Form 424B3 Elanco Animal Health

March 5, 2019 2:39 PM

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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-229577

ELI LILLY AND COMPANY

Offer to Exchange Up to 293,290,000 Shares of Common Stock of

ELANCO ANIMAL HEALTH INCORPORATED

Which are Owned by Eli Lilly and Company for Outstanding Shares of Common Stock of

ELI LILLY AND COMPANY



           THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON MARCH 8, 2019, UNLESS THE EXCHANGE OFFER IS EXTENDED OR TERMINATED.

           Eli Lilly and Company, an Indiana corporation ("Lilly"), is offering to exchange (the "exchange offer") up to an aggregate of 293,290,000 shares of common stock, no par value ("Elanco common stock"), of Elanco Animal Health Incorporated, an Indiana corporation ("Elanco"), for outstanding shares of common stock, no par value, of Lilly ("Lilly common stock") that are validly tendered and not validly withdrawn.

           For each $100 of Lilly common stock accepted in the exchange offer, you will receive approximately $107.53 of Elanco common stock, subject to an upper limit of 4.5262 shares of Elanco common stock per share of Lilly common stock. The exchange offer does not provide for a lower limit or minimum exchange ratio. IF THE UPPER LIMIT IS IN EFFECT, YOU WILL RECEIVE LESS THAN $107.53 OF ELANCO COMMON STOCK FOR EACH $100 OF LILLY COMMON STOCK THAT YOU TENDER, AND YOU COULD RECEIVE MUCH LESS.

           The value of the two stocks for purposes of the preceding paragraph and this exchange offer will be determined by reference to the simple arithmetic average of the daily volume-weighted average prices ("VWAPs") of Lilly common stock (the "Average Lilly Price") and Elanco common stock (the "Average Elanco Price") on the New York Stock Exchange ("NYSE") during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer (the "Averaging Dates" and this three-day period, the "Averaging Period"), which, if the exchange offer is not extended or terminated, would be March 4, 5 and 6, 2019. See "The Exchange Offer — Terms of the Exchange Offer."

           Lilly common stock and Elanco common stock are listed on the NYSE under the symbols "LLY" and "ELAN," respectively. The reported last sale prices of Lilly common stock and Elanco common stock on the NYSE on February 7, 2019 were $117.50 and $29.50 per share, respectively. The indicative exchange ratio that would have been in effect following the official close of trading on the NYSE on February 7, 2019, based on the VWAPs of Lilly common stock and Elanco common stock on February 5, 6 and 7, 2019, would have provided for 4.3652 shares of Elanco common stock to be exchanged for every share of Lilly common stock accepted.

           The final exchange ratio, including whether the upper limit on the number of shares that can be received for each share of Lilly common tendered is in effect, will be announced by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). At such time, the final exchange ratio will be available at www.lillyexchangeoffer.com and from the information agent, Georgeson LLC, at 1-800-676-0194 (toll-free for shareholders, banks and brokers) or +1-781-575-2137 (all others outside the U.S.). Throughout the exchange offer, indicative exchange ratios (calculated in the manner described in this prospectus) also will be available on that website and from the information agent.

           You should read carefully the terms and conditions of the exchange offer described in this prospectus. None of Lilly, Elanco or any of their respective directors or officers or any of the dealer managers makes any recommendation as to whether you should tender all, some or none of your shares of Lilly common stock. You must make your own decision after reading this document and consulting with your advisors.

           Lilly's obligation to exchange shares of Elanco common stock for shares of Lilly common stock is subject to the conditions listed under "The Exchange Offer — Conditions to Completion of the Exchange Offer."



           See "Risk Factors" beginning on page 28 for a discussion of factors that you should consider in connection with the exchange offer.



           Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be exchanged under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.



           The dealer managers for the exchange offer are:

Goldman Sachs & Co. LLC   J.P. Morgan Securities LLC   Morgan Stanley & Co. LLC



   

The date of this prospectus is March 5, 2019.


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TABLE OF CONTENTS

    Page
 

INCORPORATION BY REFERENCE

    v  

QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

    1  

SUMMARY

    14  

RISK FACTORS

    28  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

    62  

THE TRANSACTION

    64  

THE EXCHANGE OFFER

    68  

POTENTIAL ADDITIONAL DISTRIBUTION OF ELANCO COMMON STOCK

    87  

ELI LILLY AND COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    88  

ELANCO ANIMAL HEALTH INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

    93  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ELANCO

    97  

INDUSTRY OF ELANCO

    119  

BUSINESS OF ELANCO

    123  

MANAGEMENT OF ELANCO

    143  

EXECUTIVE COMPENSATION

    149  

AGREEMENTS BETWEEN LILLY AND ELANCO AND OTHER RELATED PARTY TRANSACTIONS

    183  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LILLY AND ELANCO

    195  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

    198  

DESCRIPTION OF CAPITAL STOCK OF ELANCO

    201  

COMPARISON OF SHAREHOLDER RIGHTS

    205  

DESCRIPTION OF CERTAIN INDEBTEDNESS OF ELANCO

    209  

SHARES ELIGIBLE FOR FUTURE SALE

    210  

LEGAL MATTERS

    211  

EXPERTS

    211  

          This prospectus incorporates by reference important business and financial information about Lilly from documents filed with the Securities and Exchange Commission (the "SEC") that have not been included herein or delivered herewith. This information is available without charge at the website that the SEC maintains at http://www.sec.gov, as well as from other sources. See "Incorporation by Reference." In addition, you may ask any questions about the exchange offer or request copies of the exchange offer documents and the other information incorporated by reference in this prospectus from Lilly, without charge, upon written or oral request to the information agent, Georgeson LLC, at 1290 Avenue of the Americas, 9th Floor, New York, NY 10104 or by calling 1-800-676-0194 (toll-free for shareholders, banks and brokers) or +1-781-575-2137 (all others outside the U.S.). In order to receive timely delivery of those materials, you must make your requests no later than five business days before expiration of the exchange offer.

          This prospectus is not an offer to sell or exchange and it is not a solicitation of an offer to buy or exchange any shares of Lilly common stock in any jurisdiction in which the offer, sale or exchange is not permitted. Non-U.S. shareholders should consult their advisors in considering whether they may participate in the exchange offer in accordance with the laws of their home countries and, if they do participate, whether there are any restrictions or limitations on transactions in Lilly common stock or Elanco common stock that may apply in

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their home countries. Lilly, Elanco and the dealer managers cannot provide any assurance about whether such limitations exist.

          As used in this prospectus, unless the context requires otherwise, (i) references to "Lilly" refer to Eli Lilly and Company, an Indiana corporation, and its subsidiaries other than Elanco and Elanco's subsidiaries and (ii) references to "Elanco," our "company," "we," "us" or "our" refer to Elanco Animal Health Incorporated, an Indiana corporation and its subsidiaries. Unless the context otherwise requires or unless expressly indicated, it is assumed throughout this prospectus that the exchange offer is fully subscribed and that all shares of Elanco common stock held by Lilly are distributed pursuant to the exchange offer.

          Unless otherwise indicated, information contained in this prospectus concerning Elanco's industry and the markets in which Elanco operates, including general expectations and market positions, market opportunity and market share, is based on information from third-party sources and estimates of Elanco's management. Certain statements, where indicated, are based on information published by Vetnosis Limited ("Vetnosis"), a research and consulting firm specializing in global animal health and veterinary medicine, and estimates of Elanco's management. Management estimates are derived from publicly available information, knowledge of Elanco's industry and assumptions based on such information and knowledge, which Elanco believes to be reasonable. Management estimates have not been verified by any independent source. In addition, assumptions and estimates of Elanco's and its industry's future performances are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause future performance to differ materially from Elanco's assumptions and estimates. See "Cautionary Statement Concerning Forward-Looking Statements."


NOTICE TO EEA INVESTORS

          This prospectus is only addressed to and directed at persons in member states of the European Economic Area (the "EEA") who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (the "Qualified Investors"). This prospectus must not be acted on or relied on in any member state of the EEA by persons who are not Qualified Investors. The shares of Elanco common stock are only available to, and any investment or investment activity to which this prospectus relates is only available to, Qualified Investors, and will be engaged in only with such persons.


NOTICE TO UK INVESTORS

          In the United Kingdom, this prospectus is being distributed only to, and is directed only at, Qualified Investors: (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, (the "Order"); or (ii) who fall within Article 49(2)(a) to (d) of the Order; or (iii) to whom it may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons"). This prospectus must not be acted on or relied on in the United Kingdom by persons who are not Relevant Persons. The shares of Elanco common stock are only available to, and any investment or investment activity to which this prospectus relates is available only to, Relevant Persons, and will be engaged in only with such persons.


NOTICE TO DUTCH INVESTORS

          No offer of shares of Elanco common stock which are the subject of this prospectus has been, or will be made to the public in the Netherlands, except to any legal entity which is a qualified investor (gekwalificeerde belegger) as defined in Section 1:1 of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht).

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NOTICE TO NORWEGIAN INVESTORS

          In Norway, shares of Elanco common stock may be offered at any time under the following exemptions under the Prospectus Directive:


NOTICE TO JAPANESE INVESTORS

          The placement of shares of Elanco common stock in Japan, if any, will be made only to the qualified institutional investors ("QIIs") and constitute a private placement under Article 2, Paragraph 4, Item (ii)(a) of the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the "FIEA") and are exempt from registration requirement thereunder. Accordingly, no securities registration statement under Article 4, Paragraph 1 of the FIEA has been nor will be filed with respect to the shares of Elanco common stock. The placement in Japan will be made on a condition that any purchaser in Japan shall enter into an agreement to the effect that the purchaser will not transfer the shares of Elanco common stock to any person in Japan or to, or for the benefit of, any resident of Japan, other than a QII. Except for the private placement or resale to QIIs, the shares of Elanco common stock may not be offered or sold in Japan or to, or for the benefit of, any resident of Japan or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan or to others for offering or resale except pursuant to an exemption from the registration requirements of, or otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan. As used in this paragraph, "resident of Japan" means any natural person having his place of domicile or residence in Japan, including any corporation or other entity organized under the laws of Japan, or having its main office in Japan.


NOTICE TO AUSTRALIAN INVESTORS

          This document does not constitute an offer to sell, or the solicitation of an offer to buy, Lilly common stock in any jurisdiction in which such offer or solicitation is unlawful.

          No prospectus or other disclosure document has been lodged, or will be lodged, with the Australian Securities and Investments Commission ("ASIC") in relation to the exchange offer. This document does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (Cth) (the "Corporations Act"), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

          No offer of shares is or will be made in Australia pursuant to this document, except to a person who is (i) either a "sophisticated investor" within the meaning of section 708(8) of the Corporations Act or a "professional investor" within the meaning of section 9 and section 708(11) of the Corporations Act; and (ii) a "wholesale client" for the purposes of section 761G(7) of the Corporations Act (and related regulations) who has complied with all relevant requirements in this respect, or another person who may be issued shares without requiring a disclosure document.

          Any shares of Elanco common stock received in the exchange offer must not be offered for sale (or transferred, assigned or otherwise alienated) in Australia for a period of 12 months after the date of exchange under the exchange offer, except in circumstances where disclosure to investors is not required under Chapter 6D of the Corporations Act or where the offer is pursuant to a

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disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares of Elanco common stock must observe such Australian on-sale restrictions.

          This document contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice and has been prepared without reference to individual shareholders or any other person. Before making an investment decision, investors need to consider whether the information in this document is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

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INCORPORATION BY REFERENCE

          The SEC allows certain information to be "incorporated by reference" into this prospectus by Lilly, which means that Lilly can disclose important information to you by referring you to another document it has separately filed with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus. This prospectus incorporates by reference the documents set forth below that Lilly has previously filed with the SEC. These documents contain important information about Lilly, its business, financial condition and results of operations:

          All documents filed by Lilly pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from the date of this prospectus to the date that the exchange offer is terminated or expires shall also be deemed to be incorporated into this prospectus by reference (except for any information therein which has been furnished rather than filed). Subsequent filings with the SEC will automatically modify and supersede the information in this prospectus.

          Documents incorporated by reference are available without charge, upon written or oral request to the information agent, Georgeson LLC, at 1290 Avenue of the Americas, 9th Floor, New York, NY 10104 or by calling 1-800-676-0194 (toll-free for shareholders, banks and brokers) or +1-781-575-2137 (all others outside the U.S.). In order to receive timely delivery of those materials, you must make your requests no later than five business days before expiration of the exchange offer.

          Lilly and Elanco file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. You may access this information on the SEC's website, which contains reports, proxy statements and other information that Lilly and Elanco file electronically with the SEC. The address of that website is http://www.sec.gov. You may also consult Lilly's and Elanco's websites for more information about Lilly and Elanco, respectively. Lilly's website is www.lilly.com. Elanco's website is www.elanco.com. Information included on these websites is not incorporated by reference into this prospectus.

          Elanco has filed a registration statement on Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"), of which this prospectus forms a part, to register with the SEC the shares of Elanco common stock to be exchanged in the exchange offer. Lilly has filed a Tender Offer Statement on Schedule TO with the SEC with respect to the exchange offer. This prospectus constitutes Lilly's offer to exchange, in addition to being a prospectus of Elanco. This prospectus does not contain all of the information set forth in the registration statement, the exhibits to the registration statement or the Schedule TO, selected portions of which are omitted from this prospectus in accordance with the rules and regulations of the SEC. For further information pertaining to Lilly, Lilly common stock, Elanco and Elanco common stock, reference is made to the registration statement and its exhibits. Statements contained in this prospectus or in any document incorporated herein by reference as to the contents of any contract or other document referred to in this prospectus or other documents that are incorporated herein by reference are not necessarily complete and, in each instance, reference is made to the copy of the applicable contract or other document filed as an exhibit to the registration statement or otherwise filed with the SEC. Each such statement contained in this prospectus is qualified in its entirety by reference to the underlying documents.

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QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER

          Lilly has decided to offer to exchange its remaining interest in Elanco, consisting of 293,290,000 shares of Elanco common stock, which represents approximately 80.2% of the outstanding common stock of Elanco, for outstanding shares of Lilly common stock. Following the exchange offer, Elanco will be wholly independent from Lilly, except that certain agreements between Lilly and Elanco will remain in place, and one or more Lilly executives may continue to serve on the Elanco board of directors. See "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly" and "Management of Elanco — Board of Directors." The following are answers to common questions about the exchange offer.

1.      Why has Lilly decided to separate Elanco from Lilly through the exchange offer?

          Lilly has decided to commence the exchange offer to complete the separation of the Elanco animal health business from Lilly's human pharmaceutical businesses in a tax-efficient manner, with the goal of enhancing shareholder value and better positioning Lilly to focus on its human pharmaceutical business.

          Lilly believes that the separation (as defined below under "The Transaction") and the exchange offer have the potential to, among other things, (a) create a fully independent company, Elanco, focused exclusively on the animal health business, which can pursue future business initiatives, including acquisitions and other capital investments, without the influence of a controlling shareholder, (b) create a widely held, publicly traded equity security linked only to the performance of the animal health business, rather than Lilly's larger human pharmaceutical business, which can be used efficiently to attract, retain and incentivize employees of the animal health business and to pursue attractive acquisition and capital raising opportunities, and (c) enhance the capital markets efficiency of Lilly common stock, which can be used in acquisitions and capital raising activities, by eliminating a non-core business which investors may not appropriately value when assessing Lilly's business operations.

2.      Why did Lilly choose an exchange offer as the way to separate Elanco from Lilly?

          Lilly believes that the exchange offer is a tax-efficient way to divest its remaining interest in Elanco. The exchange offer is expected to qualify for non-recognition of gain and loss under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code"), and thus will give Lilly's shareholders an opportunity to adjust their current Lilly investment between Lilly and Elanco in a tax-free manner for U.S. federal income tax purposes (except with respect to cash received in lieu of a fractional share).

          Lilly and Elanco also have significantly different competitive strengths and operating strategies and operate in different industries. The exchange offer is an efficient means of placing Elanco common stock with holders of Lilly common stock who wish to directly own an interest in Elanco and reducing the total number of shares of Lilly common stock outstanding.

3.      What is the main way that the relationship between Elanco and Lilly will change after the exchange offer is completed?

          Following the completion of the exchange offer, Lilly will no longer have any ownership interest in Elanco. Elanco will be able to pursue its own initiatives, regardless of whether those initiatives are consistent with Lilly's strategy, subject to certain continuing agreements with Lilly.

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4.      Will dividends be paid on Elanco common stock?

          The declaration and payment of dividends to holders of Elanco common stock is at the discretion of Elanco's board of directors in accordance with applicable law after taking into account various factors.

          Elanco currently intends to pay a quarterly cash dividend to holders of Elanco common stock of approximately $0.06 per share commencing following the completion of the quarter during which Lilly no longer owns shares of Elanco common stock, subject to the discretion of its board of directors. Elanco's ability to pay dividends is subject to certain limitations, and Elanco may change its dividend policy at any time. See "Risk Factors — Risks Related to Elanco Common Stock — While Elanco currently intends to pay a quarterly cash dividend to its common shareholders, it may change its dividend policy at any time."

5.      Who may participate in the exchange offer and will it be extended outside the United States?

          Any U.S. holder of Lilly common stock during the exchange offer period, which will be at least 20 business days, may participate in the exchange offer, including directors and officers of Lilly, Elanco and their respective subsidiaries. This includes shares held for the account of participants of The Lilly Employee 401(k) Plan, The Savings Plan for Lilly Affiliate Employees in Puerto Rico and The Elanco US Inc. 401(k) Plan (the "Savings Plans").

          Although Lilly may deliver this prospectus to shareholders located outside the United States, this prospectus is not an offer to sell or exchange, and it is not a solicitation of an offer to buy or exchange, any shares of Lilly common stock in any jurisdiction in which such offer, sale or exchange is not permitted. This prospectus has not been reviewed or approved by any stock exchange on which shares of Lilly common stock are listed.

          Countries outside the United States generally have their own legal requirements that govern securities offerings made to persons resident in those countries and often impose stringent requirements about the form and content of offers made to the general public. Lilly has not taken any action under those non-U.S. regulations to qualify the exchange offer outside the United States but may take steps to facilitate participation of shareholders from certain jurisdictions. Therefore, the ability of any non-U.S. person to tender Lilly common stock in the exchange offer will depend on whether there is an exemption available under the laws of such person's home country that would permit the person to participate in the exchange offer without the need for Lilly or Elanco to take any action to qualify or otherwise facilitate the exchange offer in that country or otherwise. For example, some countries exempt transactions from the rules governing public offerings if they involve persons who meet certain eligibility requirements relating to their status as sophisticated or professional investors.

          All tendering shareholders must make certain representations in the letter of transmittal, including, in the case of non-U.S. shareholders, as to the availability of an exemption under their home country laws that would allow them to participate in the exchange offer without the need for Lilly or Elanco to take any action to qualify or otherwise facilitate a public offering in that country or otherwise. Lilly will rely on those representations and, unless the exchange offer is terminated, plans to accept shares validly tendered by persons who properly complete the letter of transmittal and provide any other required documentation on a timely basis and as otherwise described herein.

          Non-U.S. shareholders should consult their advisors in considering whether they may participate in the exchange offer in accordance with the laws of their home countries and, if they do participate, whether there are any restrictions or limitations on transactions in Lilly common stock or

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Elanco common stock that may apply in their home countries. Lilly, Elanco and the dealer managers cannot provide any assurance about whether such limitations exist.

          All holders who are tendering shares allocated to their Savings Plans accounts should follow the special instructions provided to them by or on behalf of their applicable plan administrator. Such participants may direct the applicable plan trustee to tender all, some or none of the shares of Lilly common stock allocated to their Savings Plan accounts, subject to certain limitations. To allow sufficient time for the tender of shares by the trustee of the applicable Savings Plan, tendering holders must provide the tabulator for the Savings Plans with the requisite instructions by the deadline specified in the special instructions provided to them, unless the exchange offer is extended. If the exchange offer is extended, and if administratively feasible, the deadline for receipt of the holder's direction also may be extended.

6.      How many shares of Elanco common stock will I receive for my shares of Lilly common stock accepted in the exchange offer?

          Unless the upper limit discussed below is in effect, the exchange offer is designed to permit you to exchange your shares of Lilly common stock for shares of Elanco common stock so that for each $100 of your Lilly common stock accepted in the exchange offer, you will receive approximately $107.53 of Elanco common stock based on the calculated per-share values determined by reference to the simple arithmetic average of the daily volume-weighted average prices ("VWAPs") for Lilly common stock (the "Average Lilly Price") and Elanco common stock (the "Average Elanco Price") on the NYSE during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer (the "Averaging Dates," and this three-day period, the "Averaging Period"). If the exchange offer is not extended or terminated, the Averaging Dates would be March 4, 5 and 6, 2019. Any changes in the prices of Lilly common stock and Elanco common stock between the conclusion of the Averaging Period and the expiration of the exchange offer will not affect the final exchange ratio.

          Please note, however, that the number of shares you can receive is subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. If the upper limit is in effect, you will receive less than $107.53 of Elanco common stock for each $100 of Lilly common stock that you tender, based on the Average Lilly Price and Average Elanco Price, and you could receive much less. The exchange offer does not provide for a lower limit or minimum exchange ratio. In addition, because the exchange offer is subject to proration, the number of shares of Lilly common stock Lilly accepts in the exchange offer may be less than the number of shares you tender.

          Lilly will announce the final exchange ratio, including whether the upper limit on the number of Elanco shares that can be received for each share of Lilly common stock validly tendered and not validly withdrawn is in effect, at www.lillyexchangeoffer.com and by press release, no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). If the upper limit is in effect at that time, then the final exchange ratio will be fixed at the upper limit, and you will receive 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer.

7.      Why is there an upper limit on the number of shares of Elanco common stock I can receive for each share of Lilly common stock that I tender?

          The number of shares you can receive is subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. If the upper limit is in effect, you will receive less than $107.53 of Elanco common stock for each $100 of

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Lilly common stock that you tender, based on the Average Lilly Price and Average Elanco Price, and you could receive much less.

          This upper limit represents a 12% discount for shares of Elanco common stock based on the closing prices of Lilly common stock and Elanco common stock on the NYSE on February 7, 2019 (the trading day immediately preceding the date of the commencement of the exchange offer). Lilly set this upper limit to ensure that any unusual or unexpected decrease in the trading price of Elanco common stock, relative to the trading price of Lilly common stock, during the exchange offer period would not result in an unduly high number of shares of Elanco common stock being exchanged for each share of Lilly common stock accepted in the exchange offer.

8.      What will happen if the upper limit is in effect?

          Lilly will announce whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect at www.lillyexchangeoffer.com and by press release, no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). If the upper limit is in effect at that time, then the final exchange ratio will be fixed at the upper limit, and you will receive 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. If the upper limit is in effect, you will receive less than $107.53 of Elanco common stock for each $100 of Lilly common stock that you tender based on the Average Lilly Price and Average Elanco Price, and you could receive much less.

9.      How are the Average Lilly Price and the Average Elanco Price determined for purposes of calculating the number of shares of Elanco common stock to be received for each share of Lilly common stock accepted in the exchange offer?

          The Average Lilly Price and the Average Elanco Price for purposes of the exchange offer will equal the simple arithmetic average of the daily VWAPs of shares of Lilly common stock and Elanco common stock, respectively, on the NYSE during the Averaging Period (the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer). Lilly will determine the simple arithmetic average of the VWAPs of each stock, and such determination will be final. If the exchange offer is not extended or terminated, the Averaging Period would be March 4, 5 and 6, 2019. If the upper limit is in effect, you will receive 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. Any changes in the prices of Lilly common stock and Elanco common stock between the conclusion of the Averaging Period and the expiration of the exchange offer will not affect the final exchange ratio.

10.    What is the daily volume-weighted average price or "VWAP"?

          The daily VWAPs for shares of Lilly common stock or Elanco common stock, as the case may be, will be the volume-weighted average price per share of that stock on the NYSE during the period beginning at 9:30 a.m., New York City time (or such other time as is the official open of trading on the NYSE), and ending at 4:00 p.m., New York City time (or such other time as is the official close of trading on the NYSE), except that such data will only take into account adjustments made to reported trades included by 4:10 p.m., New York City time. The daily VWAP will be as reported by Bloomberg L.P. as displayed under the heading Bloomberg VWAP on the Bloomberg pages "LLY UN<Equity>AQR" with respect to Lilly common stock and "ELAN UN<Equity>AQR" with respect to Elanco common stock (or their equivalent successor pages if such pages are not available). The daily VWAPs obtained from Bloomberg L.P. may be different from other sources or

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investors' or other security holders' own calculations. Lilly will determine the simple arithmetic average of the VWAPs of each stock, and such determination will be final.

          A website will be maintained at www.lillyexchangeoffer.com that will provide the daily VWAPs of both Lilly common stock and Elanco common stock during the pendency of the exchange offer. You may also contact the information agent at its toll-free number provided on the back cover of this prospectus to obtain this information.

11.    How and when will I know the final exchange ratio?

          The final exchange ratio that determines the number of shares of Elanco common stock that you will receive for each share of Lilly common stock accepted in the exchange offer, including whether the upper limit on the number of Elanco shares that can be received for each share of Lilly common stock validly tendered is in effect, will be announced by press release by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). At such time, the final exchange ratio will also be available at www.lillyexchangeoffer.com. In addition, as described below, you may also contact the information agent to obtain the final exchange ratio (after the time the final exchange ratio becomes available) at its toll-free number provided on the back cover of this prospectus.

12.    Will indicative exchange ratios be provided during the exchange offer period?

          Yes. A website will be maintained at www.lillyexchangeoffer.com that will provide the daily VWAPs of both Lilly common stock and Elanco common stock during the pendency of the exchange offer. You may also contact the information agent at its toll-free number provided on the back cover of this prospectus to obtain this information.

          Prior to the Averaging Period, commencing on the third trading day of the exchange offer, the website will also provide indicative exchange ratios for each day that will be calculated based on the indicative calculated per-share values of Lilly common stock and Elanco common stock on each day, calculated as though that day were the last day of the Averaging Period, by 4:30 p.m., New York City time. In other words, assuming that a given day is a trading day, the indicative exchange ratio will be calculated based on the simple arithmetic average of the daily VWAPs of Lilly common stock and Elanco common stock for that day and the immediately preceding two trading days. The indicative exchange ratio will also reflect whether the upper limit would have been in effect had such day been the last day of the Averaging Period.

          During the first two days of the Averaging Period, the website will provide indicative exchange ratios that will be calculated based on the Average Lilly Price and Average Elanco Price, as calculated by Lilly based on data reported by Bloomberg L.P. The website will not provide an indicative exchange ratio on the third day of the Averaging Period. The indicative exchange ratios will be calculated as follows: (i) on the first day of the Averaging Period, the indicative exchange ratio will be calculated based on the daily VWAPs of Lilly common stock and Elanco common stock for that first day of the Averaging Period and (ii) on the second day of the Averaging Period, the indicative exchange ratio will be calculated based on the simple arithmetic average of the daily VWAPs of Lilly common stock and Elanco common stock for the first and second days of the Averaging Period. During the first two days of the Averaging Period, the indicative exchange ratios will be updated on the website each day by 4:30 p.m., New York City time. The final exchange ratio, including whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect, will be announced by press release and be available on the website by 9:00 a.m., New York City time, on the trading day immediately

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preceding the expiration date of the offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019).

          In addition, a table indicating the number of shares of Elanco common stock that you would receive per share of Lilly common stock, calculated on the basis described above and taking into account the upper limit, assuming a range of averages of the VWAPs of Lilly common stock and Elanco common stock during the Averaging Period, is provided herein for purposes of illustration. See "The Exchange Offer — Terms of the Exchange Offer — Final Exchange Ratio."

13.    What if the trading market in either shares of Lilly common stock or Elanco common stock is disrupted on one or more days during the Averaging Period?

          If a market disruption event (as defined below under "The Exchange Offer — Terms of the Exchange Offer — Final Exchange Ratio") occurs with respect to shares of Lilly common stock or Elanco common stock on any day during the Averaging Period, the simple arithmetic average stock price of Lilly common stock and Elanco common stock will be determined using the daily VWAPs of shares of Lilly common stock and Elanco common stock on the preceding trading day or days, as the case may be, on which no market disruption event occurred. If, however, Lilly decides to extend the exchange offer period following a market disruption event, the Averaging Period will be reset. If a market disruption event occurs, Lilly may terminate the exchange offer if, in its reasonable judgment, the market disruption event has impaired the benefits of the exchange offer. See "The Exchange Offer — Conditions to Completion of the Exchange Offer."

