash created between now and 2028, margin expansion to occur year-on-year, and the deleveraging that will get us into the two. Then a pipeline. Today, we have a pipeline, a basket of six innovations we are launching, but we have 15 projects in clinical development now that are blockbuster potential products. We have had no attrition since December, and we are committing to five to six coming through that pipeline of those 15 between now and 2031. That is a little bit of a summary. Growth, innovation, cash. Last three years, next three years, durable. We have seen good response from the market and we are in a really good place.
I think animal health is a $40 billion industry headed to a $60 billion industry. We are not only going to get market share growth, but we really like the market growth.
Great. That is a great starting.
Okay.
You put out a press release last week. Some mentioned the price gain, quarter to today versus Q2.
Yeah.
Maybe we can start from that there, given that the pricing has been a big topic for the quarter. Can you maybe just talk a little bit about that, and how do you think about the pricing dynamic in the market right now? What do you see in the market, especially from the competitor actions?
I think we got to stick with facts here, right, and what's happened. First of all, animal health last year grew 7%, 10% Farm Animal, 5% in Pet Health. First semester this year, first six months, we grew 2% in price and growing high single digit overall in the business driven by innovation. 10 of the 12 companies in animal health grew in the first semester. Most all the major markets globally grew. Derm, para, pet, pharm all grew. I start with just that growth overall. When you look at specifically price is definitely correlated to value in our business.
What we're seeing is we announced in that release that in July and August, our prices actually accelerated. We're seeing that because of the medical differentiation we have in markets that matter to pet owners. Pet owners today, we surveyed at the end of May 1,400 pet owners in the U.S., and 86% said, "We will spend the same or more for health." There is a backing down on food, supplements, hard goods, but not for health. If you've got medical differentiation, we're proving that we can take price, and we're seeing that. We see a responsible market. There's no price war going on. There's always targeted promotions, probably more with corporates than general practices. With differentiated innovation, you can take price and take share.
Okay. That is great. I guess when you talk about the channel between the corporate and general, do you expect to change in the next maybe second quarter, given that contract does not renew all at the same time, you are probably going to see a little bit more dynamics in the future?
I am meeting with some corporates here in Europe, there are some here as well. I think the corporate market in the U.S. and U.K. are the primary corporate markets. Today, about a 1/3, a little less than a 1/3 of the clinics. There are 30,000 clinics in the U.S. A little less than a 1/3 are corporate or conglomerate group purchasing. The U.K. is probably a little higher than that. But what I would tell you is we are very under-indexed with corporates.
I think the big message on Elanco is corporates are an area of opportunity, but it is not a market that we need to drive growth over the next few years. I think that corporates, just like other practices, they want differentiated medicine. They want the itching dog to stop itching, they want the ticks to be taken care of. That is where we are spending a lot of time is medical differentiation and building brands with pet owners. When pet owners want their brands, and today they are walking into a vet clinic, is more aware and have more information than they have ever had.
That puts us in a good position. I would back up, though. I think what is more important is we acquired Bayer six years ago to do something that is now playing out really well.
We bought Bayer because they had OTC products in pet health, 1/3 of pet owners don't go to the vet, and they buy OTC. That market continues to grow really nicely. Elanco's one of the only companies in that market. Chewy, Amazon, Walmart have become. We are the number one animal health company to them, and that's probably the more price sensitive. So we can offer more pet owners more products at more price points than any other company. So we are able to address even parts of the market that might be a little more price sensitive.
Okay, that's very helpful. So let's move on to more the product category specific. Quattro has been pretty strong performance so far. I am wondering what is really driving the growth and then how do you see that going? Clinical profile, DTC investment or anything you want to highlight.
I have to stop on Quattro and just say, because I know there's a lot of investors that spend a lot of time in pharma. I was an officer for Lilly. I was inside of Lilly running animal health, but for 10 years inside of Lilly. So I had an opportunity to have a front row seat as the GLP-1s were being developed and everything, but to contrast human and animal health. But there is one common barrier, one common thread, and that it's not only is it regulated and science-based, but medical differentiation matters. And people will pay for medical differentiation, whether it's for their animals or for themselves. And that really matters. So what's happening today, and I will say 30 years of growth in animal health. We've grown for 30 years in a row, 5%-6%, 2% price.
