Elanco Animal Health (ELAN) – Pawsitive Adoption Rates
In last week’s Conversations recording, we covered the company’s Q4 earnings report in which we highlighted Credelio Qauttro, an all-in-one parasite preventative drug for dogs, and how it continued to gain U.S. market share in vet clinics. The drug also continues to rank highest in Kynetec’s Puppy Index, indicating a level of new puppies starting on the product. Meanwhile, Quattro was recently approved in Australia, and expectations are for additional geographic expansions this year to further boost what is already a high revenue growth product. Turning to Zenrelia, a prescription medication used to control itching and skin inflammation in dogs, it achieved double-digit share of the U.S. JAK inhibitor market in December, and the company came across on the call as highly confident in the prospect of Zenrelia seeing another label upgrade in the U.S. this year. The last time it received a label update (September), it resulted in the addition of 2,500 new clinics. In their post-earnings note, KeyBanc would note that Elanco’s 2026 revenue guidance does not contemplate Zenrelia label improvement in the U.S.
A new development that came out on Thursday evening was an updated survey of 100 U.S. Veterinary practices conducted by Stifel analyst Jonathan Block. Among his key takeaways:
• Among survey respondents, Zenrelia’s adoption rate is 33% and expected to rise to 57% over the next twelve months. The 33% current adoption and 57% NTM expected adoption compared to a 17% and 51% NTM expected adoption from their deep dive report nearly 12 months ago.
• Elanco’s current 2026 guidance does not factor in any change or improvement in Zenrelia’s current U.S. label. For context, Zenrelia’s U.S. AD JAK share likely stands around +LDD%. While this has been increasing, it is well below the 30-40% share achieved in a couple of international markets, where the label is not hampered. Elanco has talked about the possibility of further improving Zenrelia’s U.S. label, which would likely remove the boxed warning. Currently, 43% of the 100 respondents have not/do not plan to adopt Zenrelia in the NTM. Of these 43 practices, 84% said they are more likely (to varying degrees) to adopt Zenrelia if the boxed warning was removed (42% said they were more likely/significantly more likely).
• When isolating the 86 repeat respondents from their prior Q3 survey, Credelio Quattro’s current adoption increased to 29%, with another 15% expecting to adopt over the NTM. In Q3, 23% of these respondents were using Credelio Quattro, with another 13% expecting to adopt over the NTM.