14.    Are there circumstances under which I would receive fewer shares of Elanco common stock than I would have received if the exchange ratio were determined using the closing prices of the shares of Lilly common stock and Elanco common stock on the expiration date of the exchange offer?

          Yes. For example, if the trading price of shares of Lilly common stock were to increase during the last two trading days of the exchange offer, the Average Lilly Price would likely be lower than the closing price of shares of Lilly common stock on the expiration date of the exchange offer. As a result, you may receive fewer shares of Elanco common stock for each $100 of Lilly common stock than you would have if the Average Lilly Price were calculated on the basis of the closing price of shares of Lilly common stock on the expiration date of the exchange offer or on the basis of an Averaging Period that includes the last two trading days of the exchange offer. Similarly, if the trading price of Elanco common stock were to decrease during the last two trading days of the exchange offer, the Average Elanco Price would likely be higher than the closing price of shares of Elanco common stock on the expiration date of the exchange offer. This could also result in your receiving fewer shares of Elanco common stock for each $100 of Lilly common stock than you would otherwise receive if the Average Elanco Price were calculated on the basis of the closing price of shares of Elanco common stock on the expiration date of the exchange offer or on the basis of an Averaging Period that included the last two trading days of the exchange offer.

15.    Will I receive any fractional shares of Elanco common stock in the exchange offer?

          No. Fractional shares of Elanco common stock will not be distributed in the exchange offer. Instead, you will receive cash in lieu of a fractional share. The exchange agent, acting as agent for the Lilly shareholders otherwise entitled to receive a fractional share of Elanco common stock, will aggregate all fractional shares that would otherwise have been required to be distributed and cause them to be sold in the open market for the accounts of those shareholders. Any proceeds that the exchange agent realizes from the sale will be distributed, less any brokerage commissions or other fees, to each shareholder entitled thereto in accordance with such shareholder's proportional interest in the aggregate number of shares sold. The distribution of fractional share proceeds may

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take longer than the distribution of shares of Elanco common stock. As a result, shareholders may not receive fractional share proceeds at the same time they receive shares of Elanco common stock.

16.    Will all the shares of Lilly common stock that I tender be accepted in the exchange offer?

          Not necessarily. The maximum number of shares of Lilly common stock that will be accepted if the exchange offer is completed will be equal to the number of shares of Elanco common stock held by Lilly divided by the final exchange ratio (which will be subject to the upper limit). Lilly holds 293,290,000 shares of Elanco common stock. Accordingly, the largest possible number of shares of Lilly common stock that will be accepted equals 293,290,000 divided by the final exchange ratio. Depending on the number of shares of Lilly common stock validly tendered in the exchange offer and not validly withdrawn, and the Average Lilly Price and Average Elanco Price, Lilly may have to limit the number of shares of Lilly common stock that it accepts in the exchange offer through a proration process. Any proration of the number of shares accepted in the exchange offer will be determined on the basis of the proration mechanics described under "The Exchange Offer — Terms of the Exchange Offer — Proration; Odd-Lots."

17.    Are there any conditions to Lilly's obligation to complete the exchange offer?

          Yes. Lilly is not required to complete the exchange offer unless the conditions described under "The Exchange Offer — Conditions to Completion of the Exchange Offer" are satisfied or, where legally permitted, waived before the expiration of the exchange offer. For example, Lilly is not required to complete the exchange offer unless (i) at least 146,645,000 shares of Elanco common stock will be distributed in exchange for shares of Lilly common stock that are validly tendered in the exchange offer, and (ii) Lilly receives an opinion of counsel to the effect that the exchange offer will qualify for non-recognition of gain and loss under Sections 355 and 368(a)(1)(D) of the Code. The minimum number of shares of Lilly common stock that must be validly tendered in order for at least 146,645,000 shares of Elanco common stock to be distributed in the exchange offer is referred to as the "minimum amount." Lilly may waive any or all of the conditions to the exchange offer, subject to limited exceptions. Elanco has no right to waive any of the conditions to the exchange offer.

18.    How many shares of Lilly common stock will Lilly acquire if the exchange offer is completed?

          The number of shares of Lilly common stock that will be accepted if the exchange offer is completed will depend on the final exchange ratio and the number of shares of Lilly common stock validly tendered and not validly withdrawn. The maximum number of shares of Lilly common stock that will be accepted if the exchange offer is completed will be equal to the number of shares of Elanco common stock held by Lilly divided by the final exchange ratio (which will be subject to the upper limit). Lilly holds 293,290,000 shares of Elanco common stock. Accordingly, the largest possible number of shares of Lilly common stock that will be accepted equals 293,290,000 divided by the final exchange ratio. For example, assuming that the final exchange ratio is 4.5262 (the upper limit for shares of Elanco common stock that could be exchanged for one share of Lilly common stock), then Lilly would accept up to 64,798,286 shares of Lilly common stock.

19.    What happens if more than the minimum number of shares are validly tendered, but not enough shares of Lilly common stock are validly tendered to allow Lilly to exchange all of the shares of Elanco common stock it owns?

          In that case, following the completion of the exchange offer, Lilly will continue to hold shares of Elanco common stock not distributed in the exchange offer. Depending on the number of shares

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validly tendered and not validly withdrawn, Lilly may be able to influence the outcome of certain corporate actions requiring shareholder approval so long as it owns a significant portion of Elanco common stock and may retain certain rights pursuant to the master separation agreement. See "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly — Master Separation Agreement." If the exchange offer is not fully subscribed, and Lilly were to waive the minimum condition and continue to hold more than 50% of the outstanding Elanco common stock, then Elanco would continue to be considered a "controlled company" under NYSE rules. In such case, the typical independence requirements under the NYSE rules would not apply to Elanco.

          In addition, if Lilly does not exchange all of the shares of Elanco common stock it holds, Lilly intends to conduct one or more additional exchange offers and/or distribute all of its remaining shares of Elanco common stock through a special dividend to all Lilly shareholders, on a pro rata basis (a "pro rata spin-off"). In such event, Lilly and Elanco, as applicable, will file any documents required by U.S. securities laws in connection with such exchange offer or pro rata spin-off and will not rely on this prospectus or the registration statement of which it forms a part in connection with such distribution.

20.    What happens if the exchange offer is oversubscribed and Lilly is unable to accept all tenders of Lilly common stock at the exchange ratio?

          In that case, all shares of Lilly common stock that are validly tendered and not validly withdrawn will generally be accepted for exchange on a pro rata basis in proportion to the number of shares validly tendered, which is referred to as "proration." Shareholders who beneficially own "odd-lots" (less than 100 shares) of Lilly common stock and who validly tender all of their shares will not be subject to proration. For instance, if you beneficially own 50 shares of Lilly common stock and tender all 50 shares, your odd-lot will not be subject to proration. If, however, you hold less than 100 shares of Lilly common stock, but do not tender all of your shares, you will be subject to proration to the same extent as holders of more than 100 shares if the exchange offer is oversubscribed. Direct or beneficial holders of 100 or more shares of Lilly common stock will be subject to proration. In addition, shares held on behalf of participants in the Savings Plans (each of which holds more than 100 shares of Lilly common stock) will be subject to proration.

          Proration for each tendering shareholder will be based on the number of shares of Lilly common stock validly tendered by that shareholder in the exchange offer, and not on that shareholder's aggregate ownership of Lilly common stock. Any shares of Lilly common stock not accepted for exchange as a result of proration will be returned to tendering shareholders. Lilly will announce its preliminary determination, if any, of the extent to which tenders will be prorated by press release by 9:00 a.m., New York City time, on the business day immediately following the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). This preliminary determination is referred to as the "preliminary proration factor." Lilly will announce its final determination of the extent to which tenders will be prorated by press release promptly after this determination is made. This final determination is referred to as the "final proration factor."

21.    How long will the exchange offer be open?

          The period during which you are permitted to tender your shares of Lilly common stock in the exchange offer will expire at 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), unless the exchange offer is extended or terminated. Lilly may extend the exchange offer in the circumstances described in "The Exchange Offer — Extension; Amendment — Extension or Amendment by Lilly."

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          All holders who are tendering shares allocated to their Savings Plans accounts should follow the special instructions provided to them by or on behalf of their applicable plan administrator.

22.    Under what circumstances can the exchange offer be extended by Lilly?

          Lilly can extend the exchange offer at any time, in its sole discretion, and regardless of whether any condition to the exchange offer has been satisfied or, where legally permitted, waived. If Lilly extends the exchange offer, it must publicly announce the extension by press release at any time prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date of the exchange offer.

23.    How do I decide whether to participate in the exchange offer?

          Whether you should participate in the exchange offer depends on many factors. You should examine carefully your specific financial position, plans and needs before you decide whether to participate, as well as the relative risks associated with an investment in Elanco and Lilly.

          In addition, you should consider all of the factors described in "Risk Factors." None of Lilly, Elanco or any of their respective directors or officers or any of the dealer managers or any other person makes any recommendation as to whether you should tender all, some or none of your shares of Lilly common stock. You must make your own decision after carefully reading this prospectus, and the documents incorporated by reference, and consulting with your advisors in light of your own particular circumstances. You are strongly encouraged to read this prospectus in its entirety, including all documents referred to herein, very carefully.

24.    How do I participate in the exchange offer?

          The procedures you must follow to participate in the exchange offer will depend on whether you hold your shares of Lilly common stock in certificated form, in uncertificated form registered directly in your name in Lilly's share register ("Direct Registration Shares"), or through a broker, dealer, commercial bank, trust company, custodian or similar institution or otherwise. For specific instructions about how to participate, see "The Exchange Offer — Procedures for Tendering."

25.    Can I tender only a part of my Lilly common stock in the exchange offer?

          Yes. You may tender all, some or none of your Lilly common stock.

26.    Will holders of Lilly unvested restricted stock units ("RSUs"), performance awards or shareholder value awards have the opportunity to exchange their Lilly RSUs, performance awards or shareholder value awards for Elanco common stock in the exchange offer?

          No, holders of unvested RSUs, performance awards or shareholder value awards cannot tender the shares underlying such awards in the exchange offer. If you hold shares of Lilly common stock as a result of the vesting and settlement of RSUs, performance awards or shareholder value awards during the exchange offer period, these shares can be tendered in the exchange offer.

27.    How can I participate in the exchange offer if shares of Lilly common stock are held for my account under a Savings Plan?

          Shares of Lilly common stock held for the account of participants in the Savings Plans are eligible for participation in the exchange offer. A Savings Plan participant may direct that all, some or none of the shares of Lilly common stock allocated to his or her Savings Plan account be exchanged, subject to the Savings Plan's rules for participating in the exchange offer.

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          A Savings Plan's rules and procedures for tendering shares held by the Savings Plan for the account of participants will be different than those described in this prospectus. For example, the process for submitting instructions to tender or withdraw the tender of Savings Plan shares may be different, and the deadlines for receipt of such instructions may be earlier than the expiration date of the exchange offer (including any extensions thereof). Proceeds from the exchange offer may be provided to Savings Plan participants in the form of units of the Saving Plan's Elanco Stock Fund that contain a cash component. Such units may be credited later than described in this prospectus and may not be subject to the treatment of fractional shares as described in this prospectus. With respect to The Lilly Employee 401(k) Plan and The Savings Plan for Lilly Affiliate Employees in Puerto Rico, shares of Elanco common stock will only be held for a limited duration (i.e., until on or about December 11, 2019), after which time investments in the saving plan's Elanco Stock Fund will be liquidated and reinvested in the investment fund designated as such savings plan's qualified default investment alternative (i.e., the appropriate target date portfolio based on the year you turn age 60). With respect to The Elanco US Inc. 401(k) Plan, whether or not a participant in such savings plan elects to participate in the exchange offer, shares of both Lilly common stock and Elanco common stock will be held for a limited duration (i.e., until on or about December 11, 2019), after which time investments in both the saving plan's Lilly Stock Fund and Elanco Stock Fund will be liquidated and reinvested in the investment fund designated as such saving plan's qualified default investment alternative. Savings Plan participants may face different risks than other participants in the exchange offer due to these different rules.

          The Savings Plans' rules are described in a separate notice, which will be made available to the Savings Plan participants. Savings Plan participants should consult this additional notice together with this prospectus in deciding whether or not to participate in the exchange offer with respect to their Savings Plan shares.

28.    What do I do if I want to retain all of my Lilly common stock?

          If you want to retain your Lilly common stock, you do not need to take any action in connection with the exchange offer.

29.    Will I be able to withdraw the shares of Lilly common stock that I tender in the exchange offer?

          Yes. You may withdraw shares tendered at any time before the exchange offer expires. See "The Exchange Offer — Withdrawal Rights." If you change your mind again before the expiration of the exchange offer, you can re-tender your Lilly common stock by following the tender procedures again.

30.    Will I be able to withdraw the shares of Lilly common stock that I tender in the exchange offer before and after the final exchange ratio has been determined?

          Yes. The final exchange ratio used to determine the number of shares of Elanco common stock that you will receive for each share of Lilly common stock accepted in the exchange offer, including whether the upper limit is in effect, will be announced by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). The expiration date of the exchange offer may be extended or the exchange offer may be terminated. You have a right to withdraw shares of Lilly common stock you have tendered for two trading days after the final exchange ratio has been established. If you change your mind again before the expiration of the exchange offer, you can re-tender shares of Lilly common stock by following the exchange procedures again prior to the expiration of the exchange offer. See "The Exchange Offer — Withdrawal Rights."

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          If you are a registered holder of Lilly common stock (which includes persons holding certificated shares and Direct Registration Shares), you must provide a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019). The information that must be included in that notice is specified under "The Exchange Offer — Withdrawal Rights."

          If you hold your shares through a broker, dealer, commercial bank, trust company, custodian or similar institution, you should consult with that institution on the procedures with which you must comply and the time by which such procedures must be completed in order for that institution to provide a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent on your behalf before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019). If you hold your shares through such an institution, that institution must deliver the notice of withdrawal with respect to any shares you wish to withdraw. In such a case, as a beneficial owner and not a registered shareholder, you will not be able to provide a notice of withdrawal for such shares directly to the exchange agent. The Depository Trust Company ("DTC") is expected to remain open until 5:00 p.m., New York City time, and institutions may be able to process withdrawals through DTC until that time (although there is no assurance that will be the case). Once DTC has closed, if you beneficially own shares that were previously delivered through DTC, then in order to withdraw your shares the institution through which your shares are held must deliver a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent prior to 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019). Such notice of withdrawal must be in the form of DTC's notice of withdrawal. Shares can be withdrawn only if the exchange agent receives a withdrawal notice directly from the relevant institution that tendered the shares through DTC. On the last day of the exchange offer, beneficial owners who cannot contact the institution through which they hold their shares will not be able to withdraw their shares.

          If you hold your shares through the Savings Plans, you will be provided with special instructions by or on behalf of your plan administrator on how to withdraw your shares and you must deliver any required information in a timely manner in order for the tabulator for the Savings Plans to withdraw your election to exchange from the final tabulation. The deadline will be specified in the special instructions provided to you (or, if the exchange offer is extended, on the new plan participant withdrawal deadline).

31.    How soon will I receive delivery of my Elanco common stock once I have validly tendered my Lilly common stock?

          Assuming the shares of Lilly common stock validly tendered in the exchange offer have been accepted for exchange, the exchange agent will cause shares of Elanco common stock to be credited in book-entry form to direct registered accounts maintained by Elanco's transfer agent for your benefit (or, in the case of shares tendered through DTC, to the account of DTC so that DTC can credit the relevant DTC participant and such participant can credit you) promptly after the expiration of the exchange offer. See "The Exchange Offer — Delivery of Elanco Common Stock; Book-Entry Accounts."

32.    Will I be taxed on the shares of Elanco common stock that I receive in the exchange offer?

          The exchange offer is conditioned upon the receipt by Lilly of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), to the effect that the exchange offer will qualify as a

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tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code and that, for U.S. federal income tax purposes, except with respect to the receipt of cash in lieu of fractional shares, holders of Lilly common stock will recognize no gain or loss upon the receipt of shares of Elanco common stock in the exchange offer. A holder of Lilly common stock will generally recognize capital gain or loss with respect to cash received in lieu of a fractional share of Elanco common stock.

          Please see "Risk Factors — Risks Related to the Exchange Offer — The exchange offer could result in significant tax liability," "Risk Factors — Risks Related to Elanco Common Stock — If there is a later determination that the exchange offer is taxable for U.S. federal income tax purposes because the facts, assumptions, representations or undertakings underlying the tax opinion are incorrect or for any other reason, then Lilly and its shareholders could incur significant U.S. federal income tax liabilities, and Elanco could incur significant liabilities" and "Material U.S. Federal Income Tax Consequences" for more information regarding the tax opinion and the potential tax consequences of the exchange offer. Holders of Lilly common stock should consult their tax advisor as to the particular tax consequences to them of the exchange offer.

33.    Are there any appraisal rights for holders of Lilly or Elanco common stock?

          There are no appraisal rights available to Lilly shareholders or Elanco shareholders in connection with the exchange offer.

34.    What is the accounting treatment of the exchange offer?

          The shares of Lilly common stock acquired by Lilly in the exchange offer will be recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of Lilly common stock accepted in the exchange offer at its expiration. Any difference between the net book value of Elanco attributable to Lilly and the market value of the shares of Lilly common stock acquired at that date will be recognized by Lilly as a gain on disposal of discontinued operations net of any direct and incremental expenses of the exchange offer on the disposal of its Elanco common stock.

          Also, upon completion of the exchange offer, Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco.

35.    What will Lilly do with the shares of Lilly common stock it acquires in the exchange offer?

          Lilly common stock acquired by Lilly in the exchange offer will be held as treasury stock unless and until retired or used for other purposes.

36.    What is the impact of the exchange offer on the number of Lilly shares outstanding?

          Any Lilly common stock acquired by Lilly in the exchange offer will reduce the total number of Lilly shares outstanding, although Lilly's actual number of shares outstanding on a given date reflects a variety of factors, such as the vesting and settlement of RSUs, performance awards or shareholder value awards.

37.    Do the statements on the cover page regarding this prospectus being subject to change and the registration statement filed with the SEC not yet being effective mean that the exchange offer has not commenced?

          As permitted under SEC rules, Lilly has commenced the exchange offer without the registration statement, of which this prospectus forms a part, having been declared effective by the SEC. Lilly cannot, however, complete the exchange offer and accept for exchange any shares of

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Lilly common stock validly tendered and not validly withdrawn in the exchange offer until the registration statement is effective and the other conditions to the exchange offer have been satisfied or, where legally permitted, waived.

38.    Where can I find out more information about Lilly and Elanco?

          You can find out more information about Lilly and Elanco by reading this prospectus and, with respect to Lilly, from various sources described in "Incorporation by Reference."

39.    Whom should I call if I have questions about the exchange offer or want copies of additional documents?

          You may ask any questions about the exchange offer or request copies of the exchange offer documents and the other information incorporated by reference in this prospectus, without charge, from the information agent, Georgeson LLC, at 1290 Avenue of the Americas, 9th Floor, New York, NY 10104 or by calling 1-800-676-0194 (toll-free for shareholders, banks and brokers) or +1-781-575-2137 (all others outside the U.S.).

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SUMMARY

          This summary does not contain all of the information that may be important to you. You should carefully read this entire prospectus and the other documents to which it refers to understand the exchange offer. See "Incorporation by Reference."

The Companies

Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
(317) 276-2000

          Lilly, an Indiana corporation, is a leading worldwide research-based pharmaceutical company. Founded in Indianapolis, Indiana, in 1876 by Colonel Eli Lilly, Lilly is engaged in the discovery, development, manufacture, marketing and sale of human pharmaceutical products. Lilly's purpose is to unite caring with discovery to create medicines that make life better for people around the world. Most of the products sold by Lilly today were discovered or developed by Lilly's own scientists, and Lilly's success depends to a great extent on its ability to continue to discover, develop and bring to market innovative new medicines. Lilly sells a broad range of patented pharmaceutical products, primarily in the following disease categories: diabetes and other endocrine diseases; cancer; cardiovascular diseases; autoimmune diseases; and central nervous system diseases.

Elanco Animal Health Incorporated
2500 Innovation Way
Greenfield, Indiana 46140
(877) 352-6261

          Elanco, an Indiana corporation, is a premier animal health company that innovates, develops, manufactures and markets products for companion and food animals. Headquartered in Greenfield, Indiana, Elanco is the fourth largest animal health company in the world, with revenue of $3.1 billion for the year ended December 31, 2018. Globally, Elanco is #1 in medicinal feed additives, #2 in poultry and #3 in cattle, measured by 2017 revenue, according to Vetnosis. Elanco has one of the broadest portfolios of pet parasiticides in the companion animal sector and offers a diverse portfolio of more than 125 brands that make Elanco a trusted partner to veterinarians and food animal producers in more than 90 countries. Elanco operates its business in a single segment directed at fulfilling its vision of enriching the lives of people through food — making protein more accessible and affordable — and through pet companionship — helping pets live longer, healthier lives. Elanco advances its vision by offering products in four primary categories: companion animal disease prevention ("CA Disease Prevention"); companion animal therapeutics ("CA Therapeutics"); food animal future protein & health ("FA Future Protein & Health"); and food animal ruminants & swine ("FA Ruminants & Swine").

The Exchange Offer

Terms of the Exchange Offer

          Lilly is offering to exchange up to an aggregate of 293,290,000 shares of Elanco common stock for outstanding shares of Lilly common stock that are validly tendered and not validly withdrawn. You may tender all, some or none of your shares of Lilly common stock.

          Shares of Lilly common stock validly tendered and not validly withdrawn will be accepted for exchange at the final exchange ratio on the terms and conditions of the exchange offer and subject to the limits described below, including the proration provisions. Shares not accepted for exchange

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will be returned to the tendering shareholder promptly following the expiration or termination of the exchange offer, as applicable.

Extension; Amendment; Termination

          The exchange offer, and your withdrawal rights, will expire at 12:00 midnight, New York City time, at the end of the day on March 8, 2019, unless the exchange offer is extended or terminated. You must tender your shares of Lilly common stock before this time if you want to participate in the exchange offer. Lilly may extend, amend or terminate the exchange offer as described in this prospectus.

Conditions to Completion of the Exchange Offer

          The exchange offer is subject to various conditions, including that (i) at least 146,645,000 shares of Elanco common stock will be distributed in exchange for shares of Lilly common stock that are validly tendered in the exchange offer and (ii) Lilly receives an opinion of counsel to the effect that the exchange offer will qualify for non-recognition of gain and loss under Sections 355 and 368(a)(1)(D) of the Code. All conditions to the completion of the exchange offer must be satisfied or, where legally permitted, waived by Lilly before the expiration of the exchange offer. Lilly may waive any or all of the conditions to the exchange offer, subject to limited exceptions. See "The Exchange Offer — Conditions to Completion of the Exchange Offer."

Proration; Odd-Lots

          If, as of 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), Lilly shareholders have validly tendered more shares of Lilly common stock than Lilly is able to accept for exchange, Lilly will accept for exchange the shares of Lilly common stock validly tendered and not validly withdrawn by each tendering shareholder on a pro rata basis, based on the proportion that the total number of shares of Lilly common stock to be accepted for exchange bears to the total number of shares of Lilly common stock validly tendered and not validly withdrawn (rounded to the nearest whole number of shares of Lilly common stock and subject to any adjustment necessary to ensure the exchange of all shares of Elanco common stock owned by Lilly), except for tenders of odd-lots, as described below.

          Except as otherwise provided in this section, beneficial holders of less than 100 shares of Lilly common stock who validly tender all of their shares will not be subject to proration if the exchange offer is oversubscribed. Direct or beneficial holders of more than 100 shares of Lilly common stock, and those who own less than 100 shares but do not tender all of their shares, will be subject to proration. In addition, shares held on behalf of participants in the Savings Plans (each of which holds more than 100 shares of Lilly common stock) will be subject to proration.

          Lilly will announce the preliminary proration factor, if any, by press release by 9:00 a.m., New York City time, on the trading day immediately following the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). Upon determining the number of shares of Lilly common stock validly tendered for exchange, Lilly will announce the final results, including the final proration factor, if any.

Fractional Shares

          Fractional shares of Elanco common stock will not be distributed in the exchange offer. The exchange agent, acting as agent for the tendering Lilly shareholders, will aggregate any fractional shares that would otherwise have been required to be distributed and cause them to be sold in the open market. You will receive the proceeds, if any, less any brokerage commissions or other fees,

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from the sale of these shares in accordance with your proportional interest in the aggregate number of shares sold. The distribution of fractional share proceeds may take longer than the distribution of shares of Elanco common stock. As a result, shareholders may not receive fractional share proceeds at the same time they receive shares of Elanco common stock.

          Holders who are tendering shares allocated to their Savings Plans accounts should refer to the special instructions provided to them by or on behalf of their applicable plan administrator for information that is specific to the Savings Plans.

Procedures for Tendering

          The procedures you must follow to participate in the exchange offer will depend on how you hold your shares of Lilly common stock. For you to validly tender your shares of Lilly common stock pursuant to the exchange offer, before the expiration of the exchange offer, you will need to take the following steps:

    If you hold certificates for shares of Lilly common stock, you must deliver to the exchange agent at the appropriate address listed on the letter of transmittal a properly completed and duly executed letter of transmittal, together with any required signature guarantees and any other required documents, and the certificates representing the shares of Lilly common stock tendered;

    If you hold Direct Registration Shares, you must deliver to the exchange agent pursuant to one of the methods set forth in the letter of transmittal a properly completed and duly executed letter of transmittal, together with any required signature guarantees and any other required documents. Because certificates are not issued for Direct Registration Shares, you do not need to deliver any certificates representing those shares to the exchange agent;

    If you hold shares of Lilly common stock through a broker, dealer, commercial bank, trust company, custodian or similar institution, you should receive instructions from that institution on how to participate in the exchange offer. In this situation, do not complete the letter of transmittal. Please contact the institution through which you hold your shares directly if you have not yet received instructions. Some financial institutions may effect tenders by book-entry transfer through DTC;

    Participants in the Savings Plans should follow the special instructions that are being sent to them by or on behalf of their applicable plan administrator. Such participants should not use the letter of transmittal to direct the tender of shares of Lilly common stock held in these plans, but should instead use the exchange offer election form provided to them by or on behalf of their plan administrator. Such participants may direct the applicable plan trustee to tender all, some or none of the shares of Lilly common stock allocated to their Savings Plan accounts, subject to any limitations set forth in the special instructions provided to them. Lilly and Elanco have been informed that instructions to tender or withdraw by participants in the Savings Plans must be made by a date that is earlier than the expiration date of the exchange offer, which will be specified in the special instructions sent by or on behalf of the applicable plan administrator; and

    If you wish to tender your shares of Lilly common stock that are in certificated form but the share certificates are not immediately available, time will not permit shares or other required documentation to reach the exchange agent before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer or the procedure for book-entry transfer cannot be completed on a timely basis, you must follow the procedures for guaranteed delivery described under "The Exchange Offer — Procedures for Tendering — Guaranteed Delivery Procedures."

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Delivery of Shares of Elanco Common Stock

          Assuming the shares of Lilly common stock validly tendered in the exchange offer have been accepted for exchange, the exchange agent will cause shares of Elanco common stock to be credited in book-entry form to direct registered accounts maintained by Elanco's transfer agent for the benefit of the respective holders (or, in the case of shares tendered through DTC, to the account of DTC so that DTC can credit the relevant DTC participant and such participant can credit its respective account holders) promptly after the expiration of the exchange offer. Certificates representing shares of Elanco common stock will not be issued pursuant to the exchange offer.

Withdrawal Rights

          You may withdraw your tendered shares of Lilly common stock at any time before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019). If you change your mind again before the expiration of the exchange offer, you may re-tender your shares of Lilly common stock by again following the exchange offer procedures.

          In order to withdraw your shares, you must provide a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent. The information that must be included in that notice is specified under "The Exchange Offer — Withdrawal Rights."

