Posilac cow hormone receives attention because of health concerns
The Austin American Statesman
By Christopher Leonard, The Associated Press
ST. LOUIS Monsanto Co. is unloading a bumper crop of controversy with its $300 million sale of the cow hormone Posilac to drugmaker Eli Lilly & Co.
Posilac was not a major part of Monsanto’s growth plans, but the genetically engineered hormone has gotten outsized public attention because of questions about its effect on human health.
The sale, announced Wednesday, means Monsanto’s name won’t be associated with a drug that some activists call “one of the most hated products in the world.”
“I think I would term this addition through subtraction for Monsanto,” said Frank Mitsch, an analyst with BB&T Capital Markets in New York. “Did they really need to spend their time defending this product when it’s not the reason people are buying their stock?”
Dropping the hot-button Posilac strengthens Monsanto’s long-term strategy to focus on selling high-tech seeds to farmers worldwide.
Monsanto was founded as a chemical firm selling everything from aspirin to herbicide. Now its scientists focus almost exclusively on genetic seed research, and Monsanto plans to double its annual gross profit in four years by developing crops resistant to pests, herbicides and drought.
Monsanto’s stock rose $5.22, or 4.6 percent, to $118.08 on Wednesday, while Eli Lilly fell 39 cents to $47.41.
Posilac was a profitable and growing business within Monsanto, although the company doesn’t disclose annual revenue from the hormone, spokeswoman Danielle Jany said.
She said Monsanto did not sell the Posilac division because of public criticism but said losing the hormone will help the company’s long-term bottom line.
“It allows Monsanto to focus on its core seeds and traits business,” Jany said.
The Posilac brand will be absorbed into Eli Lilly’s Elanco animal health unit. The Indianapolis-based pharmaceutical maker said it might make additional payments to Monsanto for Posilac, depending on the results of the deal. Monsanto said the sale will be completed as soon as is practical.
Posilac is the brand name for a hormone called recombinant bovine somatotropin, or rBST. It increases milk production in cows, and Monsanto said it sold more than half a billion Posilac units since the product was approved in 1994.
Critics have said the drug is unhealthy additive for humans and cows alike. Organic food groups say Posilac injections increase infections in cows, and say the hormone could remain in the milk consumed by humans. Some dairy farmers label their milk as hormone-free in response to the criticism.
Eli Lilly defended its acquisition.
“We recognize that there is a challenge out there,” company spokesman Mark Taylor said. He said many of the criticisms are “misperceptions” and said Posilac will complement Elanco’s line of antibiotics and other drugs for dairy cows.
“This product has been proven safe,” Taylor said. “It’s been used for over 14 years.”
Still, the Organic Consumers Association released a statement Wednesday suggesting it would continue opposing the use of Posilac.
“Why would Eli Lilly want to pick up (Posilac)?” the statement said.
“Because they are partners in crime with Monsanto and the biotech industry pushing largely untested and unlabeled genetically engineered products on an unwilling, but often gullible public.”