(Lilly) Buying Controversy (from Monsanto)

Pharmaceutical giant Eli Lilly has just bought Monsanto’s controversial synthetic bovine hormone, Posilac.

From Bloomberg: Lilly to Buy Monsanto’s Cow-Milk Stimulating Hormone

Eli Lilly & Co. agreed to pay at least $300 million for Monsanto Co.’s Posilac, a synthetic hormone used to boost milk production in cows.

The agreement, announced today by both companies, will expand Lilly’s veterinary operations and enable Monsanto, a maker of pesticides and seeds, to focus on genetically modified crops.

Posilac has been on the market since 1994. Lilly, the maker of the antipsychotic drug Zyprexa, gains the U.S. sales force for Posilac and the manufacturing plant in Augusta, Georgia. It also inherits opposition to the hormone from consumer advocates who question its safety and from dairy processors, such as Dean Foods Co., which has labeled its milk as hormone-free.

“You’d assume the controversy is part of the price, so there must be some other reason Lilly wants this asset,” said Charles Anthony Butler, an analyst for Lehman Brothers in New York, in a telephone interview today. “Maybe it’ll help them sell other products to those farmers. Animal health as a component for all pharma companies is a business they want to grow.”

Of course, neither company is a stranger to controversy. Lilly is the maker of the antidipressant Prozac, a regular punching bag for anyone who thinks modern society is over-medicated, and has been the subject of a number of pharma marketing scandals. For its part, Monsanto is one of the companies behind “agent orange,” and has more recently faced all kinds of controversy over its genetically modified seeds and the way it has vigorously protected its intellectual property rights. So the two make quite a pair. Just imagine the business-ethics war-stories those two CEO’s could trade over beers. At least neither company has much to lose in terms of reputation by dealing with the other. I wonder if the controversy attached to Posilac means that a controversy-hardened company like Lilly is more likely to buy it than an equally well-heeled company not so accustomed to controversy?

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