          If you hold shares of Lilly common stock through the Savings Plans, you will be provided with special instructions by or on behalf of your plan administrator on how to withdraw your shares and you must deliver any required information in a timely manner in order for the tabulator for the Savings Plans to withdraw your election to exchange from the final tabulation. The deadline will be specified in the special instructions provided to you (or, if the exchange offer is extended, any new withdrawal deadline established by the plan administrator).

          If you hold your shares through a broker, dealer, commercial bank, trust company, custodian or similar institution, you should consult with that institution on the procedures with which you must comply and the time by which such procedures must be completed in order for that institution to provide a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent on your behalf before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019). If you hold your shares through such an institution, that institution must deliver the notice of withdrawal with respect to any shares you wish to withdraw. In such a case, as a beneficial owner and not a registered shareholder, you will not be able to provide a notice of withdrawal for such shares directly to the exchange agent.

No Appraisal Rights

          No appraisal rights are available to Lilly shareholders or Elanco shareholders in connection with the exchange offer.

Legal and Other Limitations; Certain Matters Relating to Non-U.S. Jurisdictions

          Although Lilly may deliver this prospectus to shareholders located outside the United States, this prospectus is not an offer to sell or exchange and it is not a solicitation of an offer to buy any shares of Lilly common stock in any jurisdiction in which such offer, sale or exchange is not permitted. This prospectus has not been reviewed or approved by any stock exchange on which shares of Lilly common stock are listed.

          Countries outside the United States generally have their own legal requirements that govern securities offerings made to persons resident in those countries and often impose stringent

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requirements about the form and content of offers made to the general public. Lilly has not taken any action under those non-U.S. regulations to qualify the exchange offer outside the United States but may take steps to facilitate participation of shareholders from certain jurisdictions. Therefore, the ability of any non-U.S. person to tender Lilly common stock in the exchange offer will depend on whether there is an exemption available under the laws of such person's home country that would permit the person to participate in the exchange offer without the need for Lilly or Elanco to take any action to qualify or otherwise facilitate the exchange offer in that country or otherwise. For example, some countries exempt transactions from the rules governing public offerings if they involve persons who meet certain eligibility requirements relating to their status as sophisticated or professional investors.

          All tendering shareholders must make certain representations in the letter of transmittal, including, in the case of non-U.S. shareholders, as to the availability of an exemption under their home country laws that would allow them to participate in the exchange offer without the need for Lilly or Elanco to take any action to facilitate a public offering in that country or otherwise. Lilly will rely on those representations and, unless the exchange offer is terminated, plans to accept shares validly tendered by persons who properly complete the letter of transmittal and provide any other required documentation on a timely basis and as otherwise described herein.

          Non-U.S. shareholders should consult their advisors in considering whether they may participate in the exchange offer in accordance with the laws of their home countries and, if they do participate, whether there are any restrictions or limitations on transactions in Lilly common stock or Elanco common stock that may apply in their home countries. Lilly, Elanco and the dealer managers cannot provide any assurance about whether such limitations exist.

Potential Additional Distribution of Elanco Common Stock

          Lilly has informed Elanco that, following the completion of the exchange offer, in the event that more than the minimum amount of shares are validly tendered but not enough shares of Lilly common stock are validly tendered to allow Lilly to exchange all of its shares of Elanco common stock, Lilly intends, from time to time, to conduct one or more additional exchange offers and/or a pro rata spin-off of its remaining interest in Elanco. In such event, Lilly and Elanco, as applicable, will file any documents required by U.S. securities laws in connection with such exchange offer or pro rata spin-off and will not rely on this prospectus or the registration statement of which it forms a part in connection with such distribution.

Risk Factors

          In deciding whether to tender your shares of Lilly common stock, you should carefully consider in their entirety the matters described in "Risk Factors," as well as other information included in this prospectus and the other documents incorporated by reference herein.

Regulatory Approval

          Certain acquisitions of Elanco common stock under the exchange offer may require a premerger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott-Rodino Act"). If you decide to participate in the exchange offer and acquire enough shares of Elanco common stock to exceed the $84.4 million threshold stated in the Hart-Scott-Rodino Act and associated regulations, and if no exemption under the Hart-Scott-Rodino Act or associated regulations applies, Lilly and you will be required to make filings under the Hart-Scott-Rodino Act and you will be required to pay the applicable filing fee. A filing requirement could delay the exchange of shares with any shareholder or shareholders required to make such a filing until the waiting periods in the Hart-Scott-Rodino Act have expired or been terminated.

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Material U.S. Federal Income Tax Consequences

          The completion of the exchange offer is conditioned upon the receipt by Lilly of the opinion of Skadden Arps, to the effect that the exchange offer will qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code and that, for U.S. federal income tax purposes, except with respect to the receipt of cash in lieu of fractional shares, holders of Lilly common stock will recognize no gain or loss upon the receipt of shares of Elanco common stock in the exchange offer. A holder of Lilly common stock will generally recognize capital gain or loss with respect to cash received in lieu of a fractional share of Elanco common stock.

          If the exchange offer were determined not to qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code, each Lilly shareholder who receives shares of Elanco common stock in the exchange offer would generally be treated as recognizing taxable gain or loss equal to the difference between the fair market value of the shares of Elanco common stock received by the shareholder and its tax basis in the shares of Lilly common stock exchanged therefor, or, in certain circumstances, as receiving a taxable distribution equal to the fair market value of the shares of Elanco common stock received by the shareholder.

          In addition, Lilly would generally recognize gain with respect to the transfer of Elanco common stock in the exchange offer, as well as with respect to the receipt of certain cash proceeds from Elanco in connection with the Elanco initial public offering (also referred to as the "IPO").

          The exchange offer could be taxable to Lilly, but not its shareholders, if Elanco or its shareholders were to engage in certain transactions after the exchange offer is completed. In such cases, Elanco would be required to indemnify Lilly for any resulting taxes and related expenses, which amount could be material.

          Please see "Risk Factors — Risks Related to the Exchange Offer — The exchange offer could result in significant tax liability," "Risk Factors — Risks Related to Elanco Common Stock — If there is a later determination that the exchange offer is taxable for U.S. federal income tax purposes because the facts, assumptions, representations or undertakings underlying the tax opinion are incorrect or for any other reason, then Lilly and its shareholders could incur significant U.S. federal income tax liabilities, and Elanco could incur significant liabilities" and "Material U.S. Federal Income Tax Consequences" for more information regarding the tax opinion and the potential tax consequences of the exchange offer. Holders of Lilly common stock should consult their tax advisor as to the particular tax consequences to them of the exchange offer.

Accounting Treatment of the Exchange Offer

          The shares of Lilly common stock acquired by Lilly in the exchange offer will be recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of Lilly common stock accepted in the exchange offer at its expiration. Any difference between the net book value of Elanco attributable to Lilly and the market value of the shares of Lilly common stock acquired at that date will be recognized by Lilly as a gain on disposal of discontinued operations net of any direct and incremental expenses of the exchange offer on the disposal of its Elanco common stock.

          Also, upon completion of the exchange offer, Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco.

Comparison of Shareholder Rights

          Lilly and Elanco are both organized under the laws of the State of Indiana. Differences in the rights of a shareholder of Lilly from those of a shareholder of Elanco arise principally from

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provisions of the constitutive documents of each of Lilly and Elanco. See "Comparison of Shareholder Rights."

The Exchange Agent and the Tabulator for the Savings Plans

          The exchange agent for the exchange offer and the tabulator for the Savings Plans is Computershare Trust Company, N.A.

The Information Agent

          The information agent for the exchange offer is Georgeson LLC.

The Dealer Managers

          The dealer managers for the exchange offer are Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC. These firms are referred to as the "dealer managers."

Selected Historical and Pro Forma Financial Data for Lilly and Elanco

Lilly Selected Historical Consolidated and Pro Forma Financial Data

          The following table sets forth Lilly's selected historical consolidated financial data for the periods indicated. The selected historical consolidated statements of operations data for the years ended December 31, 2018, 2017 and 2016 and the consolidated balance sheets data as of December 31, 2018 and 2017 are derived from Lilly's audited consolidated financial statements and related notes contained in its Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference into this prospectus. The selected historical consolidated statements of operations data for the years ended December 31, 2015 and 2014 and the consolidated balance sheets data as of December 31, 2016, 2015 and 2014 have been derived from Lilly's audited consolidated financial statements for such years, which have not been incorporated into this prospectus by reference.

          The data shown below are not necessarily indicative of results to be expected for any future period. You should read the following information together with Lilly's audited consolidated financial statements and the notes related thereto and "Management's Discussion and Analysis of Results of Operations and Financial Condition" contained in Lilly's Annual Report on Form 10-K for the year ended December 31, 2018, which are incorporated by reference into this prospectus.

          The selected unaudited pro forma condensed consolidated statement of operations data for the year ended December 31, 2018, and the unaudited pro forma condensed consolidated statement of financial position at December 31, 2018, presented below have been derived from Lilly's unaudited pro forma condensed consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma information set forth below reflects Lilly's historical audited consolidated annual financial information, as adjusted to give effect to the exchange offer. The unaudited pro forma information is illustrative and not intended to represent what Lilly's results of operations or financial position would have been had the exchange offer occurred on the dates indicated or project Lilly's results of operations or financial position for any future period. For an understanding of the pro forma financial statements that give pro forma effect to the exchange offer, see "Eli Lilly and Company Unaudited Pro Forma Condensed Consolidated Financial Statements" included elsewhere in this prospectus.

          The unaudited pro forma condensed consolidated statement of financial position gives effect to the exchange offer, as if it had occurred at December 31, 2018, assuming the exchange offer is completed and fully subscribed. The unaudited pro forma condensed consolidated statement of

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operations for the year ended December 31, 2018 is presented as if such events had occurred on January 1, 2018.

          Based on Lilly's historical ownership of Elanco, the data shown below are impacted by assets, liabilities, results of operations or cash flows attributable to Elanco. Upon completion of the exchange offer, Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco. You should read the information set forth below together with "Eli Lilly and Company Unaudited Pro Forma Condensed Consolidated Financial Statements" included elsewhere in this prospectus for further discussion of discontinued operations.

 
  Year Ended/As of December 31,  
 
  Pro Forma   Historical  
(Millions, except per common share data and ratios)
  2018   2018   2017   2016   2015   2014  

Statement of operations data:

                                     

Revenues

  $ 21,488.9   $ 24,555.7   $ 22,871.3   $ 21,222.1   $ 19,958.7   $ 19,615.6  

Costs, Expenses and other(a)

    17,543.0     20,278.0     19,000.3     17,465.6     16,801.0     16,146.6  

Asset impairment, restructuring and other special charges

    266.9     482.0     1,673.6     382.5     367.7     468.7  

Income from continuing operations

    3,132.6     3,232.0     (204.1 )   2,737.6     2,408.4     2,390.5  

Balance sheet data:

                                     

Current assets

  $ 18,320.5   $ 20,549.6   $ 19,202.1   $ 15,101.4   $ 12,573.6   $ 12,179.8  

Noncurrent assets

    16,906.0     23,358.8     25,778.9     23,704.5     22,995.3     24,998.4  

Total assets

    35,226.5     43,908.4     44,981.0     38,805.9     35,568.9     37,178.2  

Current liabilities

    11,225.2     11,888.1     14,535.9     10,986.6     8,229.6     11,207.5  

Noncurrent liabilities

    18,306.3     21,111.2     18,777.2     13,738.8     12,749.0     10,582.6  

Long-term debt (also included in Noncurrent liabilities above)

    9,196.4     11,639.7     9,940.5     8,367.8     7,972.4     5,367.7  

Noncontrolling interests

    71.1     1,080.4     75.7     72.8     19.0     14.9  

Earnings per common share — basic

  $ 3.26   $ 3.14   $ (0.19 ) $ 2.59   $ 2.27   $ 2.23  

Earnings per common share — diluted

  $ 3.24   $ 3.13   $ (0.19 ) $ 2.58   $ 2.26   $ 2.23  

Cash dividends declared per common share

      $ 2.33   $ 2.12   $ 2.05   $ 2.01   $ 1.97  

Weighted-average shares — basic

    960.5     1,027.7     1,052.0     1,058.3     1,061.9     1,069.9  

Weighted-average shares — diluted

    966.5     1,033.7     1,052.0     1,061.8     1,065.7     1,074.3  

Book value per common share(b)

      $ 9.30   $ 10.54   $ 12.72   $ 13.18   $ 13.84  

Total outstanding shares

    989.8     1,057.0     1,100.0     1,100.9     1,105.3     1,110.6  

(a)
Includes costs of sales, research and development, marketing, selling and administrative, acquired in-process research and development and other (income) expense, net.

(b)
Represents Lilly shareholders' equity divided by the actual number of outstanding shares, in each case excluding treasury stock.

Elanco Selected Historical Consolidated and Combined and Pro Forma Financial Data

          Elanco reports its financial results in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The selected historical consolidated and combined statements of operations data for the years ended December 31, 2018, 2017 and 2016 and the consolidated and combined balance sheets data as of December 31, 2018 and 2017 presented below have been derived from Elanco's consolidated and combined financial statements included elsewhere in this prospectus. The selected historical combined statement of operations data for the year ended December 31, 2015 and the combined balance sheet data as of December 31, 2016 presented below have been derived from Elanco's audited combined financial information not included elsewhere in this prospectus. The selected historical combined statement of operations data for the

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year ended December 31, 2014 and the combined balance sheet data as of December 31, 2015 and 2014 presented below have been derived from Elanco's unaudited combined financial information not included elsewhere in this prospectus.

          Elanco's combined financial statements for the periods prior to the IPO include the attribution of certain assets and liabilities that have historically been held at the Lilly corporate level but which are specifically identifiable or attributable to Elanco. Elanco's combined financial statements for the period prior to the IPO also include expense allocations related to certain Lilly corporate functions, including executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations. These expenses have been allocated to Elanco based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount or other measures. Elanco believes that this expense methodology, and the results thereof, is reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred if Elanco had operated as an independent, publicly traded company for the periods presented. It is impractical to estimate what Elanco's standalone costs would have been for the historical periods presented.

          The selected unaudited pro forma condensed consolidated and combined statement of operations data for the year ended December 31, 2018 presented below have been derived from Elanco's unaudited pro forma condensed consolidated and combined statement of operations included elsewhere in this prospectus. The unaudited pro forma information set forth below reflects Elanco's historical consolidated and combined statement of operations, as adjusted to give effect to the Transactions (as defined below) as if they had occurred as of January 1, 2018. The unaudited pro forma information is illustrative and not intended to represent what Elanco's results of operations or financial position would have been had the Transactions occurred on the date indicated or to project Elanco's results of operations or financial position for any future period. For an understanding of the pro forma statement of operations that give pro forma effect to the Transactions, see "Elanco Animal Health Incorporated Unaudited Pro Forma Condensed Consolidated and Combined Statement of Operations" included elsewhere in this prospectus.

          The financial statements included in this prospectus may not be indicative of Elanco's future performance and do not necessarily reflect what Elanco's financial position and results of operations would have been had Elanco operated as an independent, publicly traded company for the entirety of the periods presented, including changes that occurred and will occur in Elanco's operations and capital structure as a result of the IPO and the separation.

          The unaudited pro forma condensed consolidated and combined statement of operations gives effect to the following transactions, which are referred to, collectively, as the "Transactions," as if they each had occurred on January 1, 2018:

    the impact of the Debt Transactions (as defined below under "The Transaction") and the use of the proceeds therefrom.

          Due to local regulatory and operational requirements, in certain non-U.S. jurisdictions, the transfer of certain assets and liabilities of Lilly's animal health businesses will occur following the date of this prospectus. Elanco has not adjusted the accompanying unaudited pro forma condensed consolidated and combined statement of operations for the potential impact of such delayed transfers because any impact of these transfers is not material to its unaudited pro forma condensed consolidated and combined statement of operations, individually or in the aggregate.

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          You should read the information set forth below together with "Elanco Animal Health Incorporated Unaudited Pro Forma Condensed Consolidated and Combined Statement of Operations," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Elanco" and Elanco's consolidated and combined financial statements and the related notes thereto included elsewhere in this prospectus.

          Year Ended December 31,
 

    Pro Forma     Historical
 

    2018     2018     2017     2016     2015     2014
 

    (In millions, except per share data)  

Statement of Operations Data:

                                     

Revenue

  $ 3,066.8   $ 3,066.8   $ 2,889.0   $ 2,913.5   $ 2,909.1   $ 2,066.0  

Costs, expenses and other:

                                     

Cost of sales

    1,573.8     1,573.8     1,493.9     1,409.0     1,533.7     932.6  

Research and development

    246.6     246.6     251.7     265.8     291.0     208.5  

Marketing, selling and administrative

    735.2     735.2     779.8     784.8     916.0     561.2  

Amortization of intangible assets

    197.4     197.4     221.2     170.7     163.0     57.6  

Asset impairment, restructuring and other special charges

    128.8     128.8     375.1     308.4     263.3     38.8  

Interest expense, net of capitalized interest

    110.7     29.6                  

Other (income) expense, net

    41.3     41.3     (0.1 )   (2.8 )   1.6     1.4  

Income (loss) before income taxes

    33.0     114.1     (232.6 )   (22.4 )   (259.5 )   265.9  

Income tax expense (benefit)

    8.1     27.6     78.1     25.5     (48.7 )   101.0  

Net income (loss)

  $ 24.9   $ 86.5   $ (310.7 ) $ (47.9 ) $ (210.8 ) $ 164.9  

Net income (loss) as a percent of revenue

    1 %   3 %   (11 )%   (2 )%   (7 )%   8 %

Net income (loss) per share — basic and diluted

  $ 0.08   $ 0.28   $ (1.06 ) $ (0.16 ) $ (0.72 ) $ 0.56  

Weighted average shares outstanding — basic and diluted(1)

    313.7     313.7     293.3     293.3     293.3     293.3  

Other Data (non-GAAP):

                                     

Adjusted EBITDA(2)

  $ 647.5   $ 647.5   $ 498.9   $ 540.4   $ 393.7        

Adjusted net income(2)

  $ 370.2   $ 431.8   $ 250.5   $ 332.7   $ 208.7        

 

    As of December 31,
 

    Historical
 

    2018     2017     2016     2015     2014
 

    (In millions, except per share data)  

Balance Sheet Data:

                               

Total assets

  $ 8,956.7   $ 8,940.3   $ 8,099.7   $ 8,433.6   $ 2,980.6  

Total liabilities

    3,759.2     1,160.0     1,082.3     1,004.1     551.5  

Long-term debt

    2,443.3                  

Total equity

    5,197.5     7,780.3     7,017.4   $ 7,429.5   $ 2,429.1  

Cash dividends declared per common share

                     

Book value per common share(3)

  $ 14.22                  

(1)
The weighted average shares for the periods prior to the IPO represents shares of Elanco common stock held by Lilly as if such shares had been outstanding for the entire period.

(2)
See "Summary—Non-GAAP Financial Measures."

(3)
Represents Elanco shareholders' equity divided by the actual number of outstanding shares.

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Non-GAAP Financial Measures

    Adjusted EBITDA

          Elanco defines adjusted EBITDA as net income (loss) adjusted for interest expense, income tax expense (benefit) and depreciation and amortization, further adjusted to exclude purchase accounting adjustments to inventory, integration costs of acquisitions, severance, asset impairment, gain on sale of assets, facility exit costs and other specified significant items, such as unusual or non-recurring items that are unrelated to Elanco's long-term operations. For the periods presented, Elanco has not made adjustments for all items that may be considered unrelated to its long-term operations. Elanco believes adjusted EBITDA, when used in conjunction with Elanco's results presented in accordance with U.S. GAAP and its reconciliation to net income (loss), enhances investors' understanding of Elanco's performance, valuation and prospects for the future. Elanco also believes adjusted EBITDA is a measure used in the animal health industry by analysts as a valuable performance metric for investors.

          The following is a reconciliation of adjusted EBITDA to net income (loss), as reported under U.S. GAAP for the years ended December 31, 2018, 2017, 2016 and 2015:

          Year Ended December 31,
 

    Pro Forma     Historical
 

    2018     2018     2017     2016     2015
 

    (In millions)                          

Reported Net Income (Loss)

  $ 24.9   $ 86.5   $ (310.7 ) $ (47.9 ) $ (210.8 )

Interest expense, net

    110.7     29.6              

Income tax expense (benefit)

    8.1     27.6     78.1     25.5     (48.7 )

Depreciation and amortization

    296.0     296.0     318.4     254.4     236.9  

EBITDA

    439.7     439.7     85.8     232.0     (22.6 )

Purchase accounting adjustments to inventory(a)

            42.7         153.0  

Integration costs of acquisitions(b)

    26.5     26.5     90.3     154.8     140.8  

Severance(b)

    15.5     15.5     162.0     42.1     59.5  

Asset impairment(b)

    81.9     81.9     110.6     98.3     57.5  

Gain on sale of assets(b)

    (0.8 )   (0.8 )   (19.6 )        

Facility exit costs(b)

    5.7     5.7     31.8     13.2     5.5  

Contingent consideration(c)

    40.4     40.4     (4.7 )        

Inventory write-off(d)

    38.6     38.6              

Adjusted EBITDA

  $ 647.5   $ 647.5   $ 498.9   $ 540.4   $ 393.7  

(a)
See Note 6: Acquisitions to Elanco's consolidated and combined financial statements.

(b)
See Note 7: Asset Impairment, Restructuring and Other Special Charges to Elanco's consolidated and combined financial statements.

(c)
See Note 10: Financial Instruments to Elanco's consolidated and combined financial statements.

(d)
See Note 8: Inventories to Elanco's consolidated and combined financial statements.

    Adjusted Net Income

          Elanco defines adjusted net income as net income (loss) excluding amortization of intangible assets, purchase accounting adjustments to inventory, integration costs of acquisitions, severance, asset impairment, gain on sale of assets, facility exit costs and other specified significant items, such as unusual or non-recurring items that are unrelated to Elanco's long-term operations. For the periods presented, the only other specified significant item included is the exclusion in 2017 of the

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benefit related to the recently enacted U.S. tax reform legislation. Adjusted net income is an alternative view of performance used by Elanco's management to evaluate the results of Elanco's operations and the discovery, development, manufacture and commercialization of Elanco's products, prior to considering certain income statement elements. Specifically, Elanco's management intends to use adjusted net income for the purpose of analyzing performance results and setting compensation targets. Elanco believes adjusted net income, when used in conjunction with Elanco's results presented in accordance with U.S. GAAP and its reconciliation to net income (loss), enhances investors' understanding of its performance, valuation and prospects for the future. Elanco also believes adjusted net income is a measure used in the animal health industry by analysts as a valuable performance metric for investors.

          The following is a reconciliation of adjusted net income to net income (loss), as reported under U.S. GAAP for the years ended December 31, 2018, 2017, 2016 and 2015:

          Year Ended December 31,
 

    Pro Forma     Historical
 

    2018     2018     2017     2016     2015
 

    (In millions)  

Reported Net Income (Loss)

  $ 24.9   $ 86.5   $ (310.7 ) $ (47.9 ) $ (210.8 )

Purchase Accounting Adjustments:

                               

Amortization of intangible assets

    197.4     197.4     221.2     170.7     163.0  

Purchase accounting adjustments to inventory(a)

            42.7         153.0  

Integration costs of acquisitions(b)

    26.5     26.5     90.3     154.8     140.8  

Severance(b)

    15.5     15.5     162.0     42.1     59.5  

Asset impairment(b)

    81.9     81.9     110.6     98.3     57.5  

Gain on sale of assets(b)

    (0.8 )   (0.8 )   (19.6 )        

Facility exit costs(b)

    5.7     5.7     31.8     13.2     5.5  

Contingent consideration(c)

    40.4     40.4     (4.7 )        

Inventory write-off(d)

    38.6     38.6              

Other:

                               

U.S tax reform(e)

            (33.1 )        

Tax effect of adjustments(f)

    (59.9 )   (59.9 )   (40.0 )   (98.5 )   (159.8 )

Adjusted Net Income

  $ 370.2   $ 431.8   $ 250.5   $ 332.7   $ 208.7  

(a)
See Note 6: Acquisitions to Elanco's consolidated and combined financial statements.

(b)
See Note 7: Asset Impairment, Restructuring and Other Special Charges to Elanco's consolidated and combined financial statements.

(c)
See Note 10: Financial Instruments to Elanco's consolidated and combined financial statements.

(d)
See Note 8: Inventories to Elanco's consolidated and combined financial statements.

(e)
See Note 14: Income Taxes to Elanco's consolidated and combined financial statements.

(f)
The tax effect of the adjustments is calculated by applying the applicable tax rate to each adjustment in each relevant jurisdiction. In jurisdictions where Elanco had recorded deferred tax assets related to net operating losses that were offset with valuation allowances, Elanco applied the applicable tax rate to each adjustment and further adjusted for the tax effect of the beneficial reversal of the valuation allowances.

Limitations of Adjusted EBITDA and Adjusted Net Income

          The primary material limitations associated with the use of adjusted EBITDA and adjusted net income as compared to U.S. GAAP results include the following: (i) they may not be comparable to similarly titled measures used by other companies, including those in Elanco's industry, (ii) they exclude financial information and events, such as the effects of an acquisition or amortization of

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intangible assets, that some may consider important in evaluating Elanco's performance, value or prospects for the future, (iii) they exclude items or types of items that may continue to occur from period to period in the future and (iv) they may not exclude all unusual or non-recurring items, which could increase or decrease these measures, which investors may consider to be unrelated to Elanco's long-term operations, such as business activities that Elanco has either exited or made the strategic decision to exit (referred to as "Strategic Exits"). These non-GAAP measures are not, and should not be viewed as, substitutes for U.S. GAAP reported net income (loss). Elanco encourages investors to review its consolidated and combined financial statements in their entirety and cautions investors to use U.S. GAAP measures as the primary means of evaluating Elanco's performance, value and prospects for the future, and adjusted EBITDA and adjusted net income as supplemental measures.

Market Price and Dividend Information

          The market prices of Lilly and Elanco common stock are subject to fluctuation. The exchange ratio will be set based on the respective market prices of Lilly and Elanco common stock. As a result, you should, among other things, obtain current market quotations before deciding to tender your shares of Lilly common stock. There can be no assurance what the market price of shares will be before, on, or after the date on which the exchange offer is completed. Lilly common stock is listed on the NYSE under the symbol "LLY." Elanco common stock is listed on the NYSE under the symbol "ELAN."

Lilly

          The following table describes the per share range of high and low sales prices, as reported by the NYSE, for shares of Lilly common stock and dividends paid per share of Lilly common stock for the quarterly periods indicated.

    Market Price for
Lilly Common
Stock
    Dividends Paid
 

    High     Low     Per Share
 

2016

                   

First Quarter

  $ 85.40   $ 67.88   $ 0.51  

Second Quarter

  $ 78.81   $ 71.53   $ 0.51  

Third Quarter

  $ 83.79   $ 76.45   $ 0.51  

Fourth Quarter

  $ 83.24   $ 64.18   $ 0.51  

2017

   
 
   
 
   
 
 

First Quarter

  $ 86.14   $ 73.54   $ 0.52  

Second Quarter

  $ 86.72   $ 76.85   $ 0.52  

Third Quarter

  $ 85.61   $ 76.89   $ 0.52  

Fourth Quarter

  $ 89.09   $ 81.42   $ 0.52  

2018

   
 
   
 
   
 
 

First Quarter

  $ 88.33   $ 73.69   $ 0.563  

Second Quarter

  $ 87.27   $ 75.40   $ 0.563  

Third Quarter

  $ 107.84   $ 84.71   $ 0.563  

Fourth Quarter

  $ 119.84   $ 104.17   $ 0.563  

2019

   
 
   
 
   
 
 

First Quarter (through February 7, 2019)

  $ 121.84   $ 111.10      

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          The declaration and payment of dividends to holders of Lilly common stock is at the discretion of Lilly's board of directors in accordance with applicable law after taking into account various factors.

          As of February 4, 2019, there were 1,033,372,115 shares of Lilly common stock outstanding, and as of February 4, 2019, there were 23,881 shareholders of record of Lilly common stock.

          On February 7, 2019, the NYSE trading day immediately preceding the initial filing of the registration statement of which this prospectus forms a part, the closing sales price per share of Lilly common stock as reported by the NYSE was $117.50.

Elanco

          The following table describes the per share range of high and low sales prices, as reported by the NYSE, for shares of Elanco common stock and dividends paid per share of Elanco common stock for the quarterly periods indicated.