This is one of the most durable industries that exists today. But I think it's really important, Lu, to emphasize when someone enters a market with something differentiated, it takes share, and Quattro is taking share. With mostly just in the U.S. business right now, we've picked up more than 50% of the clinics. It was the fastest blockbuster we've ever created in 71 years, and it's because it has four dimensions of differentiation. It's the only pill you can give a dog for parasites that has four active ingredients. It covers the broadest coverage with tapeworm. It has the fastest tick kill compared to another competitor. It controls heartworms on month one, not through month six. And it's palatable. People, vets want the dog to be able to take it, not roll it up in bologna or peanut butter. Five dimensions of differentiation that we see.
We believe we've got the best medicine. We've captured half the clinics in the U.S., and it's moving to first-line treatment. This will be Elanco's biggest drug we've ever created in 70 years. It's in a $6 billion para market, $2 billion oral. Now that $2 billion, we believe that we're in early innings. We said we're over $100 million, but we're really early with what we think is best medicine.
Yes. It'll be. People have asked me about international today. We'll start to roll it out internationally. We hope to bring it here to the U.K. and Europe next year. So it will be a growth driver in 2027 as we take it internationally.
I guess let's sticking to that point. There were so many different individual markets in Europe. You've recently been to Brazil as well, so maybe just talk a little bit about what is your international strategy, how do you attack each of your markets?
Bayer gave us scale and R&D, gave us scale in all the affiliates. So we're in all the major countries. We would say today we have the right, we say SG&A. We've got the right S, we've got the right sales organization. We've been building it for other innovations over the last five years. So we've got the right sales force in all the major countries. Think Europe, Japan, Australia, U.S., Canada are the big ones. The emerging markets like Brazil and others, East Europe are growing. So we've got the right sales. It will be the promotional activity. Where our spend will come will be more in marketing and promotion. But no, we've got the right infrastructure. We're rolling it out. Zenrelia is a great success. We have brought Zenrelia as fast as any product to the other 40-some countries, and it's doing extremely well.
That is a good way to pivot to derm.
Yeah.
Zenrelia. The first-line usage has actually increased from below 20%, and right now to more than 40% of the users just in one year. What is really driving the shift to prescribing behavior and how much one way that you expect that to continue?
Yeah. Let us just back up, back to the, "Hey, our market is growing. What is happening in animal health?" This is one of the most attractive markets in all of animal health. An itching dog is the number one reason people go to the vet. I say the only way the animal can the one thing an animal can self-diagnose. But it is what vets have to do. If you think about an itching dog walking into a clinic, and I have had it with my family, it is like, "Get that dog to stop itching." Efficacy prevails. If the dog keeps itching, what it will say is, hey, they will change vet after the second visit if the dog does not stop itching. They will try something else. This market is $2.5 billion. Internationally, it grew 9% in the first half, so it is an unsatisfied market.
Zenrelia has come in and very quickly taken share. The reason, I have never seen, like when I was in Brazil, we were over 50% market share in 18 months after two incumbent products had been there over a decade. Why? Because if you stop itch. In our press release that we put out last week, we also, when I shared on the news this morning, this hotter weather in Europe, pollen up, itching has actually, the season has gone from three or four months to five, six, seven months. The season has expanded with the weather change. The itching dog matters and Zenrelia has become a product that has high efficacy. It started as maybe second-line treatment. It is now in over half the clinics in the U.S., 40% of those are using it first line, and we see those numbers climbing.
We are picking up 400- 500 clinics a month from usage, and that has been a big driver. We are in 44 countries outside the U.S. Here in Europe, there is another competitor that has come in.
Right.
We launched at the same time, and we announced in that press release, we picked up 10 points more of market share in the first half here in Europe, while the new competitor has picked up two. We like our efficacy, and now we are coming with another product, Befrena in the U.S., which will be two products in this market.
How do you expect those two products to work together?