    Market Price for
Elanco
Common Stock
    Dividends Paid
 

    High     Low     Per Share
 

2018

                   

Third Quarter (since September 20, 2018)

  $ 37.61   $ 32.05      

Fourth Quarter

  $ 35.48   $ 28.85      

2019

   
 
   
 
   
 
 

First Quarter (through February 7, 2019)

  $ 33.35   $ 28.00      

          The declaration and payment of dividends to holders of Elanco common stock is at the discretion of Elanco's board of directors in accordance with applicable law after taking into account various factors.

          Elanco currently expects to pay quarterly cash dividends to holders of Elanco common stock of $0.06 per share commencing following the completion of the quarter during which Lilly no longer owns shares of Elanco common stock, subject to the discretion of its board of directors.

          As of February 5, 2019, there were 365,643,991 shares of Elanco common stock outstanding. As of February 5, 2019, there were 2 registered holders of record of shares of Elanco common stock. Immediately before the commencement of the exchange offer, Lilly beneficially owned 293,290,000 shares of Elanco common stock, representing approximately 80.2% of Elanco's outstanding common stock.

          On February 7, 2019, the last NYSE trading day immediately preceding the initial filing of the registration statement of which this prospectus forms a part, the closing sales price per share of Elanco common stock as reported by the NYSE was $29.50.

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RISK FACTORS

          In determining whether or not to tender your shares of Lilly common stock in the exchange offer, you should consider carefully all of the information about Elanco and Lilly included or incorporated by reference in this prospectus, as well as the information about the terms and conditions of the exchange offer. None of Lilly, Elanco or any of their respective directors or officers or any of the dealer managers or any other person makes any recommendation as to whether you should tender all, some or none of your shares of Lilly common stock. You must make your own decision after reading this prospectus and consulting with your advisors.

          The risk factors described below are separated into two groups:

          "Risks Related to Elanco" describe the material risks relating to Elanco as a standalone company. For a description of the material risks relating to Lilly, please read "Risk Factors" in Lilly's Annual Report on Form 10-K for the year ended December 31, 2018, which are incorporated by reference in this prospectus.

          The occurrence of the events described below under "Risks Related to Elanco" could have a material adverse effect on Elanco's businesses, prospects, financial condition, results of operations and/or cash flows. In such a case, the price of shares of Elanco common stock may decline and you could lose all or part of your investment. In addition, the risks described in this prospectus relating to Elanco are, until the completion of the exchange offer, also associated with an investment in Lilly due to Lilly's ownership interest in Elanco. In addition, other unknown or unpredictable economic, business, competitive, regulatory, geopolitical or other factors could have material adverse effects on Elanco's or Lilly's businesses, prospects, financial condition, results of operations and/or cash flows. Please read "Cautionary Statement Concerning Forward-Looking Statements."

Risks Related to Elanco

The animal health industry is highly competitive.

          The animal health industry is highly competitive. Elanco's competitors include standalone animal health businesses, the animal health businesses of large pharmaceutical companies, specialty animal health businesses and companies that mainly produce generic products. Elanco believes many of its competitors are conducting R&D activities in areas served by Elanco's products and in areas in which it is developing products. Several new start-up companies also compete in the animal health industry. Elanco also faces competition from manufacturers of drugs globally, as well as producers of nutritional health products. These competitors may have access to greater financial, marketing, technical and other resources. As a result, they may be able to devote more resources to developing, manufacturing, marketing and selling their products, initiating or withstanding substantial price competition or more readily taking advantage of acquisitions or other opportunities. Further, consolidation in the animal health industry could result in existing competitors realizing additional efficiencies or improving portfolio bundling opportunities, thereby potentially increasing their market share and pricing power, which could lead to a decrease in Elanco's revenue and profitability and an increase in competition. For example, many of Elanco's competitors have relationships with key distributors and, because of their size, the ability to offer attractive pricing incentives, which may negatively impact or hinder Elanco's relationships with these distributors. In addition to competition from established market participants, new entrants to the animal health medicines and vaccines industry could substantially reduce Elanco's market share, render Elanco's products obsolete or disrupt Elanco's business model.

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          To the extent that any of Elanco's competitors are more successful with respect to any key competitive factor, or Elanco is forced to reduce, or is unable to raise, the price of any of its products in order to remain competitive, its business, financial condition and results of operations could be materially adversely affected. Competitive pressure could arise from, among other things, more favorable safety and efficacy product profiles, limited demand growth or a significant number of additional competitive products being introduced into a particular market, price reductions by competitors, the ability of competitors to capitalize on their economies of scale, the ability of competitors to produce or otherwise procure animal health products at lower costs than Elanco and the ability of competitors to access more or newer technology than Elanco.

Disruptive innovation and advances in veterinary medical practices, animal health technologies and alternatives to animal-derived protein could negatively affect the market for Elanco's products.

          The markets for Elanco's products are regularly impacted by the introduction and/or broad market acceptance of newly-developed or alternative products that address the diseases and conditions for which Elanco sells products, including "green" or "holistic" health products, specially bred disease-resistant animals or replacements for meat, milk, eggs or fish from alternative natural or synthetic sources. For example, the market for Elanco's companion animal therapeutics has been particularly affected by innovation in new molecules and delivery formulations in recent years. Technological breakthroughs by others may render obsolete Elanco's products and reduce or eliminate the market for its products. Introduction or acceptance of competing animal health products and innovation or disruptive protein alternatives could materially adversely affect Elanco's business, financial condition and results of operations.

Regulatory restrictions and bans on the use of antibiotics and productivity products in food animals, as well as changing market demand, may continue to negatively affect demand for certain of Elanco's food animal products.

          Over the past few years, Elanco's operational results have been, and will continue to be, affected by regulations and changing market demand. In certain markets, including the U.S., sales of certain of Elanco's food animal products have been negatively affected by an increase in consumer sentiment for proteins and dairy products produced without the use of antibiotics or other products intended to increase animal production.

          There are two classes of antibiotics used in animal health: shared-class, or medically important, antibiotics, which are used to treat infectious disease caused by pathogens that occur in both humans and animals; and animal-only antibiotics, which are used to treat infectious disease caused by pathogens that occur in animals only. See "Business of Elanco — Products — Antibiotics." Concerns that the use of antibiotics in food animal production may lead to increased antibiotic resistance of human pathogens have resulted in increased regulation and changing market demand. In December 2013, the U.S. Food & Drug Administration (the "FDA") announced final guidance establishing procedures for the voluntary phase-out in the U.S. over a three-year period of the use of shared-class antibiotics in animal feed or water for growth promotion in food animal production. The guidance allows for continued use of shared-class antibiotics in food-producing animals under the supervision of a veterinarian for treatment, control and, under certain circumstances, for prevention of disease. The FDA indicated that it took this action to help preserve the efficacy of shared-class antibiotics to treat infections in humans. As part of those efforts, stricter guidelines governing the administration of shared-class antibiotics have recently come into effect. As of January 1, 2017, under the FDA's guidance and the related rule known as the Veterinary Feed Directive, the use of shared-class antibiotics in the water or feed of food-producing animals requires written authorization by a licensed veterinarian. In addition, other

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countries in which Elanco sells or plans to sell its products, such as France and Vietnam, have passed restrictions or bans on antibiotic use. Other countries have placed restrictions or bans on the use of specific antibiotics in certain food-producing animals, regardless of the route of administration (in feed or injectable).

          From 2015 to 2018, Elanco's revenue from shared-class antibiotics declined at a CAGR of 6%, excluding the impact of foreign exchange. This was driven primarily by changing regulations in many markets, including the Veterinary Feed Directive, as well as changing market demand and Elanco's tiered-approach to antibiotic stewardship, which included removing growth promotion from labels and requiring veterinary oversight in the U.S. and other markets. Globally, during 2018, Elanco's revenue from shared-class antibiotics declined 2%, excluding the impact of foreign exchange, and represented 12% (4% from sales in the U.S. and 8% from sales outside the U.S.) of total revenue, down from 16% in 2015. From 2015 to 2018, Elanco's revenue from animal-only antibiotics grew at a CAGR of 5%, excluding the impact of foreign exchange, driven by sales outside the U.S., which offset a slight decline in the U.S. Globally, during 2018, Elanco's revenue from animal-only antibiotics grew 8%, excluding the impact of foreign exchange, and represented 25% of total revenue, up from 23% in 2015. In 2018, 87% of Elanco's revenue from animal-only antibiotics resulted from the sale of ionophores. Ionophores are a special class of animal-only antimicrobials, and because of their animal-only designation, mode of action and spectrum of activity, their use has not to date been impacted by regulations or changing market demand in many markets outside of the U.S.

          The impact of changes in regulations and market preferences regarding the use of antibiotics in food animals could have a material adverse effect on Elanco's business, financial condition and results of operations. If there is an increased public perception that consumption of food derived from animals that utilize Elanco's products poses a risk to human health, there may be a further decline in the production of those food products and, in turn, demand for Elanco's products. In addition, antibiotic resistance concerns will likely result in additional restrictions or bans, expanded regulations or public pressure to further reduce the use of antibiotics in food animals, increased demand for antibiotic-free protein, or changes in the market acceptance or regulatory treatment of ionophores, any of which could materially adversely affect Elanco's business, financial condition and results of operations.

          In addition, Elanco's revenue has been impacted by regulatory changes in China and other markets restricting the use of productivity products, such as those containing ractopamine in food animals. This has resulted in many U.S. food producers who access such markets eliminating their use of ractopamine. Elanco's FA Ruminants & Swine products Optaflexx and Paylean contain ractopamine. If more producers decide to access such markets or additional markets restrict the use of ractopamine or other productivity products, Elanco's business, financial condition and results of operations could be materially adversely affected.

Generic products may be viewed as more cost-effective than Elanco's products.

          Elanco faces competition from products produced by other companies, including generic alternatives to Elanco's products. Elanco depends on patents and regulatory data exclusivity periods to provide it with exclusive marketing rights for some of its products. Patents for individual products expire at different times based on the date of the patent filing (or sometimes the date of patent grant) and the legal term of patents in the jurisdictions where such patents are obtained. The extent of protection afforded by Elanco's patents varies from jurisdiction to jurisdiction and is limited by the scope of the claimed subject matter of its patents, the term of the patent and the availability and enforcement of legal remedies in the applicable jurisdiction. In 2018, approximately 72% of Elanco's revenue was from products that did not have patent protection, including revenue from some of its top products such as Rumensin, Maxiban, Denagard and Tylan Premix. Other products

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are protected by patents that expire over the next several years. For example, certain patents related to Trifexis expire as early as 2020 in the U.S., 2021 in Japan and 2025 in European territories. As the patents for a brand name product expire, competitors may begin to introduce generic or other alternatives, and as a result, Elanco may face competition from lower-priced alternatives to many of its products. For example, Elanco has experienced significant competitive headwinds from generic ractopamine in the U.S. In the third quarter of 2013, a large established animal health company received U.S. approval for generic ractopamine. U.S. revenue from Optaflexx, Elanco's ractopamine beef product, has declined at a CAGR of 24% from 2015 to 2018 as a result of generic competition and international regulatory restrictions. Elanco may face similar competition in the future for existing products that do not benefit from exclusivity, including Rumensin, which has not benefitted from patent protection in the U.S. for over 20 years, or for existing products with material patents expiring in the future. See "Business of Elanco — Intellectual Property."

          Generic competitors are becoming more aggressive in terms of launching products before patent rights expire, and, because of attractive pricing, sales of generic products are an increasing percentage of overall animal health sales in certain regions. Although the impact of generic competition in the animal health industry to date has not typically mirrored that seen in human health, product pricing and the impact of generic competition in the future may more closely mirror human health as a result of changes in industry dynamics, such as channel expansion, consolidation, an increase in the availability and use of pet insurance and the potential for generic competition by established animal health businesses. If animal health customers increase their use of new or existing generic products, Elanco's business, financial condition and results of operations could be materially adversely affected.

Elanco may not successfully implement its business strategies or achieve targeted cost efficiencies and gross margin improvements.

          Elanco is pursuing strategic initiatives that management considers critical to its long-term success, including, but not limited to: improving manufacturing processes, reducing its manufacturing footprint, achieving lean initiatives, consolidating its CMO network, strategically insourcing projects, pursuing cost savings opportunities with respect to raw materials through a new procurement process and improving the productivity of its sales force. Elanco may pursue additional strategic initiatives in the future to improve gross margins and achieve its targeted cost efficiencies. Elanco also has acquired or partnered with a number of smaller animal health businesses, and it intends to continue to do so in the future. There are significant risks involved with the execution of these initiatives, including significant business, economic and competitive uncertainties, many of which are outside of Elanco's control. Accordingly, Elanco may not succeed in implementing these strategic initiatives. Realizing the anticipated benefits from these initiatives, if any benefits are achieved at all, may take several years. Elanco may be unable to achieve its targeted cost efficiencies and gross margin improvements. Additionally, Elanco may have insufficient access to capital to fund investments in strategic initiatives, or its business strategy may change from time to time, which could delay its ability to implement initiatives that it believes are important to its business.

Consolidation of Elanco's customers and distributors could negatively affect the pricing of its products.

          Third-party distributors, veterinarians and food animal producers are Elanco's primary customers. In recent years, there has been a trend towards the concentration of veterinarians in large clinics and hospitals. In addition, food animal producers, particularly swine and poultry producers, and Elanco's distributors have seen recent consolidation in their industries. Furthermore,

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Elanco has seen the expansion of larger cross-border corporate customers and an increase in the consolidation of buying groups (cooperatives of veterinary practices that leverage volume to pursue discounts from manufacturers). The pace of consolidation and structure of markets varies greatly across geographies. If these trends towards consolidation continue, Elanco's customers could attempt to improve their profitability by leveraging their buying power to obtain favorable pricing. The resulting decrease in Elanco's prices could have a material adverse effect on its business, financial condition and results of operations.

An outbreak of infectious disease carried by food animals could negatively affect the demand for, and sale and production of, Elanco's food animal products.

          Sales of Elanco's food animal products could be materially adversely affected by the outbreak of disease carried by food animals, which could lead to the widespread death or precautionary destruction of food animals as well as the reduced consumption and demand for animal protein. In addition, outbreaks of disease carried by food animals may reduce regional or global sales of particular animal-derived food products or result in reduced exports of such products, either due to heightened export restrictions or import prohibitions, which may reduce demand for Elanco's food animal products due to reduced herd or flock sizes.

          In recent years, outbreaks of various diseases, including avian influenza, foot-and-mouth disease, bovine spongiform encephalopathy (otherwise known as BSE or "mad cow" disease) and porcine epidemic diarrhea virus (otherwise known as PEDV), have negatively impacted sales of Elanco's animal health products. The discovery of additional cases of any of these, or new, diseases may result in additional restrictions on animal protein, reduced herd or flock sizes, or reduced demand for animal protein, any of which may have a material adverse effect on Elanco's business, financial condition and results of operations. In addition, the outbreak of any highly contagious disease near Elanco's main production sites could require Elanco to immediately halt production of its products at such sites or force it to incur substantial expenses in procuring raw materials or products elsewhere.

Elanco's R&D, acquisition and licensing efforts may fail to generate new products or expand the use of its existing products.

          Elanco's future success depends on both its existing product portfolio and its pipeline of new products, including new products that it may develop through joint ventures and products that it is able to obtain through license or acquisition. Elanco commits substantial effort, funds and other resources to R&D, both through its own dedicated resources and through collaborations with third parties.

          Elanco may be unable to determine with accuracy when or whether any of its products now under development will be approved or launched, or it may be unable to develop, license or otherwise acquire product candidates or products. In addition, Elanco cannot predict whether any products, once launched, will be commercially successful or will achieve sales and revenue that are consistent with its expectations. The animal health industry is subject to regional and local trends and regulations and, as a result, products that are successful in some markets may not achieve similar success when introduced into other markets. Furthermore, the timing and cost of Elanco's R&D may increase, and Elanco's R&D may become less predictable as, among other things, regulations applicable to its industry may make it more time-consuming and/or costly to research, develop and register products. If Elanco is unable to generate new products or expand the use of its existing products, its business, financial condition and results of operations will be materially adversely affected. For example, between 2015 and 2017, prior to Elanco's February 2018 launch of Credelio in the U.S., it experienced an innovation lag in the companion animal parasiticide space. In the absence of a competitive combined oral flea and tick product, Elanco's U.S. companion animal

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parasiticide portfolio revenue declined 15% in 2017, excluding the impact on revenue resulting from a reduction in inventory levels within Elanco's distribution channel.

          In addition, some of Elanco's growth has occurred through Lilly's acquisitions, including Novartis Animal Health, Lohmann Animal Health, Janssen Animal Health and the BI Vetmedica U.S. vaccines portfolio. However, following the separation, Elanco no longer benefits from Lilly's scale, capital base and financial strength.

Elanco had losses in recent periods.

          In recent periods, Elanco has incurred net losses, as reported on a combined basis, including a net income (loss) for each of the years ended December 31, 2017 and 2016 of $(310.7) million and $(47.9) million, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of Elanco." Elanco could continue to incur asset impairment, restructuring and other special charges and could report losses in the future. Elanco also expects to continue to incur substantial expenditures to develop, manufacture and market its products and implement its business strategies. Elanco may encounter unforeseen expenses, difficulties, complications, delays, adverse events and other unknown factors that may materially adversely affect its business.

The misuse or off-label use of Elanco's products may harm its reputation or result in financial or other damages.

          Elanco's products have been approved for use under specific circumstances for the treatment of certain diseases and conditions in specific species. There may be increased risk of product liability claims if veterinarians, food animal producers, pet owners or others attempt to use Elanco's products off-label, including the use of its products in species (including humans) for which they have not been approved. Furthermore, the use of Elanco's products for indications other than those for which its products have been approved may not be effective, which could harm its reputation and lead to an increased risk of litigation. If Elanco is deemed by a governmental or regulatory agency to have engaged in the promotion of any of its products for off-label use, such agency could request that Elanco modify its training or promotional materials and practices, and Elanco could be subject to significant fines and penalties, and the imposition of these sanctions could also affect its reputation and position within the industry. Any of these events could materially adversely affect Elanco's business, financial condition and results of operations.

Animal health products are subject to unanticipated safety, quality or efficacy concerns, which may harm Elanco's reputation.

          Unanticipated safety, quality or efficacy concerns arise from time to time with respect to animal health products, whether or not scientifically or clinically supported, leading to product recalls, withdrawals or suspended or declining sales, as well as product liability and other claims.

          Regulatory actions based on these types of safety, quality or efficacy concerns could impact all, or a significant portion, of a product's sales and could, depending on the circumstances, materially adversely affect Elanco's results of operations.

          In addition, since Elanco depends on positive perceptions of the safety, quality and efficacy of its products, and animal health products generally, by food producers, veterinarians and pet owners, any concern as to the safety, quality or efficacy of Elanco's products, whether actual or perceived, may harm its reputation. These concerns and the related harm to Elanco's reputation could materially adversely affect its business, financial condition and results of operations, regardless of whether such reports are accurate.

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Elanco's business may be negatively affected by weather conditions and the availability of natural resources.

          The animal health industry and demand for many of Elanco's products in a particular region are affected by weather conditions, varying weather patterns and weather-related pressures from pests, such as ticks. As a result, Elanco may experience regional and seasonal fluctuations in its results of operations.

          Food animal producers depend on the availability of natural resources, including large supplies of fresh water. Their animals' health and their ability to operate could be adversely affected if they experience a shortage of fresh water due to human population growth or floods, droughts or other weather conditions. In the event of adverse weather conditions or a shortage of fresh water, veterinarians or food animal producers may purchase less of Elanco's products.

          Further, heat waves may cause stress in animals and lead to increased vulnerability to disease, reduced fertility rates and reduced milk production. Droughts may threaten pasture and feed supplies by reducing the quality and amount of forage available to grazing livestock, while climate change may increase the prevalence of parasites and diseases that affect food animals. Adverse weather conditions may also have a material impact on the aquaculture business. Changes in water temperatures could affect the timing of reproduction and growth of various fish species, as well as trigger the outbreak of certain water borne diseases.

          In addition, veterinary hospitals and practitioners depend on visits from, and access to, the animals under their care. Veterinarians' patient volume and ability to operate could be adversely affected if they experience prolonged snow, ice or other severe weather conditions, particularly in regions not accustomed to sustained inclement weather.

Elanco may not be able to realize the expected benefits of its investments in emerging markets and is subject to certain risks due to its presence in emerging markets, including political or economic instability and failure to adequately comply with legal and regulatory requirements.

          Elanco has taken steps to increase its presence in select emerging markets, including by expanding its sales organization and product offerings in these markets. Failure to continue to maintain and expand Elanco's business in emerging markets could materially adversely affect its business, financial condition and results of operations.

          In addition, certain emerging markets have legal systems that are less developed. Other jurisdictions in which Elanco conducts business may have legal and regulatory regimes that differ materially from U.S. laws and regulations, are continuously evolving or do not include sufficient judicial or administrative guidance to interpret such laws and regulations. Compliance with diverse legal requirements is costly and time-consuming and requires significant resources. Violations or possible violations of applicable laws or regulations by Elanco's employees may result in investigation costs, potential penalties and other related costs which in turn could negatively affect its reputation and its results of operations.

          Some countries within emerging markets may be especially vulnerable to periods of local, regional or global economic, political or social instability or crisis. For example, Elanco's sales in certain emerging markets have suffered from extended periods of disruption due to natural disasters. Furthermore, Elanco has also experienced lower than expected sales in certain emerging markets due to local, regional and global restrictions on banking and commercial activities in those countries. In addition, certain emerging markets have currencies that fluctuate substantially, which may impact Elanco's financial performance. For these reasons, among others, doing business within emerging markets carries significant risks.

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Modification of foreign trade policy may harm Elanco's food animal product customers.

          Changes in laws, agreements and policies governing foreign trade in the territories and countries where Elanco's customers do business could negatively impact such customers' businesses and adversely affect its results of operations. A number of Elanco's customers, particularly U.S.-based food animal producers, benefit from free trade agreements, such as the North American Free Trade Agreement ("NAFTA"). In November 2018, the U.S. negotiated a new trade deal with Canada and Mexico known as the United States-Mexico-Canada-Agreement ("USMCA"), aimed at re-negotiating and updating the terms of NAFTA. The USMCA still requires ratification by legislative bodies in all three countries before it can take effect. If the USMCA is not ratified and the U.S. were to withdraw from or materially modify NAFTA or other international trade agreements to which it is a party or if the U.S. were to engage in trade disputes or the imposition of tariffs, Elanco's customers could be harmed, and as a result, Elanco's business, financial condition and results of operations could be materially adversely affected.

Elanco's business is subject to risk based on global economic conditions.

          Macroeconomic business and financial disruptions could have a material adverse effect on Elanco's business, financial condition and results of operations. Certain of Elanco's customers and suppliers could be affected directly by an economic downturn and could face constraints on the availability of credit or decreased cash flow that could give rise to payment delays, increased credit risk, bankruptcies and other financial hardships that could decrease the demand for Elanco's products or hinder its ability to collect amounts due from its customers. If one or more of Elanco's large customers, including distributors, discontinues or modifies their relationship with it as a result of economic conditions or otherwise, its business, financial condition and results of operations may be materially adversely affected. In addition, economic concerns may cause some pet owners to forgo or defer visits to veterinary practices or could reduce their willingness to treat pet health conditions or to continue to own a pet. Furthermore, Elanco's exposure to credit and collectability risk is higher in certain international markets and its ability to mitigate such risks may be limited. Elanco's procedures intended to monitor and limit its exposure to credit and collectability risk may not effectively limit such risk and avoid losses.

Elanco's results of operations are dependent upon the success of its top products.

          If any of Elanco's top products experience issues, such as disruptive innovations or the introduction of more effective competitive products, negative publicity, changes to veterinarian or customer preferences, loss of patent protection, material product liability litigation, new or unexpected side effects, manufacturing disruptions and/or regulatory proceedings, its revenue could be negatively impacted, perhaps significantly. Elanco's top five products, Rumensin, Trifexis, Maxiban, Denagard and Interceptor Plus, contributed approximately 31% of its revenue in 2018. Any issues with these top products, particularly Rumensin, which contributed approximately 11% of Elanco's revenue in 2018, could have a material adverse effect on its business, financial condition and results of operations.

Elanco's business is subject to risk based on customer exposure to rising costs and reduced customer income.

          Feed, fuel, transportation and other key costs for food animal producers may increase or animal protein prices or sales may decrease. Either of these trends could cause deterioration in the financial condition of Elanco's food animal product customers, potentially inhibiting their ability to purchase its products or pay it for products delivered. Elanco's food animal product customers may offset rising costs by reducing spending on its food animal products, including by switching to lower-cost alternatives to its products. In addition, concerns about the financial resources of pet

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owners could cause veterinarians to alter their treatment recommendations in favor of lower-cost alternatives to Elanco's products, which could result in a decrease in sales of Elanco's companion animal products, especially in developed countries where there is a higher rate of pet ownership. Rising costs or reduced income for Elanco's customers could have a material adverse effect on its business, financial condition and results of operations.

For Elanco's companion animal products, increased use of alternative distribution channels, or changes within existing distribution channels, could negatively impact its market share, margins and distribution of its products.

          In most markets, pet owners typically purchase their animal health products directly from veterinarians. However, pet owners increasingly have the option to purchase animal health products from sources other than veterinarians, such as online retailers, "big-box" retail stores or other over-the-counter distribution channels. This trend has been demonstrated by the significant shift away from the veterinarian distribution channel in the sale of flea and tick products in recent years. Pet owners also could decrease their reliance on, and visits to, veterinarians as they rely more on internet-based animal health information. Because Elanco markets its companion animal prescription products primarily through the veterinarian distribution channel, any decrease in visits to veterinarians by pet owners could reduce its market share for such products and materially adversely affect its business, financial condition and results of operations. In addition, pet owners may substitute human health products for animal health products if human health products are deemed to be lower-cost alternatives.

          Legislation has also been proposed in the U.S., and may be proposed in the U.S. or abroad in the future, that could impact the distribution channels for Elanco's companion animal products. For example, such legislation may require veterinarians to provide pet owners with written prescriptions and disclosure that the pet owner may fill prescriptions through a third party, which may further reduce the number of pet owners who purchase their animal health products directly from veterinarians. Such requirements may lead to increased use of generic alternatives to Elanco's products or the increased substitution of its companion animal products with other animal health products or human health products if such other products are deemed to be lower-cost alternatives. Many states already have regulations requiring veterinarians to provide prescriptions to pet owners upon request and the American Veterinary Medical Association has long-standing policies in place to encourage this practice.

          Over time, these and other competitive conditions may increase Elanco's use of online retailers, "big-box" retail stores or other over-the-counter distribution channels to sell its companion animal products. Elanco may not be adequately prepared or able to distribute its companion animal products if an increased portion of its sales occurs through these channels. Also, Elanco may realize lower margins on sales through these distribution channels than it does on sales through veterinarians. Any of these events could materially adversely affect Elanco's business, financial condition and results of operations.

          In addition, if one or more of Elanco's companion animal distributors discontinues or modifies their relationship with it, Elanco's business, financial condition and results of operations may be materially adversely affected. For example, in 2017, a change in Elanco's U.S. inventory management practices resulted in a revenue lag as existing inventory was sold down, which management estimates decreased its revenue by approximately $35 million.

Loss of Elanco's executive officers or other key personnel could disrupt its operations.

          Elanco depends on the efforts of its executive officers and other key personnel. Elanco's executive officers and other key personnel are not currently, and are not expected to be, subject to

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non-compete provisions. In addition, Elanco has not entered into employment agreements with its executive officers or other key personnel. Any unplanned turnover or its failure to develop an adequate succession plan for one or more of its executive officer or other key personnel positions could deplete its institutional knowledge base and erode its competitive advantage. The loss or limited availability of the services of one or more of Elanco's executive officers or other key personnel, or its inability to recruit and retain qualified executive officers or other key personnel in the future, could, at least temporarily, have a material adverse effect on its business, financial condition and results of operations.

Elanco may be required to write down goodwill or identifiable intangible assets.