Yeah. You've seen about a 60/40, 70/30 split of the JAK product, the pill you take home, to the, what we say, the allergy shot that lasts four to eight weeks. Befrena has some differentiation to the product that's in the market today. So it's a monoclonal antibody, and the label in the U.S. is six to eight weeks of control, compared to the incumbent, which is four to eight weeks. Surveying the U.S. veterinarians, 85% said they want that product right away. The demand is far surpassed supply, so we're ramping the monoclonal antibody supply to have full supply first half of next year. So it'll be a big growth driver in the U.S. next year. If you think about a $2.5 billion market, 30%-40% of the market is mAbs. The other is the Zenrelia, the JAK market.
Is that the manufacturing capacity build slower than you expected, or just in line, or how should we think about that? Are you worried about you're not going to have enough capacity or vice versa?
Yeah. It's a good problem because right now we're 24/7 manufacturing for Zenrelia, and we're ramping against a bigger demand line. We're a year out forecast of demand now. There's a lot of people that want Befrena right now. Remember, the other two major competitors in animal health don't have the monoclonal antibodies yet. So we're the second company that's come, and we've got them differentiated. Manufacturing is common with mAbs to scale the bioreactors. We've gone from the 200 L to 2,000 L. We're scaling to the 5,000 L. Things are tracking nicely. It's just more of a demand problem than supply.
Okay, great. Back to Zenrelia. I think you have an FDA submission plan. There was some potential label today. Maybe just talk a little bit about that, and then what will become of the impact from it?
Yeah. We keep adding countries. We are in around 45, 46 countries today. We have a clean label in all international countries, including Canada. U.S. had a boxed label on it where trials were required to be at 3x the dose with vaccine-naive dogs, and the titer reaction was the question. We ran a booster study that has been helpful to a lot of veterinarians. We have gotten rid of persistently infected with PCR data. Now we are running a trial to continue to improve. We should finish that trial at the end of this year, which would put us on pace for a six-month review middle of 2027. We could see further changes to the label potentially, middle of next year. But I step back and say we are 24/7 manufacturing.
It is probably the fastest growing product we have ever had in seven decades as a company, and it is a market that is growing. People, I think what is probably misunderstood about Elanco is even with all the questions about animal health is we are early innings here. We are $100 million in on a $2.5 billion market growing at 9% with two differentiated assets.
The same with Quattro, a $2 billion broad spectrum endectocide market still growing globally, and we are $150 million in with what we believe is best medicine. We are set up well. We will scale the manufacturing and continue to support the products.
Maybe stepping back, I think in the U.S. there are lots of concerns on the web visit, utilization trend, that kind of stuff. Are you worried about dog versus cat dynamics.
Yeah.
Maybe just talk about what is the long-term market growth for this market.
Yeah. Pet is 40% of the animal health market. Farm animals, still 60%. The rest of this decade, farm animal will still be bigger than pet health. The protein revolution that is going on with everyone wanting more animal protein, that continues. I start there. Then in pet, 1/3 of the pet market is pet retail. We play there, most of our competitors do not. Now we are down to 20%, 25% of animal health, which is pet vet. We have seen flat dog numbers. We have seen cat numbers in the U.S. We have seen 70% of new puppies and outside the U.S. and actually dog and cat numbers are growing outside the U.S. The vet visit, we believe, is more of a change of behavior of the pet owner. Pet owners are not going to the clinic to purchase as much as they are going online.
They are still going to the vet, the vet is important. But growth of online ordering is 2x the growth of inside the clinic. We see purchase visits down, but non-wellness visits, an itching dog, a dog with pain, a dog needing surgery, visits are actually up.
What would be your pricing strategy on different channel, one on the ads and then the other online?
Yeah.
Are you going to do it differently?
Yeah. It's all product related, so if we have a topical product that's only for treatment or is in a dollar store in the U.S., that will be priced according to that value proposition compared to, say, a Quattro new innovation, most differentiated inside a vet clinic. It will all be priced relative to the product and the channel, but it's more product driven than it is channel driven.
Okay. Let's switching to Farm because I feel like that is really not getting the attention that they should be. It's 50% of business. Maybe just same question, high level, what is the driver? Everyone wanting more protein, beef, or any other kind of meat that you think will have a bigger market going forward?
Yeah. Look, I think that it all starts with an underlying demand for animal protein. I spoke in London five years ago, and all the questions were on Impossible Burger, Meatless Mondays, veganism, animal protein is coming to the end. It has absolutely flipped totally the other way. Why? Taste, cost, nutrition. The plant proteins didn't win in the taste category, the cost category, or the nutrition category. There's been a wellness movement the last five years, and it is attributed to the first time, this data point's an important one. The first time in 30 years that farm animal outgrew pet health. Farm animal grew 10% last year. I'm talking the industry. And pet grew 5%. Chicken, Rabobank will say chicken numbers are up 3%. Chicken is winning. Dairy is winning. Dairy cow numbers are up 4%.
You might say it's a little different in Europe, but it is. And there is a beef shortage. Then I would say pork got some religious barriers, but I would say it's more regional. Europe, U.S., and China. There's three trends now that they've won the taste, cost, nutrition, and they've innovated. There's meat sticks, there's yogurts, there's milkshakes. Everyone needs their 150 g of protein a day. There's three things. Wellness. Over 80% of consumers, Europe, U.S., want more protein than they did three years ago. Two is there's an aging population. The new disease, talked about even at this conference, is muscle retention. There will be 25% more people over 60 years of age after this decade's done, and muscle retention is the big problem. The third is GLP use. GLP use has created 30%- 50% more animal protein consumption with a GLP user than not.
Believe it or not, our parent company that we spun out of, Eli Lilly, their big focus is, hey, working with protein companies as well to make sure that, hey, the diet is right for muscle retention. Those three trends are driving animal numbers to be up, and so to animal health, a healthy animal is a more productive animal. We want to give consumers what they want. Animals more health. Right now, there's a 20% mortality, morbidity challenge with farm animal so that people want to solve that so they can create more protein. The beef shortage is something a little different. There's a cattle problem in the U.S., but Brazil, Argentina, grass-fed cattle in Australia will make up some of that shortage globally.
You have some double-digit growth number in the quarter. How sustainable is that.
We're not predicting. Let me go back to my algorithm of mid-single digit revenue growth. Probably when we put that out in December, we didn't think Farm Animal would hold its own. We thought Pet Health would be a little bit higher in Farm Animal. Today, we're saying we see the rest of the decade the ability. We're number one Farm Animal business in the U.S. We're leaders in poultry and cattle. We think we're positioned well to say we see Farm Animal being a really strong mid-single digit revenue. We run it on very low OpEx, so it's got just as good an EBITDA as Pet Health. Pet Health has higher operating expenses, bigger sales forces, better gross margin, but the EBITDAs come together at the end.
That's helpful. Have you seen any gaps within your Farm Animal portfolio where you think you need to put more investment into a pipeline? Aspect of it.
Yeah. Look, we've done a nice job of moving out of antibiotics, focusing heavily on giving consumers what they want, proteins, vaccines, enzymes, and have been a big part of that movement, and that's helped us grow. Tomorrow I'm going to see a new acquisition we made up in Holland, AHV. It's a nutritional health company for cattle. Cattle grew 17% last quarter, and we'll continue to have tuck-ins that will help our portfolio. Our gap, though, Lu, to your question, is vaccines.
Vaccines are about 60% of Farm Animal. People want to vaccinate and prevent disease and use genetics and vaccinations. We are under-indexed. Eli Lilly and Company didn't have a vaccine at the time, infectious disease, Novartis, Bayer. We've had to acquire and do R&D and build that.
We're a little behind the industry on vaccines, which to us is a good runway of opportunity.
Okay. Is that your acquisition, like interest area vaccine will be kind of like a priority at this point or like you think compared to like U.S. Pet Health, like-
Yeah. We'll be opportunistic. Farms probably got a few more opportunities. I think our top acquisition opportunities are actually molecules that we bring into the pipeline, which are embedded in our R&D budget. Let me be clear on our capital deployment. We're going to continue to be debt, debt-focused and get it down to 2.5x . We've taken a half a turn out in the first six months, had our best first six months since the IPO. We're generating more cash today than we have since being an IPO and independent company. We'll look at shareholder return avenues. We'll look at CapEx, should be pretty consistent, not really a step up. Debt pay down, then we'll be opportunistic. No big M&A. We don't see that in our future.
Okay. That's helpful. I guess another aspect of that, like farmers are cost-cautious, right? People worried about rising costs from like bulk transportation, anything. How do you think that dynamic will change demand for farm products?