          Under U.S. GAAP, if Elanco determines goodwill or identifiable intangible assets are impaired, it will be required to write down these assets and record a non-cash impairment charge. As of December 31, 2018, Elanco had recorded on its balance sheet goodwill of $3.0 billion and identifiable intangible assets of $2.5 billion. Identifiable intangible assets consist primarily of marketed products acquired or licensed from third parties, licensed platform technologies that have alternative future uses in R&D, manufacturing technologies, and customer relationships from business combinations. Elanco also has indefinite-lived intangible assets, which consist of acquired in-process R&D projects from business combinations that are subject to impairment and non-cash impairment charges.

          Determining whether an impairment exists and the amount of the potential impairment involves quantitative data and qualitative criteria that are based on estimates and assumptions requiring significant management judgment. Future events or new information may change management's valuation of an intangible asset in a short amount of time. The timing and amount of impairment charges recorded in Elanco's consolidated and combined statements of operations and write-downs recorded in its consolidated and combined balance sheets could vary if its management's conclusions change. Any impairment of goodwill or identifiable intangible assets could have a material adverse effect on Elanco's business, financial condition and results of operations.

As a standalone public company, Elanco may expend additional time and resources to comply with rules and regulations that did not previously apply to it, and failure to comply with such rules may lead investors to lose confidence in Elanco's financial data.

          As a standalone public company, Elanco is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations of the NYSE. Elanco has established all of the procedures and practices required as a subsidiary of Lilly, but it must continue to implement others as a separate, standalone public company. Continuing to establish and expand such procedures and practices will increase Elanco's legal, accounting and financial compliance costs, will make some activities more difficult, time-consuming and costly and could be burdensome on Elanco's personnel, systems and resources. Elanco is devoting and will continue to devote significant resources to address these public company requirements, including compliance programs and investor relations, as well as Elanco's financial reporting obligations. As a result, Elanco has and will continue to incur significant legal, accounting and other expenses that it did not previously incur to comply with these rules and regulations. Furthermore, the need to establish the corporate infrastructure necessary for a standalone public company may divert some of Elanco management's attention from operating Elanco's business and implementing its strategy. However, the measures Elanco takes may not be sufficient to satisfy its obligations as a public company. In addition, Elanco cannot predict or estimate the amount of additional costs it may incur in order to comply with these requirements.

          Elanco has made, and will continue to make, changes to its internal controls and procedures for financial reporting and accounting systems to meet its reporting obligations. In particular, as a

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public company, Elanco management is required to conduct an annual evaluation of Elanco's internal controls over financial reporting and include a report of management on Elanco's internal controls in its annual reports on Form 10-K. Under current rules, Elanco will be subject to these requirements beginning with its annual report on Form 10-K for the year ending December 31, 2019. In addition, Elanco will be required to have its independent registered public accounting firm attest to the effectiveness of Elanco's internal controls over financial reporting pursuant to Auditing Standard No. 5 beginning with Elanco's annual report on Form 10-K for the year ending December 31, 2019. If Elanco is unable to conclude that it has effective internal controls over financial reporting, or if Elanco's registered public accounting firm is unable to provide Elanco with an attestation and an unqualified report as to the effectiveness of Elanco's internal controls over financial reporting, investors could lose confidence in the reliability of Elanco's financial statements, which could result in a decrease in the value of its common stock.

Elanco's R&D relies on evaluations of animals, which may become subject to bans, additional restrictive regulations or increased attention from activism movements.

          As an animal health medicines and vaccines business, Elanco is required to evaluate the effect of its existing and new products in animals in order to register such products. Animal testing in certain industries has been the subject of controversy and adverse publicity. Some organizations and individuals have attempted to ban animal testing or encourage the adoption of new regulations applicable to animal testing. To the extent that the activities of such organizations and individuals are successful, Elanco's R&D, and by extension its business, financial condition and results of operations, could be materially adversely affected. In addition, negative publicity about Elanco or its industry could harm its reputation.

Manufacturing problems and capacity imbalances may cause product launch delays, inventory shortages, recalls or unanticipated costs.

          In order to sell its products, Elanco must be able to produce and ship sufficient quantities to its customers. Elanco owns and operates 12 internal manufacturing sites located in nine countries. Elanco also employs a network of approximately 100 third-party CMOs. Many of Elanco's products involve complex manufacturing processes and are sole-sourced from certain manufacturing sites.

          Minor deviations in Elanco's manufacturing or logistical processes, such as temperature excursions or improper package sealing, could result, and have in the past resulted in, delays, inventory shortages, unanticipated costs, product recalls, product liability and/or regulatory action. In addition, a number of factors could cause production interruptions, including:

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          These interruptions could result in launch delays, inventory shortages, recalls, unanticipated costs or issues with Elanco's agreements under which it supplies third parties, which may materially adversely affect its business, financial condition and results of operations.

          Elanco's manufacturing network may be unable to meet the demand for its products or it may have excess capacity if demand for its products changes. The unpredictability of a product's regulatory or commercial success or failure, the lead time necessary to construct highly technical and complex manufacturing sites and shifting customer demand (including as a result of market conditions or entry of branded or generic competition) increase the potential for capacity imbalances. In addition, construction of sites is expensive, and Elanco's ability to recover costs will depend on the market acceptance and success of the products produced at the new sites, which is uncertain.

Elanco relies on third parties to provide it with materials and services and are subject to increased labor and material costs and potential disruptions in supply.

          The materials used to manufacture Elanco's products may be subject to availability constraints and price volatility caused by changes in demand, weather conditions, supply conditions, government regulations, economic climate and other factors. In addition, labor costs may be subject to volatility caused by the supply of labor, governmental regulations, economic climate and other factors. Increases in the demand for, availability or the price of, materials used to manufacture Elanco's products and increases in labor costs could increase the costs to manufacture its products, result in product delivery delays or shortages, and impact its ability to launch new products on a timely basis or at all. Elanco may not be able to pass all or a material portion of any higher material or labor costs on to its customers, which could materially adversely affect its business, financial condition and results of operations.

          Elanco may be unable to meet demand for certain of its products if any of its third-party suppliers cease or interrupt operations, fail to renew contracts with it or otherwise fail to meet their obligations to it.

Elanco may incur substantial costs and receive adverse outcomes in litigation and other legal matters.

          Elanco's business, financial condition and results of operations could be materially adversely affected by unfavorable results in pending or future litigation matters. These matters may include, among other things, allegations of violation of U.S. and foreign competition law, labor laws, consumer protection laws and environmental laws and regulations, as well as claims or litigation relating to product liability, intellectual property, securities, breach of contract and tort. In addition, changes in the interpretations of laws and regulations to which Elanco is subject, or in legal standards in one or more of the jurisdictions in which Elanco operates, could increase its exposure to liability. For example, in the U.S., attempts have been made to allow damages for emotional distress and pain and suffering in connection with the loss of, or injury to, a companion animal. If such attempts were successful, Elanco's exposure with respect to product liability claims could increase materially.

          Litigation matters, regardless of their merits or their ultimate outcomes, are costly, divert management's attention and may materially adversely affect Elanco's reputation and demand for its

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products. Elanco cannot predict with certainty the eventual outcome of pending or future litigation matters. An adverse outcome of litigation or legal matters could result in Elanco being responsible for significant damages. Any of these negative effects resulting from litigation matters could materially adversely affect Elanco's business, financial condition and results of operations.

Elanco's business is subject to substantial regulation.

          As a global company, Elanco is subject to various state, federal and international laws and regulations, including regulations relating to the development, quality assurance, manufacturing, importation, distribution, marketing and sale of its products. Changes in applicable federal, state, local and foreign laws and regulations could have a material adverse effect on Elanco's business, financial condition and results of operations. In addition, Elanco's manufacturing facilities, including the manufacturing facilities operated by its CMOs, are subject to periodic inspections by regulatory agencies. An inspection may report conditions or practices that indicate possible violations of regulatory requirements. Elanco's failure, or the failure of third parties it relies on, including CMOs, to comply with these regulatory requirements, allegations of such non-compliance or the discovery of previously unknown problems with a product or manufacturer could result in, among other things, inspection observation notices, warning letters or similar regulatory correspondence, fines, a partial or total shutdown of production in one or more of Elanco's facilities while an alleged violation is remediated, withdrawals or suspensions of current products from the market, and civil or criminal prosecution, as well as decreased sales as a result of negative publicity and product liability claims. Any one of these consequences could materially adversely affect Elanco's business, financial condition and results of operations.

          In addition, Elanco will not be able to market new products unless and until it has obtained all required regulatory approvals in each jurisdiction where it proposes to market those products. Even after a product reaches market, it may be subject to re-review and may lose its approvals. Elanco's failure to obtain approvals, delays in the approval process, or its failure to maintain approvals in any jurisdiction, may prevent it from selling products in that jurisdiction until approval or re-approval is obtained, if ever.

The illegal distribution and sale by third parties of counterfeit or illegally compounded versions of Elanco's products or of stolen, diverted or relabeled products could have a negative impact on Elanco's reputation and business.

          Third parties may illegally distribute and sell counterfeit or illegally compounded versions of Elanco's products that do not meet the exacting standards of Elanco's development, manufacturing and distribution processes. Counterfeit or illegally compounded medicines pose a significant risk to animal health and safety because of the conditions under which they may be manufactured and the lack of regulation of their contents. Counterfeit or illegally compounded products are frequently unsafe or ineffective and can be potentially life-threatening to animals. Elanco's reputation and business could suffer harm as a result of counterfeit or illegally compounded products which are alleged to be equivalent and/or which are sold under Elanco's brand name. In addition, products stolen or unlawfully diverted from inventory, warehouses, plants or while in transit, which are not properly stored or which have an expired shelf life and which have been repackaged or relabeled and which are sold through unauthorized channels, could adversely impact animal health and safety, Elanco's reputation and its business. Public loss of confidence in the integrity of vaccines and/or pharmaceutical products as a result of counterfeiting, illegal compounding or theft could have a material adverse effect on Elanco's business, financial condition and results of operations.

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Elanco is subject to complex environmental, health and safety laws and regulations.

          Elanco is subject to various federal, state, local and foreign environmental, health and safety laws and regulations. These laws and regulations govern matters such as the emission and discharge of hazardous materials into the ground, air or water; the generation, use, storage, handling, treatment, packaging, transportation, exposure to and disposal of hazardous and biological materials, including recordkeeping, reporting and registration requirements; and the health and safety of Elanco's employees. Due to Elanco's operations, these laws and regulations also require it to obtain, and comply with, permits, registrations or other authorizations issued by governmental authorities. These authorities can modify or revoke Elanco's permits, registrations or other authorizations and can enforce compliance through fines and injunctions.

          Given the nature of Elanco's business, it has incurred, is currently incurring and may in the future incur liabilities for the investigation and remediation of contaminated land under the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or under other federal, state, local and foreign environmental cleanup laws, with respect to Elanco's current or former sites, adjacent or nearby third-party sites, or offsite disposal locations. Elanco could be subject to liability for the investigation and remediation of legacy environmental contamination caused by historical industrial activity on sites that it owns or on which it operates. The costs associated with future cleanup activities that Elanco may be required to conduct or finance could be material. Additionally, Elanco may become liable to third parties for damages, including personal injury, property damage and natural resource damages, resulting from the disposal or release of hazardous materials into the environment. Such liability could materially adversely affect Elanco's business, financial condition and results of operations.

          Furthermore, regulatory agencies are showing increasing concern over the impact of animal health products and food animal operations on the environment. This increased regulatory scrutiny has in the past and may in the future necessitate that additional time and resources be spent to address these concerns in both new and existing products.

          Elanco's failure to comply with the environmental, health and safety laws and regulations to which it is subject, including any permits issued thereunder, may result in environmental remediation costs, loss of permits, fines, penalties or other adverse governmental or private actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment or remedial measures. Elanco could also be held liable for any and all consequences arising out of human exposure to hazardous materials, environmental damage or significant environmental, health and safety issues that might arise at a manufacturing or R&D facility. Environmental laws and regulations are complex, change frequently, have tended to become more stringent and stringently enforced over time and may be subject to new interpretation. It is possible that Elanco's costs of complying with current and future environmental, health and safety laws, and its liabilities arising from past or future releases of, or exposure to, hazardous materials could materially adversely affect its business, financial condition and results of operations.

The actual or purported intellectual property rights of third parties may negatively affect Elanco's business.

          A third party may sue Elanco, or its distributors or licensors, including Lilly, or otherwise make a claim, alleging infringement or other violation of such third-party's patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights. If Elanco, its distributors or licensors do not prevail in this type of litigation, Elanco may be required to:

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          The costs of defending an intellectual property claim could be substantial and could materially adversely affect Elanco's business, financial condition and results of operations, even if Elanco successfully defends such claim. Moreover, even if Elanco believes that it does not infringe a validly existing third-party patent, Elanco may choose to license such patent, which would result in associated costs and obligations. Elanco may also incur costs in connection with an obligation to indemnify a distributor, licensor or other third party.

          The intellectual property positions of animal health medicines and vaccines businesses frequently involve complex legal and factual questions, and an issued patent does not guarantee Elanco the right to practice the patented technology or develop, manufacture or commercialize the patented product. For example, while Elanco generally enters into proprietary information agreements with its employees and third parties which assign intellectual property rights to Elanco, these agreements may not be honored or may not effectively assign intellectual property rights to Elanco under the local laws of some countries or jurisdictions. Elanco cannot be certain that a competitor or other third party does not have or will not obtain rights to intellectual property that may prevent Elanco from manufacturing, developing or marketing certain of its products, regardless of whether Elanco believes such intellectual property rights are valid and enforceable or it believes it would otherwise be able to develop a more commercially successful product, which may materially adversely affect its business, financial condition and results of operations.

If Elanco's intellectual property rights are challenged or circumvented, competitors may be able to take advantage of Elanco's research and development efforts or harm the value of Elanco's brands.

          Elanco's long-term success depends on its ability to market innovative, competitive products. Elanco relies and expects to continue to rely on a combination of intellectual property, including patent, trademark, trade dress, copyright, trade secret and domain name protection, as well as confidentiality and license agreements with Elanco's employees and others, to protect its intellectual property and proprietary rights. If Elanco fails to obtain and maintain adequate intellectual property protection, it may not be able to prevent third parties from using its proprietary technologies or from marketing products that are very similar or identical to Elanco's.

          Elanco's currently pending or future patent applications may not result in issued patents, or be approved on a timely basis, if at all. Similarly, any term extensions that Elanco seeks may not be approved on a timely basis, if at all. In addition, Elanco's issued patents, or any patents that may issue in the future, may not contain claims sufficiently broad to protect it against third parties with similar technologies or products or provide it with any competitive advantage, including exclusivity in a particular product area.

          The validity and scope of Elanco's patent claims also may vary between countries, as individual countries have their own patent laws. For example, some countries only permit the issuance of patents covering a novel chemical compound itself, and its first use, and thus further methods of use for the same compound may not be patentable. The validity, enforceability, scope and effective term of patents can be highly uncertain and often involve complex legal and factual questions and proceedings that vary based on the local law of the relevant jurisdiction. Elanco's ability to enforce its patents also depends on the laws of individual countries and each country's practice with respect to enforcement of intellectual property rights. Patent protection must be obtained on a jurisdiction-by-jurisdiction basis, and Elanco only pursues patent protection in

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countries where it thinks it makes commercial sense for the given product. In addition, if Elanco is unable to maintain its existing license agreements or other agreements pursuant to which third parties grant it rights to intellectual property, including because such agreements terminate, Elanco's financial condition and results of operations could be materially adversely affected.

          Patent law reform in the U.S. and other countries may also weaken Elanco's ability to enforce its patent rights, or make such enforcement financially unattractive. For instance, in September 2011, the U.S. enacted the America Invents Act, which permits enhanced third-party actions for challenging patents and implements a first-to-invent system. These reforms could result in increased costs to protect Elanco's intellectual property or limit its ability to obtain and maintain patent protection for its products in these jurisdictions. Additionally, certain foreign governments have indicated that compulsory licenses to patents may be granted in the case of national emergencies, which could diminish or eliminate sales and profits from those regions and materially adversely affect Elanco's financial condition and results of operations.

          Elanco's trademarks and brands may provide it with a competitive advantage in the market as they may be known or trusted by consumers. In order to maintain the value of such brands, Elanco must be able to enforce and defend its trademarks. Elanco has pursued and will pursue the registration of trademarks and service marks in the U.S. and internationally; however, enforcing rights against those who knowingly or unknowingly dilute or infringe Elanco's brands can be difficult. Effective trademark, service mark, trade dress or related protections may not be available in every country in which Elanco's products and services are available. Enforcement is especially difficult in first-to-file countries where "trademark squatters" can prevent Elanco from obtaining adequate protections for its brands. There can be no assurance that the steps Elanco has taken and will take to protect its proprietary rights in its brands and trademarks will be adequate or that third parties will not infringe, dilute or misappropriate Elanco's brands, trademarks, trade dress or other similar proprietary rights.

          Many of Elanco's products are based on or incorporate proprietary information. Elanco actively seeks to protect its proprietary information, including its trade secrets and proprietary know-how, by generally requiring its employees, consultants, other advisors and other third parties to execute proprietary information and confidentiality agreements upon the commencement of their employment, engagement or other relationship. Despite these efforts and precautions, Elanco may be unable to prevent a third party from copying or otherwise obtaining and using its trade secrets or its other intellectual property without authorization and legal remedies may not adequately compensate it for the damages caused by such unauthorized use. Further, others may independently and lawfully develop substantially similar or identical products that circumvent Elanco's intellectual property by means of alternative designs or processes or otherwise.

Elanco could be subject to changes in its tax rates, the adoption of new U.S. or foreign tax legislation or exposure to additional tax liabilities.

          Elanco is subject to income taxes in the U.S. and numerous foreign jurisdictions. Changes in the relevant tax laws, regulations, administrative practices, principles and interpretations could adversely affect Elanco's future effective tax rates. The U.S. recently enacted tax reform legislation significantly revising U.S. tax law, and a number of other countries are actively considering or enacting tax changes. Other organizations, such as the Organisation for Economic Cooperation and Development and the European Commission, are also active concerning tax-related matters, which could influence international tax policy in countries in which Elanco operates. While outcomes of these initiatives continue to develop and remain uncertain, modifications to key elements of the U.S. or international tax framework could have a material adverse effect on Elanco's consolidated results of operations and cash flows.

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          In December 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the "2017 Tax Act"). The 2017 Tax Act included significant changes to the U.S. corporate income tax system, such as the reduction in the corporate income tax rate, transition to a modified territorial tax system, changes to business related exclusions, deductions and credits, and modifications to international tax provisions. The U.S. Treasury Department and the IRS began to issue major proposed regulations related to the 2017 Tax Act during the second half of 2018 and are expected to continue issuing such regulations through spring of 2019. The proposed regulations are generally subject to comment before being finalized; however, once finalized, these regulations may require Elanco to make adjustments, in particular, as a result of certain complex international provisions contained in the 2017 Tax Act. Such adjustments might materially impact Elanco's provision for income taxes and effective tax rate in the period in which the adjustments are made and could also impact Elanco's net income, earnings per share, consolidated cash flows and liquidity.

          In addition, Elanco's effective tax rate is subject to potential risks that various taxing authorities may challenge the pricing of Elanco's cross-border arrangements and subject Elanco to additional tax, adversely impacting Elanco's effective tax rate and its tax liability. Elanco is also subject to the examination of its tax returns and other tax matters by the Internal Revenue Service (the "IRS") and other tax authorities and governmental bodies. Elanco regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes. There can be no assurance as to the outcome of these examinations. If Elanco's effective tax rates were to increase, particularly in the U.S. or other material foreign jurisdictions, or if the ultimate determination of Elanco's taxes owed is for an amount in excess of amounts previously accrued, Elanco's business, financial condition and results of operations could be materially adversely affected.

Significant portions of Elanco's operations are conducted in foreign jurisdictions, including jurisdictions presenting a high risk of bribery and corruption, and are subject to the economic, political, legal and business environments of the countries in which Elanco does business.

          Elanco's international operations could be limited or disrupted by any of the following:

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          In addition, international transactions may involve increased financial and legal risks due to differing legal systems and customs. Compliance with these requirements may prohibit the import or export of certain products and technologies or may require Elanco to obtain a license before importing or exporting certain products or technologies. A failure to comply with any of these laws, regulations or requirements could result in civil or criminal legal proceedings, monetary or non-monetary penalties, or both, disruptions to Elanco's business, limitations on Elanco's ability to import and export products, and damage to Elanco's reputation. In addition, variations in the pricing of Elanco's products between jurisdictions may result in the unauthorized importation or unauthorized re-importation of its products between jurisdictions and may also result in the imposition of anti-dumping and countervailing duties or other trade-related sanctions. While the impact of these factors is difficult to predict, any of them could materially adversely affect Elanco's business, financial condition and results of operations.

          Further, changes in any of these laws, regulations or requirements, or the political environment in a particular country, may affect Elanco's ability to engage in business transactions in certain markets, including investment, procurement and repatriation of earnings.

Significant portions of Elanco's operations are conducted in Europe and could be impacted by the withdrawal of the United Kingdom ("UK") from the EU, commonly referred to as "Brexit."

          In June 2016, voters in the UK approved an advisory referendum to withdraw from the EU, commonly referred to as Brexit. On March 29, 2017, the UK Prime Minister formally notified the European Council of the UK's intention to withdraw from the EU under Article 50 of the Treaty of Lisbon. The notice began a two-year negotiation period to establish the withdrawal terms. The referendum and notice created political, regulatory and economic uncertainty, particularly in the UK and the EU, and this uncertainty may persist for years if the withdrawal becomes effective in March 2019 without clarification as to whether the UK will continue to be party to the EU Free Trade Agreements ("FTA") at the end of the negotiation period.

          Elanco's business is subject to substantial regulation. If the UK withdraws from the EU without an agreement and mutual recognition of the FTAs, Elanco may not be able to market certain products that entered the EU market following marketing authorization by UK authorities in all the

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nations that are parties to FTAs with the EU unless and until Elanco has obtained all required regulatory approvals in each jurisdiction where it proposes to market those products.

          In addition, the uncertainty related to Brexit has caused foreign exchange rate fluctuations in the past, including the strengthening of the U.S. dollar relative to the euro and British pound immediately following the announcement of Brexit. The implementation of, or further developments with respect to, Brexit could further impact foreign exchange rates, which could materially adversely affect Elanco's business, financial condition and results of operations.

          A withdrawal with no agreement in place could significantly disrupt the free movement of goods, services, and people between the UK and the EU, and result in increased legal and regulatory complexities, as well as potential higher costs of conducting business in Europe and declining gross domestic product in many European markets. The UK's vote to exit the EU could also result in similar referendums or votes in other European countries in which Elanco does business.

          If no agreement is reached at the end of the two-year negotiation period on March 29, 2019 and the UK's separation becomes effective, unless the remaining EU members unanimously agree to an extension, the uncertainty surrounding the terms of the UK's withdrawal and its consequences could adversely impact consumer and investor confidence, and could affect sales or regulation of Elanco's products. Any of these effects, among others, could materially adversely affect Elanco's business, financial condition and results of operations.

Foreign exchange rate fluctuations and potential currency controls affect Elanco's results of operations, as reported in its financial statements.

          Elanco conducts operations in many areas of the world, involving transactions denominated in a variety of currencies. In 2018, Elanco generated approximately 52% of its revenue in currencies other than the U.S. dollar, principally the euro, British pound, Brazilian real, Australian dollar, Japanese yen, Canadian dollar and Chinese yuan. Elanco is subject to currency exchange rate risk to the extent that its costs are denominated in currencies other than those in which it earns revenue. In addition, because Elanco's financial statements are reported in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on Elanco's results of operations.

          Elanco also faces risks arising from currency devaluations and the imposition of cash repatriation restrictions and exchange controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation. Cash repatriation restrictions and exchange controls may limit Elanco's ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by Elanco's foreign subsidiaries or businesses located in or conducted within a country imposing restrictions or controls. While Elanco currently has no need, and does not intend, to repatriate or convert cash held in countries that have significant restrictions or controls in place, should Elanco need to do so to fund its operations, it may be unable to repatriate or convert such cash, or may be unable to do so without incurring substantial costs.

          Elanco also bears foreign exchange risk associated with the future cash settlement of an existing net investment hedge ("NIH"). In October 2018, Elanco entered into a fixed interest rate, 5-year, 750 million Swiss franc NIH against Swiss franc assets. The NIH is expected to generate approximately $25 million in cash and contra interest expense per year; however, there is potential for significant 2023 settlement exposure on the 750 million Swiss franc notional if the U.S. dollar devalues versus the Swiss franc.

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Elanco depends on sophisticated information technology and infrastructure.

          Elanco relies on various information systems to manage its operations, and it increasingly depends on third parties to operate and support its information technology systems, including by way of virtual and cloud-based operations. These third parties include large established vendors as well as small, privately owned companies. Failure by any provider to adequately service Elanco's operations, or a change in control or insolvency of one or more providers, may materially adversely affect Elanco's business, financial condition and results of operations. Prior to the separation, Elanco relied on Lilly to negotiate and manage many of Elanco's relationships and contracts with these third parties.

          In connection with the IPO and the separation, Elanco substantially changed, and will continue to develop, a number of its business processes, including its financial reporting and supply chain processes and with respect to where and from whom it obtains information technology systems. In order to support the new business processes under the terms of Elanco's transitional services agreement with Lilly, Elanco will make significant configuration, process and data changes within many of the information technology systems it uses. If Elanco's information technology systems and processes are not sufficient to support Elanco's business and financial reporting functions, or if Elanco fails to properly implement its new business processes, Elanco's financial reporting may be delayed or inaccurate and, as a result, Elanco's business, financial condition and results of operations may be materially adversely affected. Even if Elanco is able to successfully configure and change its systems, all technology systems, even with implementation of security measures, are vulnerable to disability, failures or unauthorized access. If Elanco's information technology systems were to fail or be breached, this could materially adversely affect Elanco's reputation and its ability to perform critical business functions, and sensitive and confidential data could be compromised.

Breaches of Elanco's information technology systems or improper disclosure of confidential company or personal data could have a material adverse effect on Elanco's reputation and operations, or Elanco may fail to comply with privacy laws, regulations and its contractual obligations.

          Elanco relies on information technology systems to process, transmit and store electronic information in its day-to-day operations, including customer, employee and company data. The secure processing, maintenance and transmission of this information is critical to Elanco's operations and the legal environment surrounding information security, storage, use, processing, disclosure and privacy is demanding, with the frequent imposition of new and changing requirements. Elanco also stores certain information with third parties. Elanco's information systems and those of Elanco's third-party vendors are subjected to computer viruses or other malicious codes, unauthorized access attempts, and cyber- or phishing-attacks and also are vulnerable to an increasing threat of continually evolving cybersecurity risks and external hazards, as well as improper or inadvertent staff behavior, all of which could expose confidential company and personal data systems and information to security breaches. Any such breach could compromise Elanco's networks, and the information stored therein could be accessed, publicly disclosed, lost or stolen. Such attacks could result in Elanco's intellectual property and other confidential information being lost or stolen, disruption of Elanco's operations, and other negative consequences, such as increased costs for security measures or remediation costs, and diversion of management attention. Any actual or perceived access, disclosure or other loss of information or any significant breakdown, intrusion, interruption, cyber-attack or corruption of customer, employee or company data or Elanco's failure to comply with federal, state, local and foreign privacy laws or contractual obligations with customers, vendors, payment processors and other third parties, could result in legal claims or proceedings, liability under laws or contracts that protect the privacy of personal

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information, regulatory penalties, disruption of Elanco's operations, and damage to Elanco's reputation, all of which could materially adversely affect Elanco's business, revenue and competitive position. While Elanco will continue to implement additional protective measures to reduce the risk of and detect cyber-incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly. Elanco's protective measures may not protect it against attacks and such attacks could have a significant impact on Elanco's business and reputation. In addition, prior to the separation, Elanco relied on Lilly for certain privacy and compliance functions and personnel and may experience difficulties maintaining and implementing all policies and practices following completion of the separation.

Increased regulation or decreased governmental financial support relating to the raising, processing or consumption of food animals could reduce demand for Elanco's food animal products.

          Companies in the food animal sector are subject to extensive and increasingly stringent regulations. See "Business of Elanco — Regulatory." If food animal producers are adversely affected by new regulations or changes to existing regulations, they may reduce herd or flock sizes or become less profitable and, as a result, they may reduce their use of Elanco's products, which may materially adversely affect Elanco's business, financial condition and results of operations. Also, many food animal producers benefit from governmental subsidies, and if such subsidies were to be reduced or eliminated, these companies may become less profitable and, as a result, may reduce their use of Elanco's food animal products. More stringent regulation of the food animal sector, including regarding the use of food animal products, could have a material adverse effect on Elanco's business, financial condition and results of operations.

Elanco's business could be materially adversely affected by labor disputes, strikes or work stoppages.

          Some of Elanco's employees are members of unions, works councils, trade associations or are otherwise subject to collective bargaining agreements in certain jurisdictions, including the U.S. As a result, Elanco is subject to the risk of labor disputes, strikes, work stoppages and other labor-relations matters. Elanco may be unable to negotiate new collective bargaining agreements on similar or more favorable terms and may experience work stoppages, higher ongoing labor costs or other labor problems in the future at its sites. Elanco may also experience difficulty or delays in implementing changes to its workforce in certain markets. These risks may be increased by the separation because Elanco will no longer be able to benefit from Lilly's prior relationships and negotiations relating to such agreements.

          Further, labor-related issues, including at Elanco's suppliers or CMOs, could cause a disruption of Elanco's operations, which could have a material adverse effect on its business, financial condition and results of operations, potentially resulting in cancelled orders by customers, unanticipated inventory accumulation or shortages and reduced revenue and net income.

The anticipated benefits of the separation and the exchange offer may not be achieved.

          Elanco may not be able to achieve the full strategic and financial benefits expected to result from the separation and the exchange offer. Further, such benefits, if ultimately achieved, may be delayed. These benefits include the following:

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          Elanco may not achieve the anticipated benefits of the separation and the exchange offer for a variety of reasons, which could materially adversely affect Elanco's business, financial condition and results of operations.

Elanco has underfunded pension plan liabilities. Elanco will require current and future operating cash flow to fund these shortfalls reducing the cash available for other uses.

          Elanco has certain defined benefit pension plans, predominantly outside of the U.S., that Elanco's employees participate in that are either dedicated to Elanco's employees or where the plan assets and liabilities that relate to Elanco's employees were legally required to transfer to Elanco at the time of the separation. The funded status and net periodic pension cost for these plans is materially affected by the discount rate used to measure pension obligations, the longevity and actuarial profile of Elanco's workforce, the level of plan assets available to fund those obligations and the actual and expected long-term rate of return on plan assets. Significant changes in investment performance or a change in the portfolio mix of invested assets can result in corresponding increases and decreases in the valuation of plan assets or in a change in the expected rate of return on plan assets. As of December 31, 2018, for pension plans with projected benefit obligations in excess of plan assets, the projected benefit obligation was $229.2 million with plan assets of $124.1 million. Any changes in the discount rate could result in a significant increase or decrease in the valuation of pension obligations, affecting the reported funded status of Elanco's pension plans as well as the net periodic pension cost in the following years. Similarly, changes in the expected return on plan assets can result in significant changes in the net periodic pension cost in the following years. The need to make additional cash contributions will divert resources from Elanco's operations and may have a material adverse effect on Elanco's business, financial condition and results of operations.

Risks Related to Elanco's Indebtedness

Elanco has substantial indebtedness.

          Elanco has a significant amount of indebtedness, which could materially adversely affect its business, financial condition and results of operations. As of December 31, 2018, Elanco has incurred approximately $2.5 billion aggregate principal amount of senior indebtedness, consisting of the Senior Notes and the Term Facility. Elanco has an additional $750 million of borrowing capacity ($1,000 million if certain conditions are met) under the Revolving Facility. See "The Transaction — Background of the Exchange Offer" and "Description of Certain Indebtedness of Elanco."

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          Elanco may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments, acquisitions or for other purposes. If Elanco does so, the risks related to its high level of debt could intensify. Specifically, Elanco's high level of debt could have important consequences, including:

Elanco may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

          Elanco's ability to make scheduled payments on or refinance its debt obligations depends on its financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond its control. Elanco may be unable to maintain a level of cash flows from operating activities sufficient to permit it to pay the principal and interest on its indebtedness.

          If Elanco's cash flows and capital resources are insufficient to fund its debt service obligations, it could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures, or to dispose of material assets or operations, alter its dividend policy, seek additional debt or equity capital or restructure or refinance its indebtedness. Elanco may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow it to meet its scheduled debt service obligations. The instruments that will govern Elanco's indebtedness may restrict its ability to dispose of assets and may restrict the use of proceeds from those dispositions and may also restrict its ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. Elanco may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations when due.

          In addition, Elanco conducts its operations through its subsidiaries. Accordingly, repayment of Elanco's indebtedness will depend on the generation of cash flow by its subsidiaries, including certain international subsidiaries, and their ability to make such cash available to Elanco, by dividend, debt repayment or otherwise. Elanco's subsidiaries may not have any obligation to pay amounts due on Elanco's indebtedness or to make funds available for that purpose. Elanco's subsidiaries may not be able to, or may not be permitted to, make adequate distributions to enable Elanco to make payments in respect of its indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal, tax and contractual restrictions may limit Elanco's ability to obtain cash from its subsidiaries. In the event that Elanco does not receive distributions from its subsidiaries, it may be unable to make required principal and interest payments on its indebtedness.

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          Elanco's inability to generate sufficient cash flows to satisfy its debt obligations, or to refinance its indebtedness on commercially reasonable terms or at all, may materially adversely affect Elanco's business, financial condition and results of operations and its ability to satisfy its obligations under its indebtedness or pay dividends on its common stock.

Risks Related to Elanco's Relationship with Lilly

As a result of the separation, Elanco will lose Lilly's brand, reputation, capital base and other resources.

          Elanco believes its association with Lilly has contributed to Elanco's building relationships with Elanco's customers due to Lilly's globally recognized brand and perceived high-quality products. The separation could adversely affect Elanco's ability to attract and retain customers, which could result in reduced sales of its products.

          The loss of Lilly's scale, capital base and financial strength may also prompt suppliers to reprice, modify or terminate their relationships with Elanco. In addition, Lilly's reduction of its ownership of Elanco could potentially cause some of Elanco's existing agreements and licenses to be terminated. Elanco cannot predict with certainty the effect that the separation will have on Elanco's business, Elanco's clients, vendors or other persons, or whether the Elanco brand will be accepted in the marketplace.

          Further, because Elanco has not operated as a standalone company in the past, it may have difficulty doing so. Elanco may need to acquire assets and resources in addition to those provided by Lilly, and in connection with the separation, may also face difficulty in separating Elanco's assets from Lilly's assets and integrating newly acquired assets into Elanco's business. Elanco's business, financial condition and results of operations could be materially adversely affected if it has difficulty operating as a standalone company, fails to acquire assets that prove to be important to Elanco's operations or incurs unexpected costs in separating its assets from Lilly's assets or integrating newly-acquired assets.

Lilly may compete with Elanco.

          Lilly is not restricted from competing with Elanco in the animal health business. Although Lilly has informed Elanco it has no current intention to compete with it in the animal health business, if Lilly in the future decides to engage in the type of business Elanco conducts, it may have a competitive advantage over Elanco, which may cause Elanco's business, financial condition and results of operations to be materially adversely affected.

Certain Elanco directors may have actual or potential conflicts of interest because of their positions with Lilly.

          A majority of Elanco's directors are employees of Lilly. Following the completion of the exchange offer, it is expected that each of these directors will resign from the Elanco board of directors and additional independent directors will be appointed. However, it is possible that the Elanco board of directors may determine that one or more of Lilly's officers or employees should continue to serve on the board of directors for a period of time following the completion of the exchange offer. In addition, new or continuing directors may own Lilly common stock or equity awards. For certain of these individuals, their holdings of Lilly common stock or equity awards may be significant compared to their total assets. Their position at Lilly and the ownership of any Lilly equity or equity awards create, or may create the appearance of, conflicts of interest when these directors are faced with decisions that could have different implications for Lilly than for Elanco. For example, these potential conflicts could arise, particularly if Lilly continues to own a substantial portion of Elanco common stock following the exchange offer, over matters such as the desirability

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of changes in Elanco's business and operations, funding and capital matters, regulatory matters, matters arising with respect to the master separation agreement and other agreements with Lilly relating to the separation or otherwise, employee retention or recruiting, or Elanco's dividend policy.

          Provisions relating to certain relationships and transactions in Elanco's amended and restated articles of incorporation address certain potential conflicts of interest between Elanco, on the one hand, and Lilly and its officers who are directors of Elanco, on the other hand. By becoming an Elanco shareholder, you will be deemed to have notice of and have consented to these provisions of Elanco's amended and restated articles of incorporation. Although these provisions are designed to resolve certain conflicts between Elanco and Lilly fairly, Elanco cannot assure you that any conflicts will be so resolved.

To preserve the tax-free treatment to Lilly and its shareholders of the exchange offer and certain related transactions, Elanco may not be able to engage in certain transactions.

          To preserve the tax-free treatment to Lilly and its shareholders of the exchange offer and certain related transactions, under the tax matters agreement, Elanco is restricted from taking any action that prevents such transactions from being tax-free for U.S. federal income tax purposes. These restrictions may limit Elanco's ability to pursue certain strategic transactions or engage in other transactions, including using Elanco's common stock to make acquisitions and in connection with equity capital market transactions that might increase the value of Elanco's business. See "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly — Tax Matters Agreement."

Lilly's rights as licensor under the intellectual property and technology license agreement could limit Elanco's ability to develop and commercialize certain products.

          Prior to the separation, Elanco had the ability to leverage certain of Lilly's intellectual property. As part of the separation, Elanco entered into an intellectual property and technology license agreement. Pursuant to the intellectual property and technology license agreement, Lilly licenses to Elanco certain of its intellectual property (excluding trademarks) related to the animal health business and also grants a license for Elanco to use Lilly's proprietary compound library for a period of two years plus up to three additional one-year periods, each such period to be granted under Lilly's sole discretion. If Elanco fails to comply with its obligations under this agreement and Lilly exercises its right to terminate it, Elanco's ability to continue to research, develop and commercialize products incorporating that intellectual property will be limited. In addition, this agreement includes limitations that affect Elanco's ability to develop and commercialize certain products, including in circumstances where Lilly has an interest in the licensed intellectual property in connection with its human health development programs. These limitations and termination rights may make it more difficult, time consuming or expensive for Elanco to develop and commercialize certain new products, or may result in Elanco's products being later to market than those of its competitors. For a summary description of the terms of the intellectual property and technology license agreement, see "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly — Intellectual Property and Technology License Agreement."

Elanco's historical consolidated and combined financial data is not necessarily representative of the results it would have achieved as a standalone company and may not be a reliable indicator of its future results.

          Elanco's historical consolidated and combined financial data included in this prospectus does not reflect the financial condition, results of operations or cash flows it would have achieved as a

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standalone company during the periods presented or those it will achieve in the future. This is primarily the result of the following factors:

          Elanco's financial condition and future results of operations, after giving effect to the separation, will be materially different from amounts reflected in Elanco's historical consolidated and combined financial statements included in this prospectus. As a result of the separation, it may be difficult for investors to compare Elanco's future results to historical results or to evaluate Elanco's relative performance or trends in Elanco's business.

Elanco has incurred and will continue to incur significant charges in connection with the separation and incremental costs as a standalone public company.

          Elanco will need to replicate or replace certain functions, systems and infrastructure to which Elanco no longer has the same access after the separation. Elanco may also need to make investments or hire additional employees to operate without the same access to Lilly's existing operational and administrative infrastructure. These initiatives may be costly to implement. Due to the scope and complexity of the underlying projects relative to these efforts, the amount of total costs could be materially higher than Elanco's estimate, and the timing of the incurrence of these costs is subject to change.

          Prior to the separation, Lilly performed or supported many important corporate functions for Elanco. Elanco's consolidated and combined financial statements reflect charges for these services on an allocated basis. Following the separation, many of these services are governed by Elanco's transitional services agreement with Lilly. Under the transitional services agreement Elanco is able to use these Lilly services for a fixed term established on a service-by-service basis. Partial reduction in the provision of any service or termination of a service prior to the expiration of the applicable fixed term requires Lilly's consent. In addition, either party is able to terminate the agreement due to a material breach of the other party, upon prior written notice, subject to limited cure periods or if the other party undergoes a change of control.

          Elanco pays Lilly mutually agreed-upon fees for these services, which are based on Lilly's costs (including third-party costs) of providing the services through March 31, 2021 and subject to a mark-up of 7% thereafter, with additional inflation-based escalation beginning January 1, 2022. However, since Elanco's transitional services agreement was negotiated in the context of a parent-subsidiary relationship, the terms of the agreement, including the fees charged for the services, may be higher or lower than those that would be agreed to by parties bargaining at arm's length for similar services and may be higher or lower than the costs reflected in the allocations in

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Elanco's historical consolidated and combined financial statements. In addition, while these services are being provided to Elanco by Lilly, Elanco's operational flexibility to modify or implement changes with respect to such services or the amounts Elanco pays for them will be limited.

          Elanco may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that Elanco received from Lilly under the transitional services agreement. Additionally, after the transitional services agreement terminates, Elanco may be unable to sustain the services at the same levels or obtain the same benefits as when Elanco was receiving such services and benefits from Lilly. When Elanco begins to operate these functions separately, if Elanco does not have its own adequate systems and business functions in place, or is unable to obtain them from other providers, it may not be able to operate its business effectively or at comparable costs, and its profitability may decline. In addition, Elanco has historically received informal support from Lilly, which may not be addressed in the transitional services agreement. The level of this informal support may diminish or be eliminated in the future.

          In addition, Elanco's historical consolidated and combined financial statements include the attribution of certain assets and liabilities that historically have been held at the Lilly corporate level but which are specifically identifiable or attributable to the businesses that were transferred to Elanco in connection with the separation. The value of the assets and liabilities Elanco assumed in connection with the separation could ultimately be materially different than such attributions, which could have a material adverse effect on Elanco's financial condition.

Risks Related to Elanco Common Stock

The price of Elanco common stock may fluctuate substantially during and after the exchange offer period, and you could lose all or part of your investment in Elanco common stock as a result.

          Elanco common stock has a limited trading history and there may be wide fluctuations in the market value of Elanco common stock during and after the exchange offer period as a result of many factors. From its IPO through February 7, 2019, the sales price of Elanco common stock as reported by the NYSE has ranged from a low sales price of $28.00 on February 6, 2019 to a high sales price of $37.61 on September 27, 2018. Some factors that may cause the market price of Elanco common stock to fluctuate, in addition to the other risks mentioned in this prospectus, are:

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          In addition, if the market for stocks in Elanco's industry or related industries, or the stock market in general, experiences a loss of investor confidence, the trading price of Elanco's common stock could decline for reasons unrelated to Elanco's business, financial condition and results of operations. If any of the foregoing occurs, it could cause Elanco's stock price to fall and may expose it to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

The pro forma and non-GAAP financial measures included in this prospectus are presented for informational purposes only and may not be an indication of Elanco's financial condition or results of operations in the future.

          Elanco's unaudited pro forma condensed consolidated and combined statement of operations included in this prospectus are presented for information purposes only and are not necessarily indicative of what Elanco's actual financial condition or results of operations would have been had the Transactions been completed on the date indicated. The assumptions used in preparing the pro forma financial information may not prove to be accurate and other factors may affect Elanco's financial condition or results of operations. Accordingly, Elanco's financial condition and results of operations in the future may not be consistent with, or evident from, such pro forma financial information. The non-GAAP financial measures included in this prospectus, adjusted EBITDA and adjusted net income, include information that Elanco uses to evaluate its past performance, but you should not consider such information in isolation or as an alternative to measures of Elanco's performance determined under U.S. GAAP. For further information regarding such limitations, see "Summary — Selected Historical and Pro Forma Financial Data for Lilly and Elanco."

While Elanco currently intends to pay a quarterly cash dividend to its common shareholders, it may change its dividend policy at any time.

          Although Elanco currently intends to pay a quarterly cash dividend to its common shareholders, it has no obligation to do so, and its dividend policy may change at any time without notice to its shareholders. Elanco currently intends to pay a quarterly cash dividend on its common stock of approximately $0.06 per share commencing following the completion of the quarter during which Lilly no longer owns shares of Elanco common stock, subject to the discretion of Elanco's board of directors. Returns on your investment will primarily depend on the appreciation, if any, in the price of Elanco's common stock. Elanco anticipates that it will retain most of its future earnings, if any, for use in the development and expansion of its business, repayment of indebtedness and for general corporate purposes. The declaration and payment of dividends to holders of Elanco's common stock will be at the discretion of Elanco's board of directors in accordance with applicable law after taking into account various factors, including Elanco's financial condition, results of operations, current and anticipated cash needs, cash flows available in the U.S., impact on Elanco's effective tax rate, indebtedness, legal requirements and other factors that Elanco's board of directors deems relevant.

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The distributions Elanco pays on its common stock may not qualify as dividends for U.S. federal income tax purposes, which could adversely affect the U.S. federal income tax consequences to you of owning Elanco's common stock.

          Generally, any distributions that Elanco makes to a shareholder with respect to its shares of Elanco's common stock will constitute a dividend for U.S. federal income tax purposes to the extent of Elanco's current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Elanco's ability to generate earnings and profits, as determined for U.S. federal income tax purposes, in any future year is subject to a number of variables that are uncertain and difficult to predict.

          Generally, any distribution not constituting a dividend under the rules described above will be treated as first reducing your adjusted basis in your shares of Elanco's common stock and, to the extent that the distribution exceeds your adjusted basis in your shares of Elanco's common stock, as gain from the sale or exchange of such shares, and if you are a domestic corporation, you will not be entitled to claim, with respect to such non-dividend distribution, a "dividends-received" deduction, which generally applies to dividends received from other domestic corporations.

Applicable laws and regulations, provisions of Elanco's amended and restated articles of incorporation and Elanco's amended and restated bylaws and certain contractual rights granted to Lilly may discourage takeover attempts and business combinations that shareholders might consider in their best interests.

          Applicable laws, provisions of Elanco's amended and restated articles of incorporation and Elanco's amended and restated bylaws and, depending on the number of shares validly tendered and whether Lilly retains a significant portion of Elanco common stock, certain contractual rights granted to Lilly under the master separation agreement may delay, deter, prevent or render more difficult a takeover attempt that Elanco's shareholders might consider in their best interests. See "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly — Master Separation Agreement." For example, they may prevent Elanco's shareholders from receiving the benefit from any premium to the market price of Elanco's common stock offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of Elanco's common stock if they are viewed as discouraging takeover attempts in the future.

          Elanco's amended and restated articles of incorporation and Elanco's amended and restated bylaws contain provisions that are intended to encourage prospective acquirers to negotiate with Elanco's board of directors rather than to attempt a hostile takeover, which could deter coercive takeover practices and inadequate takeover bids. These provisions provide for:

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          These limitations may adversely affect the prevailing market price and market for Elanco's common stock if they are viewed as limiting the liquidity of Elanco's stock or discouraging takeover attempts in the future.

Risks Related to the Exchange Offer

Your investment will be subject to different risks after the exchange offer regardless of whether you elect to participate in the exchange offer.

          Your investment will be subject to different risks as a result of the exchange offer, regardless of whether you tender all, some or none of your shares of Lilly common stock.

          Regardless of whether you tender your shares of Lilly common stock, the shares you hold after the completion of the exchange offer will reflect a different investment from the investment you previously held.

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The exchange offer and related transactions will result in a substantial amount of Elanco common stock entering the market, which may adversely affect the market price of Elanco common stock.

          Immediately before the commencement of the exchange offer, Lilly owned 293,290,000 shares of Elanco common stock, representing 80.2% of Elanco's outstanding common stock. Assuming the completion of the exchange offer and that it is fully subscribed, Lilly will distribute 293,290,000 shares of Elanco common stock and all shares of Elanco common stock not held by Elanco's affiliates will be freely tradable. If the exchange offer is not fully subscribed, Lilly intends, from time to time, to complete subsequent exchange offers and/or a pro rata spin-off of its remaining interest in Elanco. The distribution of such a large number of shares of Elanco common stock in the exchange offer and any subsequent exchange offers or a distribution of Elanco common stock on a pro rata basis to Lilly shareholders could adversely affect the market price of Elanco common stock.

Following the completion of the exchange offer, the market price of shares of Lilly common stock and Elanco common stock will fluctuate and the final per-share values used in determining the exchange ratio may not be indicative of future trading prices.

          The common stock price history for shares of Lilly and Elanco may not provide investors with a meaningful basis for evaluating an investment in either company's common stock. Elanco has been a publicly traded company only since September 20, 2018. The prior performance of Lilly common stock and Elanco common stock may not be indicative of the performance of their common stock after the exchange offer. In addition, the indicative and final per-share values used in determining the exchange ratio may not be indicative of the prices at which Lilly common stock and Elanco common stock will trade after the exchange offer is completed.

Tendering Lilly shareholders may receive a reduced discount or may not receive any discount in the exchange offer.

          The exchange offer is designed to permit you to exchange your shares of Lilly common stock for shares of Elanco common stock at a 7% discount. Stated another way, subject to the limitations described below, for each $100 of your shares of Lilly common stock accepted in the exchange offer, you will receive approximately $107.53 of Elanco common stock based on the Average Lilly Price and the Average Elanco Price.

          The number of shares you can receive is, however, subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. The upper limit ensures that any unusual or unexpected decrease in the trading price of Elanco common stock, relative to the trading price of Lilly common stock, would not result in an unduly high number of shares of Elanco common stock being exchanged for each share of Lilly common stock accepted in the exchange offer. As a result, you may receive less than $107.53 of Elanco common stock for each $100 of Lilly common stock accepted in the exchange offer, depending on the Average Lilly Price and the Average Elanco Price. Because of the upper limit, if there is a decrease of sufficient magnitude in the trading price for shares of Elanco common stock relative to the trading price of shares of Lilly common stock, or if there is an increase of sufficient magnitude in the trading price for shares of Lilly common stock relative to the trading price for shares of Elanco common stock, you may not receive $107.53 of Elanco common stock for each $100 of Lilly common stock accepted, and could receive much less. In addition, there is no assurance that you will be able to sell shares of Elanco common stock received in the exchange offer at prices comparable to the Average Elanco Price.

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          There may also be circumstances under which you would receive fewer shares of Elanco common stock than you would have received if the exchange ratio were determined using the closing prices for shares of Lilly common stock and Elanco common stock on the expiration date of the exchange offer. For example, if the trading price of shares of Lilly common stock were to increase during the last two days of the exchange offer, the Average Lilly Price would likely be lower than the closing price of shares of Lilly common stock on the expiration date of the exchange offer. As a result, you may receive fewer shares of Elanco common stock for each $100 of Lilly common stock than you would have if the Average Lilly Price were calculated on the basis of the closing price of shares of Lilly common stock on the expiration date of the exchange offer or on the basis of an Averaging Period that includes the last two trading days of the exchange offer. Similarly, if the trading price of Elanco common stock were to decrease during the last two trading days of the exchange offer, the Average Elanco Price would likely be higher than the closing price of shares of Elanco common stock on the expiration date of the exchange offer. This could also result in your receiving fewer shares of Elanco common stock for each $100 of Lilly common stock than you would otherwise receive if the Average Elanco Price were calculated on the basis of the closing price of shares of Elanco common stock on the expiration date or on the basis of an Averaging Period that includes the last two trading days of the exchange offer.

Participating Lilly shareholders will experience some delay in receiving shares of Elanco common stock (and cash in lieu of fractional shares of Elanco common stock, if any) for shares of Lilly common stock that are accepted in the exchange offer.

          Tendering Lilly shareholders whose shares of Lilly common stock have been accepted for exchange will not be able to sell the shares of Elanco common stock to be received until the distribution of shares of Elanco common stock to individual shareholders has been completed. Consequently, if the market price for shares of Elanco common stock should decrease or increase during that period, the relevant shareholder would not be able to stop any losses or recognize any gain by selling the shares of Elanco common stock. Similarly, you will not be able to invest cash in lieu of fractional shares of Elanco common stock, if any, until the distribution of such cash has been completed, and you will not receive interest payments for this time period.

Market prices for shares of Lilly common stock may be impacted by the exchange offer.

          Investors may purchase shares of Lilly common stock in order to participate in the exchange offer, which may have the effect of raising market prices for shares of Lilly common stock during the pendency of the exchange offer. Following the completion of the exchange offer, the market prices for shares of Lilly common stock may decline because any exchange offer-related demand for shares of Lilly common stock will cease. In addition, following the completion of the exchange offer, the market prices for shares of Lilly common stock may decline because Lilly will no longer have any ownership interest in Elanco.

If the exchange offer is not fully subscribed, Lilly may continue to control Elanco, which could prevent Elanco shareholders from influencing significant decisions.

          Depending on the number of shares validly tendered, Lilly may be able to influence the outcome of certain corporate actions requiring the approval of Elanco's shareholders so long as it owns a significant portion of Elanco common stock and may retain certain rights pursuant to the master separation agreement. See "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly — Master Separation Agreement." In addition, if the exchange offer is not fully subscribed, and Lilly were to waive the minimum amount and continue to hold more than 50% of the outstanding Elanco common stock, then Elanco would

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continue to be considered a "controlled company" under NYSE rules. In such case, the typical independence requirements under the NYSE rules would not apply to Elanco.

The exchange offer could result in significant tax liability.

          The completion of the exchange offer is conditioned upon, among other things, the receipt by Lilly of the opinion of Skadden Arps, to the effect that the exchange offer will qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code and that, for U.S. federal income tax purposes, except with respect to the receipt of cash in lieu of fractional shares, holders of Lilly common stock will recognize no gain or loss upon the receipt of shares of Elanco common stock in the exchange offer. A holder of Lilly common stock will generally recognize capital gain or loss with respect to cash received in lieu of a fractional share of Elanco common stock.

          The opinion of Skadden Arps will be based on the law in effect as of the time of the exchange offer and will rely upon certain assumptions, as well as statements, representations and certain undertakings made by officers of Lilly and Elanco. These assumptions, statements, representations and undertakings are expected to relate to, among other things, Lilly's business reasons for engaging in the exchange offer, the conduct of certain business activities by Lilly and Elanco, and the plans and intentions of Lilly and Elanco to continue conducting those business activities and not to materially modify their ownership or capital structure following the exchange offer. If any of those statements, representations or assumptions is incorrect or untrue in any material respect or any of those undertakings is not complied with, or if the facts upon which the opinion of Skadden Arps is based are materially different from the facts that exist at the time of the exchange offer, the conclusions reached in such opinion could be adversely affected.

          Lilly does not intend to seek a ruling from the IRS as to the U.S. federal income tax treatment of the exchange offer. The legal authorities upon which the opinion of Skadden Arps will be based are subject to change or differing interpretations at any time, possibly with retroactive effect. The opinion will not be binding on the IRS or a court, and there can be no assurance that the IRS will not challenge the conclusions reached in the opinion or that a court would not sustain such a challenge.

          If the exchange offer were determined not to qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code, each Lilly shareholder who receives shares of Elanco common stock in the exchange offer would generally be treated as recognizing taxable gain or loss equal to the difference between the fair market value of the shares of Elanco common stock received by the shareholder and its tax basis in the shares of Lilly common stock exchanged therefor, or, in certain circumstances, as receiving a taxable distribution equal to the fair market value of the shares of Elanco common stock received by the shareholder.

          In addition, Lilly would generally recognize gain with respect to the transfer of Elanco common stock in the exchange offer, as well as with respect to the receipt of certain cash proceeds from Elanco in connection with the IPO.

          The exchange offer could be taxable to Lilly, but not its shareholders, if Elanco or its shareholders were to engage in certain transactions after the exchange offer is completed. In such cases, Elanco would be required to indemnify Lilly for any resulting taxes and related expenses, which amount could be material.

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If there is a later determination that the exchange offer is taxable for U.S. federal income tax purposes because the facts, assumptions, representations or undertakings underlying the tax opinion are incorrect or for any other reason, then Lilly and its shareholders could incur significant U.S. federal income tax liabilities, and Elanco could incur significant liabilities.