Yeah. A healthy animal converts energy into protein better than an unhealthy animal. If the cost of the inputs goes up, the return on that conversion is greater. Right now, to most of the Farm Animal species, our return on investment value proposition is as strong as it's been in a long time. Every kilogram of protein matters. That's the focus right now. What I would say is, we work to prevent disease, and we work to convert protein from feed, and we take care of food safety, Salmonella and E. coli. Those are our three big solution sets.
Today, I would say for their Farm Animal customers, our ROI is as strong as it's been, which has given us a little pricing power as well.
I think the new opportunity is the environment. Elanco is the first and only company that has the two only FDA-approved products with environmental claims. What we are doing is we are reducing ammonia and methane out of cattle and converting that also to more productivity. That is giving consumers what they want, which is less environmental footprint with also more productivity. That is the next $2 billion-$4 billion market we farm in.
That is very helpful. I guess the next one, a little bit more operational aspect, the channel investment. There are channels that you operate right now. Maybe just talk a little bit about your strategy just in general. Any additional investment that you want to make? Where do you see a gap? How do you improve? Something like that.
Yeah. I think break it down. I think on the pet side, our strategy, starting with the Bayer acquisition and bringing in OTC, is we want to be where pet owners want to shop. We want to keep the veterinarian in the center. Just like any consumer market, people with AI have more information and more awareness. They walk into a vet clinic or get online or call into telemedicine with more awareness than ever before. So our goal is to offer the right SKUs, the right product portfolio in the channels that are necessary while keeping the vet in the center. I think that is really important.
On the Farm Animal side, it is more access direct to farm. It is more of a B2B business and the ability to be able to reach farmers. But I would say that is much more of a direct-to-the-farm approach is kind of the channel. We will use partners, distributors, feed companies where necessary, but today farms are bigger, and it is much more of a B2B business.
Great. Moving on to 2027. I know you're ready to guide, but interesting to see what are the moving pieces. You mentioned their growth driver, Quattro is one of them. Maybe just talk a little bit about that.
Yeah. I stay to our commitment of the algorithm. I think we're out there, we're guiding quarterly. Our goal is to keep the consistency of delivering and doing what we say quarter by quarter. We'll continue to guide quarterly. We'll continue to outline every quarter what's coming, what's next. Because animal health is maybe covered by a lot of analysts that cover a lot of other industries, we want to be very clear. Putting out the press releases and sharing is really important. But as you look at 2027, we would say, hey, starting with the algorithm of, hey, mid-single digit top line, high single digit EBITDA, low double-digit EPS. Our goal is to stay on that mantra. What will be drivers? Befrena coming into the U.S. and some other markets as well. Quattro globalizing, that will be another big driver.
Zenrelia and Quattro in the markets they're in today, lapping as we're picking up these 400 or 500 clinics a month. That lapping effect is going to be quite significant, we believe. And on the farm animal side, I think, yes, there will be some normalization back to maybe mid-single digit, high single-digit growth rates. We have HV, we have other innovation that has come in that will be additive. And we continue to believe it is a durable market. Just saw accelerating price in July and August. We will continue to see price, we have said in that 2%-3% range.
Yeah.
On the margin, and then you mentioned the pricing.
Again, it is a competitive market.
Yeah.
How do you think about ability to continue to gain pricing and then at the same time, if competitors being more aggressive, how do you really protect?
Yeah.
The margin as well?
I say the four things of why we see the next tranche of our stock has done extremely well the last couple of years. What will drive the stock the next couple of years? I am just taking your question. Without question, the profile of our company is quite different. 50/50 Farm Animal, Pet Health, international, U.S. is really good. Two is we are in major markets with six innovations. Some of our competitors have one innovation in one market. We have got six. We will double those six innovations over the next three years. That will be the next tranche of value. The next five to six are coming. Then margin, to your point, margin and cash.
We are just like in the early markets and early share. We are in the early innings and the early stages of margin. So what we have committed to is we are mid-50s on gross margin. We are tracking to 60%.
I am given the exact timeline, but we have a trajectory and a glide path to go from 55% to 60% gross margin, low 20s, headed towards the 30% on EBITDA. What will drive that is 75% will come from gross margin on the EBITDA side, 25% will be G&A. We see nice margin expansion in net dollars on EBITDA year-on-year going into next year.
Sounds great. We mentioned quite a lot about pipeline innovation. When is the next time we are going to hear updates, details?
Well, please know that first, exploiting the six blockbusters we have that are really small in big growing markets is number one. You talk about my top priorities on growth, it is launch well. We will keep spending on these products because we see them as maybe the biggest products we have ever had, and they will be some of the biggest the industry has ever had. That is what we think of Zenrelia, Quattro, Befrena, Experior. That is one. Then I think as you look at the next, what we are saying is we got 15 projects in clinical development, and we do not want a near pocket in innovation, and I am confident more so today than even December when we had our investor day, we have had no attrition. Why we had no attrition? A stable R&D team, a matrix structure built around capabilities.
Ellen de Brabander and what she has done there and her team are amazing. The use of AI on the front and the back of the pipeline. We did not have attrition with the six we launched. We now have 15. I am committing to five to six by 2031, and they will not all happen in the last couple of years. You are going to start to see a string of innovation. They are in the big markets. They are differentiated assets. They are not a, "Oh, we hope to create a new market." They are going to be in the big markets.
Okay. You're not worried about being second offer into the market versus you want to be kind of like number one, create that market?
Yeah. We're looking at that, and look, the big markets are para, derm, pain, productivity and sustainability, infectious disease. Outside of the big six, I would say then, yes, we're chasing CKD. One out of three or four cats gets renal failure, and so we're all chasing chronic kidney disease. We're chasing oncology. We need a broad-spectrum oncology product that's cost-efficient. That's going to be a big market for us coming up. Obesity, yes, in pets will be a big market. And I think this environmental productivity market on the Farm Animal side, all of those will be future markets that we're chasing and some of our competitors are as well. But because we don't have 70%, 80% share in those other big markets, we still have a lot of room to innovate in those big markets.
Okay. That's helpful. Wanted to go back to more the margin questions cost savings. Any specific areas are you targeting? Right now, you have the Ascend program. You are on track to $200 million- $250 million EBITDA saving by 2030. Any chance that can go beyond? What are the areas upside?
Please know that Elanco Ascend, and I'm bringing in Bob VanHimbergen, that came really from Johnson Controls and Hillenbrand, a low-margin manufacturing industry into pharmaceuticals. It's all about optimized margins. While we're investing in innovation and launches, the rest of the company is saving. We have 5,000 projects. My top 100 leaders, senior leaders, are paid on two things: beating cost of capital on cash, so tight cash utilization, cash creation, what shareholders want, and beat last year's EBITDA. Those are the two metrics. What I would tell you is we're going to get kind of flat to more efficient G&A by shared service centers, use of AI, a lot more productivity. But the big one will be on the cost of our products.
Bigger products are going to have higher gross margins that are going to look a lot more like our parent industry, and that's going to be able to drive a lot more margin. Look for 75% of our margin expansion to come from gross margin, which is active ingredient procurement to better plant utilization to more efficient footprint.
Sounds great. I guess then maybe just the final one here. Where do you think the Elanco story being underappreciated right now? I know that curiously the leverage is one part of it.
Yeah.
Anything else that you kind of want to mention?
I think big markets, we're early. In a very volatile, maybe capital markets time, animal health is durable. It continues to grow. Elanco is coming in with very differentiated innovation in an industry that rewards differentiated innovation. When I'm $100 million into a $2.5 billion market in derm, I'm $150 million into a $6 billion parasitic market. We have a lot of runway of growth with stuff that's already approved that's globalizing, and the same on the protein side. I think it's our profile of our company, our early innings on innovation, and we're not going to hit an air pocket. I'm very committed that we've got five to six innovations that are coming to continue this trajectory for the next decade. Our commitment to the algorithm, low double-digit EPS growth is good. I think, look, we have delevered the company.
That cash is going to be able to create shareholder value as well. We're a multi-pronged, very compelling, I think, investment story inside the most durable industry on Wall Street today. That's my opinion.
Great, awesome.
Yeah.
Thank you so much for your time.
Thank you.
Yeah.
Thanks.