          The completion of the exchange offer is conditioned upon, among other things, the receipt by Lilly of the opinion of Skadden Arps, to the effect that the exchange offer will qualify as tax-free to Lilly and its shareholders for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, except with respect to the receipt of cash in lieu of a fractional share. The tax opinion will rely on certain facts, assumptions, representations and undertakings from Lilly and Elanco regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations or undertakings is incorrect or not otherwise satisfied, the conclusions reached in the opinion could be adversely affected and Lilly and its shareholders could be subject to significant tax liabilities. Furthermore, an opinion of counsel is not binding on the IRS or courts, and the IRS could determine on audit that the exchange offer is taxable if it disagrees with the conclusions in the opinion, or for other reasons, including as a result of certain significant changes in the stock ownership of Lilly or Elanco after the exchange offer. Accordingly, no assurance can be given that the IRS will not challenge the conclusions set forth in the opinion or that a court would not sustain such a challenge. If the exchange offer is determined to be taxable for U.S. federal income tax purposes, Lilly and/or its shareholders could incur significant U.S. federal income tax liabilities, and Elanco could incur significant liabilities under applicable law or under the tax matters agreement.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

          This prospectus contains "forward-looking" statements. Forward-looking statements reflect Elanco's and Lilly's, as the case may be, current views with respect to, among other things, future events and performance. Forward-looking statements are generally identified by using words such as "anticipate," "estimate," "expect," "intend," "project," "plan," "predict," "believe," "seek," "continue," "outlook," "may," "might," "should," "can have," "likely" or the negative version of these words or comparable words or by using future dates in connection with any discussion of future performance, actions or events. Forward-looking statements are not guarantees of future performance, actions or events.

          In particular, forward-looking statements include statements relating to: the exchange offer and/or one or more subsequent additional distributions; the separation, the exchange offer and their expected benefits; applicable laws and regulations; provisions of Elanco's amended and restated articles of incorporation and amended and restated bylaws and certain contractual rights granted to Lilly may discourage takeover attempts and business combinations that shareholders might consider in their best interests; the exchange offer and related transactions will result in a substantial amount of Elanco common stock entering the market, which may adversely affect the market price of Elanco common stock; investments will be subject to different risks after the exchange offer; during and following the completion of the exchange offer, shares of Lilly common stock and Elanco common stock will fluctuate and the final per-share values used in determining the exchange ratio may not be indicative of future trading prices; tendering Lilly shareholders may receive a reduced discount or may not receive any discount in the exchange offer; participating Lilly shareholders may experience some delay in receiving shares of Elanco common stock (and cash in lieu of fractional shares of Elanco common stock, if any) for shares of Lilly common stock that are accepted in the exchange offer; market prices for shares of Lilly common stock may be impacted by the exchange offer; the separation and the exchange offer could result in significant tax liability; if there is a later determination that the separation or the exchange offer is taxable for U.S. federal income tax purposes because the facts, assumptions, representations or undertakings underlying the tax opinion are incorrect for any other reason, then Lilly and its shareholders could incur significant U.S. federal income tax liabilities and Elanco could incur significant liabilities; Elanco's indebtedness and Elanco's ability to make interest and principal payments on its indebtedness; Elanco's ability to satisfy the covenants contained in its indebtedness; Elanco's ability to generate sufficient cash to service all of its indebtedness; future actions, business plans or prospects; prospective products, product approvals or products under development; R&D costs, timing and likelihood of success; success of acquisition and licensing efforts; future operating or financial performance; future results of current and anticipated products and services, strategies, sales efforts, expenses, production and cost efficiencies, and margin improvements; uncertainty and impact of Brexit; interest rates and foreign exchange rates; heightened competition, including from new innovation or generics; the impact of disruptive innovations and advances in veterinary medical practices, animal health technologies and product alternatives; changes in regulatory landscape; changing market demand; unanticipated safety, quality or efficacy concerns regarding Elanco products; growth in emerging markets; the outcome of contingencies, such as legal proceedings; dividend plans; Elanco's agreements with Lilly; Lilly's control of Elanco prior to the exchange offer and potential loss of control of Elanco after the completion of the exchange offer; Elanco's ability to operate as a standalone company after the exchange offer is completed; government regulation; changes in U.S. foreign trade policy, imposition of tariffs or trade disputes; weather conditions and availability of natural resources; impact of global macroeconomic conditions; and changes in financial results.

          Forward-looking statements are subject to risks and uncertainties, many of which are beyond the control of Elanco or Lilly, and are potentially inaccurate assumptions. These matters involve

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risks and uncertainties as discussed in Lilly's periodic reports on Form 10-K and Form 10-Q, and its current reports on Form 8-K, filed with the SEC, as well as those issues and uncertainties described elsewhere in this prospectus, including in "Risk Factors." Many factors, including those set forth in "Risk Factors," could cause actual results to differ materially from such forward-looking statements. However, there may also be other risks that Elanco and Lilly are unable to predict at this time. If one or more of these risks or uncertainties materialize, or if management's underlying beliefs and assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement included in this prospectus. For these reasons, you should not rely on forward-looking statements, which speak only as of the date on which such statements are made.

          Elanco and Lilly undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the above to be a complete discussion of all potential risks or uncertainties. For additional information regarding risks and uncertainties faced by Elanco and Lilly, please read "Risk Factors" and "Incorporation by Reference."

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THE TRANSACTION

Background of the Exchange Offer

Separation

          On September 24, 2018, in connection with the completion of the IPO, Lilly transferred to Elanco substantially all of its animal health businesses in exchange for (i) all of the net proceeds ($1,659.7 million) Elanco received from the sale of its common stock in the IPO, including the net proceeds received as a result of the exercise in full of the underwriters' option to purchase additional shares, (ii) all of the net proceeds (approximately $2,000 million) Elanco received in the Senior Notes Offering (as defined below) and (iii) all of the net proceeds ($498.6 million) Elanco received from the entry into the Term Facility (as defined below). Following the IPO, Elanco made a payment to Lilly of $359.9 million pursuant to the terms of the master separation agreement, which required that Elanco pay additional amounts to Lilly to the extent that Elanco's total unrestricted cash for working capital and other general corporate purposes exceeded $300 million following the completion of the IPO. A portion of the total consideration to be paid to Lilly has been temporarily retained by Elanco as restricted cash in connection with the anticipated transfer to Elanco from Lilly of certain animal health assets in jurisdictions that will occur following the completion of the IPO and the exchange offer.

          Additionally, immediately prior to the completion of the IPO, Lilly and Elanco entered into certain agreements that provide a framework for Elanco's ongoing relationship with Lilly, which agreements will remain in effect following the completion of the exchange offer. The transactions to separate Elanco's business from Lilly, as described here and elsewhere in this prospectus, are referred to, collectively, as the "separation." For additional information regarding the separation transactions see Note 19: Related Party Agreements and Transactions to Elanco's consolidated and combined financial statements included elsewhere in this prospectus and for additional information regarding Elanco's agreements with Lilly, see "Agreements Between Lilly and Elanco and Other Related Party Transactions — Relationship between Elanco and Lilly."

IPO

          On September 24, 2018, the initial public offering of 72,335,000 shares of Elanco common stock (including the exercise of the underwriters' option in full) at a price of $24.00 per share was completed (the "IPO"). As described above, Elanco did not retain any of the net proceeds from the IPO. Immediately following the IPO, there were 365,625,000 shares of Elanco common stock outstanding and Lilly retained 293,290,000 shares of Elanco common stock, representing an 80.2% ownership interest in Elanco.

Debt Transactions

          On August 28, 2018, Elanco issued $500 million aggregate principal amount of 3.912% Senior Notes due 2021, $750 million aggregate principal amount of 4.272% Senior Notes due 2023 and $750 million aggregate principal amount of 4.900% Senior Notes due 2028 (collectively, the "Senior Notes") in a private placement (the "Senior Notes Offering").

          On September 5, 2018, Elanco entered into (i) a revolving credit agreement for a five-year $750 million senior unsecured revolving credit facility with the ability (subject to certain conditions) to incur additional incremental commitments of up to $250 million (the "Revolving Facility") and (ii) a term credit agreement with a syndicate of banks providing for a three-year senior unsecured term credit facility in an amount of $500 million (the "Term Facility" and, together with the Revolving Facility, the "Credit Facilities"). The entry into the Credit Facilities and the Senior Notes Offering are referred to, together, as the "Debt Transactions."

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          As described above, Elanco did not retain any of the net proceeds from the Debt Transactions.

          See "Description of Certain Indebtedness of Elanco" for more information on the Debt Transactions.

Reasons for the Exchange Offer

          Lilly has decided to commence the exchange offer to complete the separation of the Elanco animal health business from Lilly's human pharmaceutical businesses in a tax-efficient manner, with the goal of enhancing shareholder value and better positioning Lilly to focus on its human pharmaceutical business.

          Lilly believes that the separation and the exchange offer have the potential to, among other things, (a) create a fully independent company, Elanco, focused exclusively on the animal health business that can pursue future business initiatives, including acquisitions and other capital investments, without the influence of a controlling shareholder, (b) create a widely held, publicly traded equity security linked only to the performance of the animal health business, rather than Lilly's larger human pharmaceutical business, which can be used efficiently to attract, retain, and incentivize employees of the animal health business and to pursue attractive acquisition and capital raising opportunities, and (c) enhance the capital markets efficiency of Lilly common stock, which can be used in acquisitions and capital raising activities, by eliminating a non-core business which investors may not appropriately value when assessing Lilly's business operations.

          Neither Lilly nor Elanco can provide assurances that, following the exchange offer, any of these benefits will be realized to the extent anticipated or at all.

          The following reasons were considered by Lilly in making the determination to complete the separation of the Elanco animal health business from Lilly's human pharmaceutical businesses by means of the exchange offer:

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Effects of the Exchange Offer

          Upon the completion of the exchange offer, Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco.

          Holders of Lilly common stock will be affected by the exchange offer as follows:

Elanco's Equity Capitalization

          Elanco had an equity capitalization of 365,643,991 shares of common stock as of February 5, 2019. Lilly currently beneficially owns 293,290,000 shares of Elanco common stock, representing approximately 80.2% of the outstanding shares of Elanco common stock.

No Appraisal Rights

          Appraisal is a statutory remedy under state law available to corporate shareholders who object to extraordinary actions taken by their corporation. This remedy allows dissenting shareholders to require the corporation to repurchase their stock at a price equivalent to its value immediately prior

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to the extraordinary corporate action. No appraisal rights are available to Lilly shareholders or Elanco shareholders in connection with the exchange offer.

Regulatory Approval

          Certain acquisitions of Elanco common stock under the exchange offer may require a premerger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If a holder of Lilly common stock decides to participate in the exchange offer and consequently acquires enough shares of Elanco common stock to exceed the $84.4 million threshold provided for in the Hart-Scott-Rodino Act and associated regulations, and if an exemption under the Hart-Scott-Rodino Act or associated regulations does not apply, Lilly and the holder will be required to make filings under the Hart-Scott-Rodino Act and the holder will be required to pay the applicable filing fee. A filing requirement could delay the exchange of shares with any shareholder or shareholders required to make such a filing until the waiting periods in the Hart-Scott-Rodino Act have expired or been terminated.

          Apart from the registration of shares of Elanco common stock offered in the exchange offer under applicable securities laws and Lilly filing a Schedule TO with the SEC, Lilly does not believe that any other material U.S. federal or state regulatory filings or approvals will be necessary to consummate the exchange offer.

Accounting Treatment

          The shares of Lilly common stock acquired by Lilly in the exchange offer will be recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of Lilly common stock accepted in the exchange offer at its expiration. Any difference between the net book value of Elanco attributable to Lilly and the market value of the shares of Lilly common stock acquired at that date will be recognized by Lilly as a gain on disposal of discontinued operations net of any direct and incremental expenses of the exchange offer on the disposal of its Elanco common stock.

          The aggregate market value of Lilly's investment in 293,290,000 shares of Elanco common stock, based on the closing price of shares of Elanco common stock on February 7, 2019 of $29.50 per share, was approximately $8,652,055,000. Lilly expects to recognize a gain upon consummation of the exchange offer. The amount of the gain will be dependent upon the final exchange ratio and the value of Lilly common stock at the time the exchange offer is consummated. For example, if at the time Lilly completes the exchange offer, (i) the exchange offer is fully subscribed, (ii) the upper limit of 4.5262 shares of Elanco common stock exchanged for each share of Lilly common stock is in effect, and (iii) the market value of Lilly common stock is $117.50 per share (the last reported sales price on the NYSE on February 7, 2019), Lilly would recognize a gain of approximately $3,427.4 million in connection with the transaction, prior to estimated fees and expenses. A $1.00 increase in the per share market value of Lilly common stock in this example would increase the gain recognized by Lilly by approximately $64.8 million.

          At the completion of the exchange offer Lilly will no longer control Elanco. As a result, upon the completion of the exchange offer Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco.

          The exchange of shares of Elanco common stock for shares of Lilly common stock in the exchange offer, in and of itself, will not affect the financial condition or results of operations of Elanco.

Tax Treatment

          See "Material U.S. Federal Income Tax Consequences" for a discussion of the tax treatment of the exchange offer.

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THE EXCHANGE OFFER

Terms of the Exchange Offer

General

          Lilly is offering to exchange up to 293,290,000 shares of Elanco common stock which are owned by Lilly for outstanding shares of Lilly common stock, at an exchange ratio to be calculated in the manner described below, on the terms and conditions and subject to the limitations described below and in the related letter of transmittal (including the instructions thereto), which are validly tendered by 12:00 midnight, New York City time, at the end of the day on March 8, 2019, unless the exchange offer is extended or terminated. The last day on which tenders will be accepted, whether on March 8, 2019 or any later date to which the exchange offer is extended, is referred to in this prospectus as the "expiration date." You may tender all, some or none of your shares of Lilly common stock.

          The number of shares of Lilly common stock that will be accepted if the exchange offer is completed will depend on the final exchange ratio and the number of shares of Lilly common stock validly tendered and not validly withdrawn. The maximum number of shares of Lilly common stock that will be accepted if the exchange offer is completed will be equal to the number of shares of Elanco common stock held by Lilly divided by the final exchange ratio (which will be subject to the upper limit). Lilly's obligation to complete the exchange offer is subject to important conditions that are described in the section entitled "— Conditions to Completion of the Exchange Offer."

          For each share of Lilly common stock that you tender in the exchange offer and do not validly withdraw, and that is accepted by Lilly, you will receive a number of shares of Elanco common stock at a discount of approximately 7%, subject to an upper limit of 4.5262 shares of Elanco common stock per share of Lilly common stock. Stated another way, subject to the upper limit described below, for each $100 of Lilly common stock accepted in the exchange offer, you will receive approximately $107.53 of shares of Elanco common stock based on the Average Lilly Price and the Average Elanco Price, as determined by Lilly.

          The Average Lilly Price will be equal to the simple arithmetic average of the daily VWAPs of shares of Lilly common stock on the NYSE during the Averaging Period, as determined by Lilly, and the Average Elanco Price will be equal to the simple arithmetic average of the daily VWAPs of shares of Elanco common stock on the NYSE during the Averaging Period, as determined by Lilly, as more fully described below under "— Pricing Mechanism."

          The daily VWAP for shares of Lilly common stock or Elanco common stock, as the case may be, will be the volume-weighted average price per share of that stock on the NYSE during the period beginning at 9:30 a.m., New York City time (or such other time as is the official open of trading on the NYSE), and ending at 4:00 p.m., New York City time (or such other time as is the official close of trading on the NYSE), except that such data will only take into account adjustments made to reported trades included by 4:10 p.m., New York City time. The daily VWAP will be as reported by Bloomberg L.P. as displayed under the heading Bloomberg VWAP on the Bloomberg pages "LLY UN<Equity>AQR" with respect to Lilly common stock and "ELAN UN<Equity>AQR" with respect to Elanco common stock (or their equivalent successor pages if such pages are not available). The daily VWAPs obtained from Bloomberg L.P. may be different from other sources or investors' or other security holders' own calculations. Lilly will determine the simple arithmetic average of the VWAPs of each stock, and such determination will be final.

          For purposes of the exchange offer, a "business day" means any day other than a Saturday, Sunday or U.S. federal holiday and consists of the time period from 12:01 a.m., New York City time, through 12:00 midnight, New York City time.

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Upper Limit

          The number of shares of Elanco common stock that you can receive is subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. If the upper limit is in effect, you will receive less than $107.53 of Elanco common stock for each $100 of Lilly common stock that you tender based on the Average Lilly Price and Average Elanco Price, and you could receive much less. This upper limit represents a 12% discount for shares of Elanco common stock based on the closing prices of shares of Lilly common stock and Elanco common stock on February 7, 2019 (the trading day immediately preceding the date of the commencement of the exchange offer). Lilly set this upper limit to ensure that there would not be an unduly high number of shares of Elanco common stock being exchanged for each share of Lilly common stock accepted in the exchange offer.

Pricing Mechanism

          The terms of the exchange offer are designed to result in you receiving approximately $107.53 of Elanco common stock for each $100 of Lilly common stock validly tendered and accepted in the exchange offer based on the Average Lilly Price and the Average Elanco Price determined as described above and subject to the upper limit. Regardless of the final exchange ratio, the terms of the exchange offer would always result in you receiving approximately $107.53 of Elanco common stock for each $100 of Lilly common stock, based on the Average Lilly Price and the Average Elanco Price, so long as the upper limit described above is not in effect.

          To illustrate, the number of shares of Elanco common stock you will receive for shares of Lilly common stock validly tendered and accepted in the exchange offer, and assuming no proration occurs, will be calculated as:

Number of shares of Elanco common stock   =   (a) number of shares of Lilly common stock validly tendered by you and accepted by Lilly   multiplied by   (b) the final exchange ratio

          The following formula will be used to calculate the final exchange ratio:

Final exchange ratio   = the lesser of:   (a) the Average Lilly Price divided by 93% of the Average Elanco Price   and   (b) 4.5262 (the upper limit)

          The Average Lilly Price for purposes of the exchange offer will equal the simple arithmetic average of the daily VWAPs of shares of Lilly common stock on the NYSE during the Averaging Period of three consecutive trading days (which, if the exchange offer is not extended or terminated, would be March 4, 5 and 6, 2019) ending on and including the second trading day preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). The Average Elanco Price for purposes of the exchange offer will equal the simple arithmetic average of the daily VWAPs of shares of Elanco common stock on the NYSE during the Averaging Period.

          The final exchange ratio, the daily VWAPs used to calculate the final exchange ratio, the Average Lilly Price and the Average Elanco Price will each be rounded to four decimals.

          To help illustrate the way these calculations work, below are two examples:

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          A website will be maintained at www.lillyexchangeoffer.com that will provide the daily VWAPs of both Lilly common stock and Elanco common stock during the exchange offer. You may also contact the information agent at its toll-free number provided on the back cover of this prospectus to obtain this information.

          Prior to the Averaging Period, commencing on the third trading day of the exchange offer, the website will also provide indicative exchange ratios for each day that will be calculated based on the indicative calculated per-share values of Lilly common stock and Elanco common stock on each day, calculated as though that day were the last day of the Averaging Period, by 4:30 p.m., New York City time. In other words, assuming that a given day is a trading day, the indicative exchange ratio will be calculated based on the simple arithmetic average of the daily VWAPs of Lilly common stock and Elanco common stock for that day and the immediately preceding two trading days. The indicative exchange ratio will also reflect whether the upper limit would have been in effect had such day been the last day of the Averaging Period.

          During the first two days of the Averaging Period, the website will provide indicative exchange ratios that will be calculated based on the Average Lilly Price and Average Elanco Price, as calculated by Lilly based on data reported by Bloomberg L.P. The website will not provide an indicative exchange ratio on the third day of the Averaging Period. The indicative exchange ratios will be calculated as follows: (i) on the first day of the Averaging Period, the indicative exchange ratio will be calculated based on the daily VWAPs of Lilly common stock and Elanco common stock for that first day of the Averaging Period and (ii) on the second day of the Averaging Period, the indicative exchange ratio will be calculated based on the simple arithmetic average of the daily VWAPs of Lilly common stock and Elanco common stock for the first and second day of the Averaging Period. During the first two days of the Averaging Period, the indicative exchange ratios will be updated on the website each day by 4:30 p.m., New York City time. The final exchange ratio, including whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect, will be announced by press release and be available on the website by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019).

          Prior to and during the Averaging Period, the data based on which the daily VWAP is determined will only take into account adjustments made to reported trades included by 4:10 p.m., New York City time. The daily VWAPs, as reported by Bloomberg L.P., may be different from other sources or investors' or other security holders' own calculations. Lilly will determine the simple arithmetic average of the VWAPs of each, and such determination will be final.

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Final Exchange Ratio

          The final exchange ratio that shows the number of shares of Elanco common stock that you will receive for each share of Lilly common stock that you validly tendered and which is accepted in the exchange offer, including whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect, will be announced by press release and available at www.lillyexchangeoffer.com no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). After that time, you may also contact the information agent to obtain the final exchange ratio at its toll-free number provided on the back cover of this prospectus.

          If a market disruption event occurs with respect to shares of Lilly common stock or Elanco common stock on any day during the Averaging Period, the simple arithmetic average stock price of Lilly common stock and Elanco common stock will be determined using the daily VWAPs of shares of Lilly common stock and Elanco common stock on the preceding trading day or days, as the case may be, on which no market disruption event occurred. If, however, Lilly decides to extend the exchange offer period following a market disruption event, the Averaging Period will be reset. If a market disruption event occurs as specified above, Lilly may terminate the exchange offer if, in its reasonable judgment, the market disruption event has impaired the benefits of the exchange offer. See "— Conditions to Completion of the Exchange Offer."

          A "market disruption event" with respect to either Lilly common stock or Elanco common stock means a suspension, absence or material limitation of trading of such stock on the NYSE for more than two hours of trading or a breakdown or failure in the price and trade reporting systems of the NYSE as a result of which the reported trading prices for Lilly common stock or Elanco common stock, as the case may be, during any half-hour trading period during the principal trading session in the NYSE are materially inaccurate, as determined by Lilly in its sole discretion, on the day with respect to which such determination is being made. For purposes of such determination: (i) a limitation on the hours or number of days of trading will not constitute a market disruption event if it results from an announced change in the regular business hours of the NYSE; and (ii) limitations pursuant to NYSE Rule 80A (or any applicable rule or regulation enacted or promulgated by the NYSE, any other self-regulatory organization or the SEC of similar scope as determined by Lilly or the exchange agent) on trading during significant market fluctuations will constitute a suspension, absence or material limitation of trading.

          Since the exchange offer is scheduled to expire at 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019) and the final exchange ratio, including whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect, will be announced by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer, you will be able to tender or withdraw your shares of Lilly common stock after the final exchange ratio is determined until the exchange offer has expired. For more information on tendering and withdrawing your shares, see "— Procedures for Tendering" and "— Withdrawal Rights."

          For the purposes of illustration, the table below indicates the number of shares of Elanco common stock that you would receive per one share of Lilly common stock accepted in the exchange offer, calculated on the basis described under "— Pricing Mechanism" and taking into account the upper limit, assuming a range of simple arithmetic averages of the daily VWAPs of shares of Lilly common stock and Elanco common stock during the assumed Averaging Period. The first line of the table below shows the indicative Average Lilly Price and the indicative Average Elanco Price and indicative exchange ratio that would have been in effect following the official close

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of trading on the NYSE on February 7, 2019, based on the daily VWAPs of shares of Lilly common stock and Elanco common stock on February 5, 6 and 7, 2019. The table also shows the effects of a 10% increase or decrease in either or both the indicative Average Lilly Price and indicative Average Elanco Price based on changes relative to the values as of February 7, 2019.

Lilly
common stock

 

Elanco
common stock

    Average
Lilly
Price
    Average
Elanco
Price
    Shares
of Elanco
common stock
per share
of Lilly
common stock
validly tendered
    $ Amount
of Elanco
common stock
per $100
of Lilly
common stock
 

As of February 7, 2019

 

As of February 7, 2019

  $ 119.2065   $ 29.3636     4.3652     107.53  

Down 10%

 

Up 10%

  $ 107.2859   $ 32.2999     3.5716     107.53  

Down 10%

 

Unchanged

  $ 107.2859   $ 29.3636     3.9287     107.53  

Down 10%

 

Down 10%

  $ 107.2859   $ 26.4272     4.3652     107.53  

Unchanged

 

Up 10%

  $ 119.2065   $ 32.2999     3.9684     107.53  

Unchanged

 

Down 10%

  $ 119.2065   $ 26.4272     4.5262     100.34 (1)

Up 10%

 

Up 10%

  $ 131.1272   $ 32.2999     4.3652     107.53  

Up 10%

 

Unchanged

  $ 131.1272   $ 29.3636     4.5262     101.36 (2)

Up 10%

 

Down 10%

  $ 131.1272   $ 26.4272     4.5262     91.22 (3)

(1)
In this scenario, the upper limit of 4.5262 is in effect. Absent the upper limit, the exchange ratio would have been 4.8503 shares of Elanco common stock per share of Lilly common stock validly tendered. In this scenario, Lilly would announce that the upper limit on the number of shares of Elanco common stock that can be received for each share of Lilly common stock validly tendered is in effect no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019).
(2)
In this scenario, the upper limit of 4.5262 is in effect. Absent the upper limit, the exchange ratio would have been 4.8018 shares of Elanco common stock per share of Lilly common stock validly tendered. In this scenario, Lilly would announce that the upper limit on the number of shares of Elanco common stock that can be received for each share of Lilly common stock validly tendered is in effect no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019).
(3)
In this scenario, the upper limit of 4.5262 is in effect. Absent the upper limit, the exchange ratio would have been 5.3353 shares of Elanco common stock per share of Lilly common stock validly tendered. In this scenario, Lilly would announce that the upper limit on the number of shares of Elanco common stock that can be received for each share of Lilly common stock validly tendered is in effect no later than 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019).

          If the trading price of shares of Lilly common stock were to increase during the last two trading days of the exchange offer period (which, if the exchange offer is not extended or terminated, would be March 7 and 8, 2019), the Average Lilly Price would likely be lower than the closing price of shares of Lilly common stock on the expiration date of the exchange offer. As a result, you may receive fewer shares of Elanco common stock for each $100 of Lilly common stock that you validly tender and is accepted than you would have received if the Average Lilly Price were calculated on the basis of the closing price of shares of Lilly common stock on the expiration date or on the basis of an Averaging Period that includes the last two trading days of the exchange offer. Similarly, if the trading price of shares of Elanco common stock were to decrease during the last two days of the exchange offer, the Average Elanco Price would likely be higher than the closing price of shares of Elanco common stock on the expiration date of the exchange offer. This could also result in your receiving fewer shares of Elanco common stock for each $100 of Lilly common stock than you would otherwise receive if the Average Elanco Price were calculated on the basis of the closing price of shares of Elanco common stock on the expiration date or on the basis of an Averaging Period that includes the last two trading days of the exchange offer.

          The number of shares of Lilly common stock accepted by Lilly in the exchange offer may be subject to proration. Depending on the number of shares of Lilly common stock validly tendered, and not validly withdrawn, and the final exchange ratio, determined as described above, Lilly may

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have to limit the number of shares of Lilly common stock that it accepts in the exchange offer through a proration process. Any proration of the number of shares accepted in the exchange offer will be determined on the basis of the proration mechanics described below under "— Proration; Odd-Lots."

          This prospectus and related documents are being sent to:

Proration; Odd-Lots

          If, as of 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), Lilly shareholders have validly tendered more shares of Lilly common stock than Lilly is able to accept for exchange, Lilly will accept for exchange the shares of Lilly common stock validly tendered and not validly withdrawn by each tendering shareholder on a pro rata basis, based on the proportion that the total number of shares of Lilly common stock to be accepted for exchange bears to the total number of shares of Lilly common stock validly tendered and not validly withdrawn (rounded to the nearest whole number of shares of Lilly common stock and subject to any adjustment necessary to ensure the exchange of all shares of Elanco common stock owned by Lilly), except for tenders of odd-lots, as described below.

          Except as otherwise provided in this section, beneficial holders of less than 100 shares of Lilly common stock who validly tender all of their shares will not be subject to proration if the exchange offer is oversubscribed. Direct or beneficial holders of more than 100 shares of Lilly common stock, and those who own less than 100 shares but do not tender all of their shares, will be subject to proration. In addition, shares held on behalf of participants in the Savings Plans (each of which holds more than 100 shares of Lilly common stock) will be subject to proration.

          Lilly will announce the preliminary proration factor, if any, by press release by 9:00 a.m., New York City time, on the trading day immediately following the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). Upon determining the number of shares of Lilly common stock validly tendered for exchange, Lilly will announce the final results, including the final proration factor, if any.

          Any shares of Lilly common stock not accepted for exchange in the exchange offer as a result of proration will be returned to the tendering shareholder promptly after the expiration of the exchange offer in book-entry form to a direct registration account in the name of the registered holder maintained by Lilly's transfer agent.

Fractional Shares

          Fractional shares of Elanco common stock will not be distributed in the exchange offer. The exchange agent, acting as agent for the Lilly shareholders otherwise entitled to receive fractional shares of Elanco common stock, will aggregate all fractional shares that would otherwise have been required to be distributed and cause them to be sold in the open market for the accounts of the shareholders. Any proceeds that the exchange agent realizes from that sale will be distributed, less

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any brokerage commissions or other fees, to each shareholder entitled thereto in accordance with the shareholder's proportional interest in the aggregate number of shares sold. The distribution of fractional share proceeds may take longer than the distribution of shares of Elanco common stock. As a result, shareholders may not receive fractional share proceeds at the same time they receive shares of Elanco common stock.

          None of Lilly, Elanco, the exchange agent or any of the dealer managers or any other person will guarantee any minimum proceeds from the sale of fractional shares of Elanco common stock. You will not receive any interest on any cash paid to you, even if there is a delay in making the payment. In addition, a shareholder who receives cash in lieu of a fractional share of Elanco common stock will generally recognize capital gain or loss for U.S. federal income tax purposes on the receipt of the cash to the extent that the cash received is greater or less than the tax basis allocated to the fractional share. You are urged to read carefully the discussion in "Material U.S. Federal Income Tax Consequences" and to consult your own tax advisor regarding the consequences to you of the exchange offer.

          Holders who are tendering shares allocated to their Savings Plans accounts should note that their accounts do not hold fractional shares, given the unitized nature of the Savings Plans' stock funds, and such holders should refer to the special instructions provided to them by or on behalf of their applicable plan administrator for more information.

Exchange of Shares of Lilly Common Stock

          Upon the terms and subject to the conditions of the exchange offer (including, if the exchange offer is extended or amended, the terms and conditions of the extension or amendment), Lilly will accept for exchange, and will exchange, for shares of Elanco common stock owned by Lilly, the shares of Lilly common stock validly tendered, and not validly withdrawn, prior to 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), promptly after the expiration date of the exchange offer.

          The exchange of shares of Lilly common stock validly tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of:

          For purposes of the exchange offer, Lilly will be deemed to have accepted for exchange, and thereby exchanged, shares of Lilly common stock validly tendered and not validly withdrawn if and when Lilly notifies the exchange agent of its acceptance of the tenders of those shares of Lilly common stock pursuant to the exchange offer.

          On or prior to the time of consummation of the exchange offer, Lilly will irrevocably deliver to the exchange agent Direct Registration Shares representing all of the shares of Elanco common stock outstanding owned by it, with irrevocable instructions to hold the shares of Elanco common

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stock in trust for Lilly shareholders whose shares of Lilly common stock are being accepted for exchange in the exchange offer. Elanco common stock and/or cash in lieu of fractional shares will be transferred to Lilly shareholders whose shares of Lilly common stock are accepted in the exchange offer promptly after the expiration of the exchange offer. You will not receive any interest on any cash paid to you, even if there is a delay in making the payment.

Return of Shares of Lilly Common Stock

          If shares of Lilly common stock are delivered and not accepted due to proration or a partial tender, (i) certificated shares of Lilly common stock that were delivered will be returned in uncertificated book-entry form to be credited in book-entry form in a direct registration account in the name of the applicable holder maintained by Lilly's transfer agent, (ii) Direct Registration Shares of Lilly common stock that were delivered will be credited back to the applicable account in book-entry form and (iii) shares of Lilly common stock held through DTC will be credited back through DTC in book-entry form.

          If you validly withdraw your shares of Lilly common stock or the exchange offer is not completed, (i) certificated shares of Lilly common stock that were delivered will be returned, (ii) Direct Registration Shares of Lilly common stock that were delivered will be credited back to the applicable account in book-entry form and (iii) shares of Lilly common stock held through DTC will be credited back through DTC in book-entry form.

Procedures for Tendering

          Shares Held in Certificated Form.    If you hold certificates representing shares of Lilly common stock, you must deliver to the exchange agent at one of its addresses listed on the letter of transmittal a properly completed and duly executed letter of transmittal, along with any required signature guarantees and any other required documents, and the certificates representing the shares of Lilly common stock validly tendered.

          Shares Held in Book-Entry Direct Registration System.    If you hold Direct Registration Shares of Lilly common stock, you must deliver to the exchange agent pursuant to one of the methods set forth in the letter of transmittal a properly completed and duly executed letter of transmittal, along with any required signature guarantees and any other required documents. Since certificates are not issued for Direct Registration Shares, you do not need to deliver any certificates representing those shares to the exchange agent.

          Shares Held Through a Broker, Dealer, Commercial Bank, Trust Company, Custodian or Similar Institution.    If you hold shares of Lilly common stock through a broker, dealer, commercial bank, trust company, custodian or similar institution, you should follow the instructions sent to you separately by that institution. In this case, you should not use a letter of transmittal to direct the tender of your shares of Lilly common stock. If that institution holds shares of Lilly common stock through DTC, it must notify DTC and cause it to transfer the shares into the exchange agent's account in accordance with DTC's procedures. The institution must also ensure that the exchange agent receives an agent's message from DTC confirming the book-entry transfer of your shares of Lilly common stock. A tender by book-entry transfer will be completed upon receipt by the exchange agent of an agent's message, confirmation of a book-entry transfer into the exchange agent's account at DTC and any other required documents.

          The term "agent's message" means a message, transmitted by DTC to, and received by, the exchange agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering the shares of Lilly common stock which are the subject of the book-entry confirmation, that the participant has

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received and agrees to be bound by the terms of the letter of transmittal (including the instructions thereto) and that Lilly may enforce that agreement against the participant.

          The exchange agent will establish an account at DTC with respect to the shares of Lilly common stock for purposes of the exchange offer, and any eligible institution that is a participant in DTC may make book-entry delivery of shares of Lilly common stock by causing DTC to transfer such shares into the exchange agent's account at DTC in accordance with DTC's procedure for the transfer. Delivery of documents to DTC does not constitute delivery to the exchange agent.

          Shares Held in the Savings Plans.    Participants in the Savings Plans should follow the special instructions that are being sent to them by or on behalf of their applicable plan administrator. Such participants should not use the letter of transmittal to direct the tender of shares of Lilly common stock held in these plans, but should instead use the exchange offer election form provided to them by or on behalf of their applicable plan administrator. Such participants may direct the applicable plan trustee to tender all, some or none of the shares of Lilly common stock allocated to their Savings Plan accounts, subject to any limitations set forth in the special instructions provided to them. Lilly and Elanco have been informed that instructions to tender or withdraw by participants in the Savings Plans must be made by a date that is earlier than the expiration date of the exchange offer, which will be specified in the special instructions sent by or on behalf of the applicable plan administrator.

          General Instructions.    Do not send letters of transmittal and certificates representing shares of Lilly common stock to Lilly, Elanco, the dealer managers or the information agent. Letters of transmittal for shares of Lilly common stock and certificates representing shares of Lilly common stock should be sent to the exchange agent at an address listed on the letter of transmittal. Trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity who sign a letter of transmittal or any certificates or stock powers must indicate the capacity in which they are signing and must submit evidence of their power to act in that capacity unless waived by Lilly.

          Whether you tender certificated shares of Lilly common stock by delivery of certificates or uncertificated Direct Registration Shares, the exchange agent must receive the letter of transmittal and, if applicable, any certificates representing your shares of Lilly common stock pursuant to the method or methods set forth in the letter of transmittal prior to the expiration of the exchange offer. Note that for Direct Registration Shares, you do not need to deliver any certificates representing those shares because certificates are not issued for such shares. In the case of a book-entry transfer of shares of Lilly common stock through DTC, the exchange agent must receive the agent's message and confirmation of a book-entry transfer into the exchange agent's account at DTC prior to 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019).

          Letters of transmittal for shares of Lilly common stock and certificates representing shares of Lilly common stock must be received by the exchange agent. Please read carefully the instructions to the letter of transmittal you have been sent. You should contact the information agent if you have any questions regarding tendering your shares of Lilly common stock.

          Signature Guarantees.    Signatures on all letters of transmittal for shares of Lilly common stock must be guaranteed by a firm that is a member of the Securities Transfer Agents Medallion Program, or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being a "U.S. eligible institution"), except in cases in which shares of Lilly common stock are validly tendered either (1) by a registered shareholder (which term, for purposes of this document, will include any participant in DTC whose name

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appears on a security position listing as the owner of shares of Lilly common stock) who has not completed the "Special Transfer Instructions" enclosed with the letter of transmittal or (2) for the account of a U.S. eligible institution.

          If the certificates representing shares of Lilly common stock or Direct Registration Shares are registered in the name of a person other than the person who signs the letter of transmittal, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner or owners appear on the certificates or as reflected on the letter of transmittal accompanying the tender of Direct Registration Shares without alteration, enlargement or any change whatsoever, with the signature(s) on the certificates or stock powers guaranteed by an eligible institution.

          Guaranteed Delivery Procedures.    If you wish to tender shares of Lilly common stock pursuant to the exchange offer but (1) your certificates are not immediately available, (2) the procedure for book-entry transfer cannot be completed on a timely basis or (3) time will not permit all required documents to reach the exchange agent on or before the expiration date of the exchange offer, you may still tender your shares of Lilly common stock, so long as all of the following conditions are satisfied:

          Registered shareholders (including any participant in DTC whose name appears on a security position listing of DTC as the owner of shares of Lilly common stock) may transmit the notice of guaranteed delivery by email transmission or mail it to the exchange agent. If you hold shares of Lilly common stock through a broker, dealer, commercial bank, trust company, custodian or similar institution, such institution must submit any notice of guaranteed delivery on your behalf. You must, in all cases, obtain a Medallion guarantee, in the form set forth in the notice of guaranteed delivery.

          Effect of Tenders.    A tender of shares of Lilly common stock pursuant to any of the procedures described above will constitute your acceptance of the terms and conditions of the exchange offer as well as your representation and warranty to Lilly that (1) you have the full power and authority to tender, sell, assign and transfer the tendered shares (and any and all other shares of Lilly common stock or other securities issued or issuable in respect of such shares); (2) when the same are accepted for exchange, Lilly will acquire good and unencumbered title to such shares, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims; (3) you have a net long position in the shares being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act as further explained below; (4) your participation in the exchange offer and tender of such shares complied with Rule 14e-4 and the applicable laws

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of both the jurisdiction where you received the materials relating to the exchange offer and the jurisdiction from which the tender is being made; and (5) for non-U.S. persons: you acknowledge that Lilly has advised you that it has not taken any action under the laws of any country outside the United States to qualify or otherwise facilitate a public offer to exchange Lilly common stock or Elanco common stock in that country; that there may be restrictions that apply in other countries, including with respect to transactions in Lilly common stock or Elanco common stock in your home country; that, if you are located outside the United States, your ability to tender Lilly common stock in the exchange offer will depend on whether there is an exemption available under the laws of your home country that would permit you to participate in the exchange offer without the need for Lilly or Elanco to take any action to qualify or otherwise facilitate a public offering in that country or otherwise; that your participation in the exchange offer is made pursuant to and in compliance with the applicable laws in the jurisdiction in which you are resident or from which you are tendering your shares and in a manner that will not require Lilly or Elanco to take any action to qualify or otherwise facilitate a public offering in that country or otherwise; and that Lilly will rely on your representations concerning the legality of your participation in the exchange offer in determining to accept any shares that you are tendering for exchange.

          It is a violation of Rule 14e-4 under the Exchange Act for a person, directly or indirectly, to tender shares of Lilly common stock for such person's own account unless, at the time of tender, the person so tendering (1) has a net long position equal to or greater than the amount of (a) shares of Lilly common stock tendered or (b) other securities immediately convertible into or exchangeable or exercisable for the shares of Lilly common stock tendered and such person will acquire such shares for tender by conversion, exchange or exercise; and (2) will cause such shares to be delivered in accordance with the terms of this prospectus. Rule 14e-4 provides a similar restriction applicable to the tender of guarantee of a tender on behalf of another person.

          The exchange of shares of Lilly common stock validly tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of (a)(i) share certificates representing all validly tendered shares of Lilly common stock (other than Direct Registration Shares), in proper form for transfer or (ii) with respect to shares delivered by book-entry transfer through DTC, confirmation of a book-entry transfer of those shares of Lilly common stock in the exchange agent's account at DTC; (b) a letter of transmittal for shares of Lilly common stock, properly completed and duly executed (including any signature guarantees that may be required), or, in the case of shares delivered by book-entry transfer through DTC, an agent's message; and (c) any other required documents.

          Appointment of Attorneys-in-Fact and Proxies.    By executing a letter of transmittal as set forth above, you irrevocably appoint Lilly's designees as your attorneys-in-fact and proxies, each with full power of substitution, to the full extent of your rights with respect to your shares of Lilly common stock validly tendered and accepted for exchange by Lilly and with respect to any and all other shares of Lilly common stock and other securities issued or issuable in respect of the shares of Lilly common stock on or after the expiration of the exchange offer. That appointment is effective when and only to the extent that Lilly deposits the shares of Elanco common stock for the shares of Lilly common stock that you have validly tendered with the exchange agent. All such proxies shall be considered coupled with an interest in the validly tendered shares of Lilly common stock and therefore shall not be revocable. Upon the effectiveness of such appointment, all prior proxies that you have given will be revoked and you may not give any subsequent proxies (and, if given, they will not be deemed effective). Lilly's designees will, with respect to the shares of Lilly common stock for which the appointment is effective, be empowered, among other things, to exercise all of your voting and other rights as they, in their sole discretion, deem proper. Lilly reserves the right to require that, in order for shares of Lilly common stock to be deemed validly tendered, immediately

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upon Lilly's acceptance for exchange of those shares of Lilly common stock, Lilly must be able to exercise full voting rights with respect to such shares.

          Determination of Validity.    Lilly will determine questions as to the form of documents (including notices of withdrawal) and the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of shares of Lilly common stock, in Lilly's sole discretion, provided that Lilly may delegate such power in whole or in part to the exchange agent. Lilly reserves the absolute right to reject any and all tenders of shares of Lilly common stock that it determines are not in proper form or the acceptance of or exchange for which may, in the opinion of its counsel, be unlawful. Lilly also reserves the absolute right to waive any of the conditions of the exchange offer (other than the conditions relating to the absence of an injunction and the effectiveness of the registration statement for Elanco common stock to be distributed in the exchange offer), or any defect or irregularity in the tender of any shares of Lilly common stock. No tender of Lilly common stock is valid until all defects and irregularities in tenders of Lilly common stock have been cured or waived. None of Lilly, Elanco, the dealer managers, the exchange agent, the information agent or any other person, nor any of their directors or officers, is under any duty to give notification of any defects or irregularities in the tender of any Lilly common stock or will incur any liability for failure to give any such notification. Lilly's interpretation of the terms and conditions of the exchange offer (including the letter of transmittal and instructions thereto) may be challenged in a court of competent jurisdiction.

          Binding Agreement.    The tender of shares of Lilly common stock pursuant to any of the procedures described above, together with Lilly's acceptance for exchange of such shares pursuant to the procedures described above, will constitute a binding agreement between Lilly and you upon the terms of and subject to the conditions to the exchange offer.

          The method of delivery of share certificates of shares of Lilly common stock and all other required documents, including delivery through DTC, is at your option and risk, and the delivery will be deemed made only when actually received by the exchange agent. If delivery is by mail, it is recommended that you use registered mail with return receipt requested, properly insured. In all cases, you should allow sufficient time to ensure timely delivery.

          If you tender fewer than all the shares of Lilly common stock evidenced by any share certificate you deliver to the exchange agent, then you must check the box labeled "Partial Tender" and fill in the number of shares that you are tendering in the space provided on the first page of the letter of transmittal filed as an exhibit to the registration statement of which this prospectus forms a part. In those cases, promptly after the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), the exchange agent will credit the remainder of the shares of Lilly common stock that were evidenced by the certificate(s) but not tendered to a Direct Registration Share account in the name of the registered holder maintained by Lilly's transfer agent, unless otherwise provided in "Special Transfer Instructions" or "Special Delivery Instructions" enclosed with the letter of transmittal filed as an exhibit to the registration statement of which this prospectus forms a part. Unless you indicate otherwise in your letter of transmittal, all Lilly common stock represented by share certificates you deliver to the exchange agent will be deemed to have been tendered. No share certificates are expected to be delivered to you, including in respect of any shares delivered to the exchange agent that were previously in certificated form.

Treatment of Shares of Lilly Common Stock Held Under a Savings Plan

          Shares of Lilly common stock held for the account of participants in the Savings Plans are eligible for participation in the exchange offer. A Savings Plan participant may direct that all, some or none of the shares of Lilly common stock allocated to his or her Savings Plans account be exchanged, subject to the Savings Plan's rules for participating in the exchange offer.

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          A Savings Plan's rules may be different than those described in this prospectus. For example, the process for submitting instructions to tender or withdraw the tender of Savings Plan shares may be different, and the deadline for receipt of such instructions may be earlier than the expiration date of the exchange offer (including any extensions thereof). Proceeds from the exchange offer may be provided to Savings Plan participants in the form of units of the Saving Plan's Elanco Stock Fund that contain a cash component. Such units may be credited later than described in this prospectus and may not be subject to the treatment of fractional shares as described in this prospectus. With respect to The Lilly Employee 401(k) Plan and The Savings Plan for Lilly Affiliate Employees in Puerto Rico, shares of Elanco common stock will only be held for a limited duration (i.e., until on or about December 11, 2019), after which time investments in the saving plan's Elanco Stock Fund will be liquidated and reinvested in the investment fund designated as such savings plan's qualified default investment alternative (i.e., the appropriate target date portfolio based on the year you turn age 60). With respect to The Elanco US Inc. 401(k) Plan, whether or not a participant in such savings plan elects to participate in the exchange offer, shares of both Lilly common stock and Elanco common stock will be held for a limited duration (i.e., until on or about December 11, 2019), after which time investments in both the saving plan's Lilly Stock Fund and Elanco Stock Fund will be liquidated and reinvested in the investment fund designated as such saving plan's qualified default investment alternative. Savings Plan participants may face different risks than other participants in the exchange offer due to these different rules.

          The Savings Plans' rules are described in a separate notice, which will be made available to the Savings Plan participants. Savings Plan participants should consult this additional notice together with this prospectus in deciding whether or not to participate in the exchange offer with respect to their Savings Plan shares.

Lost or Destroyed Certificates

          If your certificate(s) representing shares of Lilly common stock have been mutilated, destroyed, lost or stolen and you wish to tender your shares, you will need to follow the procedures for replacement set forth under the section entitled "Lost or Destroyed Certificate(s)" included in the letter of transmittal and the instructions related thereto. You may be required to pay a fee and to post a surety bond for your lost shares of Lilly common stock. Upon receipt of the completed applicable letter of transmittal with the required information and, if required, the surety bond payment and the service fee, your shares of Lilly common stock will be included in the exchange offer, subject to acceptance by Lilly.

Withdrawal Rights

          Shares of Lilly common stock validly tendered pursuant to the exchange offer may be withdrawn at any time before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019) and, unless Lilly has previously accepted them pursuant to the exchange offer, may also be withdrawn at any time after the expiration of 40 business days from the commencement of the exchange offer. Once Lilly accepts shares of Lilly common stock pursuant to the exchange offer, your tender is irrevocable.

          For a withdrawal of shares of Lilly common stock to be effective, the exchange agent must receive from you a written notice of withdrawal or email transmission of notice of withdrawal, in the form of the notice of withdrawal provided by Lilly, at one of its addresses or the email address, respectively, set forth on the back cover of this prospectus, and your notice must include your name and the number of shares of Lilly common stock to be withdrawn, as well as the name of the registered holder, if it is different from that of the person who tendered those shares.

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          If certificates have been delivered or otherwise identified to the exchange agent, the name of the registered holder and the serial numbers of the particular certificates evidencing the shares of Lilly common stock must also be furnished to the exchange agent, as stated above, prior to the physical release of the certificates.

          If shares of Lilly common stock have been tendered pursuant to the procedures for book-entry tender through DTC discussed in the section entitled "— Procedures for Tendering," any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn shares and must otherwise comply with the procedures of DTC.

          If you hold your shares through a broker, dealer, commercial bank, trust company, custodian or similar institution, you should consult that institution on the procedures you must comply with and the time by which such procedures must be completed in order for that institution to provide a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent on your behalf before 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer. If you hold your shares through such an institution, that institution must deliver the notice of withdrawal with respect to any shares you wish to withdraw. In such a case, as a beneficial owner and not a registered shareholder, you will not be able to provide a notice of withdrawal for such shares directly to the exchange agent.

          Lilly will decide all questions as to the form and validity (including time of receipt) of any notice of withdrawal, in its sole discretion. Lilly may delegate such power in whole or in part to the exchange agent. None of Lilly, Elanco, any of the dealer managers, the exchange agent, the information agent nor any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any notification. Any such determination may be challenged in a court of competent jurisdiction.

          Any shares of Lilly common stock validly withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer.

          However, you may re-tender withdrawn shares of Lilly common stock by following one of the procedures discussed in the section entitled "— Procedures for Tendering" at any time prior to the expiration of the exchange offer (or pursuant to the instructions sent to you separately).

          If you hold shares of Lilly common stock through the Savings Plans, you will be provided with special instructions by or on behalf of your plan administrator on how to withdraw your shares and you must deliver any required information in a timely manner in order for the tabulator for the Savings Plans to withdraw your election to exchange from the final tabulation. The deadline will be specified in the special instructions provided to you (or, if the exchange offer is extended, any new plan participant withdrawal deadline established by the applicable plan administrator).

          Withdrawing Your Shares After the Final Exchange Ratio Has Been Determined.    Subject to any extension of the exchange offer period, the final exchange ratio, including whether the upper limit on the number of shares that can be received for each share of Lilly common stock validly tendered is in effect, will be available by 9:00 a.m., New York City time, on the trading day immediately preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019). If you are a registered shareholder of Lilly common stock (which will include persons holding certificated shares or Direct Registration Shares) and you wish to withdraw your shares after the final exchange ratio has been determined, then you must deliver a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent prior to 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019), in the form of the notice of withdrawal provided by Lilly. Medallion guarantees will not be required for such withdrawal notices. If you hold Lilly common

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stock through a broker, dealer, commercial bank, trust company, custodian or similar institution, any notice of withdrawal must be delivered by that institution on your behalf. DTC is expected to remain open until 5:00 p.m., New York City time, and institutions may be able to process withdrawals through DTC until that time (although there is no assurance that will be the case). Once DTC has closed, if you beneficially own shares that were previously delivered through DTC, then in order to withdraw your shares the institution through which your shares are held must deliver a written notice of withdrawal or email transmission notice of withdrawal to the exchange agent prior to 12:00 midnight, New York City time, at the end of the day on the expiration date of the exchange offer. Such notice of withdrawal must be in the form of DTC's notice of withdrawal and must specify the name and number of the account at DTC to be credited with the withdrawn shares and must otherwise comply with DTC's procedures. Shares can be withdrawn only if the exchange agent receives a withdrawal notice directly from the relevant institution that tendered the shares through DTC. On the last day of the exchange offer, beneficial owners who cannot contact the institution through which they hold their shares will not be able to withdraw their shares.

          Except for the withdrawal rights described above, any tender made under the exchange offer is irrevocable.

Delivery of Elanco Common Stock; Book-Entry Accounts

          Physical certificates representing shares of Elanco common stock will not be issued pursuant to the exchange offer. Rather than issuing physical certificates for such shares to tendering shareholders, the exchange agent will cause shares of Elanco common stock to be credited in book-entry form to direct registered accounts maintained by Elanco's transfer agent for the benefit of the respective holders (or, in the case of shares tendered through DTC, to the account of DTC so that DTC can credit the relevant DTC participant and such participant can credit its respective account holders). Promptly following the crediting of shares to your respective direct registered account, you will receive a statement from Elanco's transfer agent evidencing your holdings, as well as general information on the book-entry form of ownership.

          If shares of Elanco common stock are to be issued to a person other than the signer of the letter of transmittal, a check is to be issued in the name of, and/or shares of Lilly common stock not tendered or not accepted for exchange in the exchange offer are to be issued or returned to, a person other than the signer of the letter of transmittal, or a check is to be mailed to a person other than the signer of the letter of transmittal or to an address other than that shown on the first page of the letter of transmittal, then the information in "Special Transfer Instructions" and "Special Delivery Instructions" enclosed with the letter of transmittal filed as an exhibit to the registration statement of which this prospectus forms a part will need to be completed. Lilly has no obligation pursuant to such instructions to transfer any such shares from the name of the registered holder(s) thereof if Lilly does not accept any such shares for exchange. If no such instructions are given, all such shares not accepted for exchange in the exchange offer will be credited in book-entry form to the registered holders in a direct registered account maintained by Lilly's transfer agent.

          With respect to any shares tendered through DTC, a shareholder may request that shares not exchanged be credited to a different account maintained at DTC by providing the appropriate instructions pursuant to DTC's applicable procedures. If no such instructions are given, all such shares of Lilly common stock not accepted will be returned by crediting the same account at DTC as the account from which such shares of Lilly common stock were delivered.

Extension; Amendment

          Lilly expressly reserves the right, in its sole discretion, for any reason, to extend the period of time during which the exchange offer is open and thereby delay acceptance for exchange of, and

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the exchange for, any shares of Lilly common stock validly tendered and not validly withdrawn in the exchange offer. For example, the exchange offer can be extended if any of the conditions to completion of the exchange offer described in the next section entitled "— Conditions to Completion of the Exchange Offer" are not satisfied or, where legally permitted, waived prior to the expiration of the exchange offer.

          Lilly expressly reserves the right, in its sole discretion, to amend the terms of the exchange offer in any respect prior to the expiration date of the exchange offer (which, if the exchange offer is not extended or terminated, would be March 8, 2019).

          If Lilly materially changes the terms of or information concerning the exchange offer, it will extend the exchange offer if required by applicable law. Generally speaking, an offer must remain open under SEC rules for a minimum of five business days from the date that notice of the material change is first given. The length of time will depend on the particular facts and circumstances giving rise to the extension.

          As required by applicable law, the exchange offer will be extended so that it remains open for a minimum of ten business days following the applicable announcement if:

          If Lilly extends the exchange offer, is delayed in accepting for exchange any shares of Lilly common stock or is unable to accept for exchange any shares of Lilly common stock under the exchange offer for any reason, then, without affecting Lilly's rights under the exchange offer, the exchange agent may retain on Lilly's behalf all shares of Lilly common stock tendered. These shares of Lilly common stock may not be withdrawn except as provided in the section entitled "— Withdrawal Rights."

          Lilly's reservation of the right to delay acceptance of any shares of Lilly common stock is subject to applicable law, which requires that Lilly pay the consideration offered or return the shares of Lilly common stock deposited promptly after the termination or withdrawal of the exchange offer.

          Lilly will issue a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day following any extension, amendment, non-acceptance or termination of the previously scheduled expiration date of the exchange offer.

          Method of Public Announcement.    Subject to applicable law (including Rules 13e-4(d), 13e-4(e)(3) and 14e-1 under the Exchange Act, which require that any material change in the information published, sent or given to shareholders in connection with the exchange offer be promptly disclosed to shareholders in a manner reasonably designed to inform them of the change) and without limiting the manner in which Lilly may choose to make any public announcement, Lilly assumes no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to PR Newswire.

Conditions to Completion of the Exchange Offer

          Lilly will not be required to complete the exchange offer and may terminate the exchange offer unless at least 146,645,000 shares of Elanco common stock would be distributed in exchange for outstanding shares of Lilly common stock that are validly tendered and not validly withdrawn prior to the expiration of the exchange offer. This number of shares of Elanco common stock represented 50% of the outstanding shares of Elanco common stock held by Lilly as of February 7, 2019.

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          In addition, Lilly will not be required to accept shares for exchange and may terminate the exchange offer if:

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          If any of the above events occurs and exists at the scheduled expiration date, Lilly may:

          These conditions are for the sole benefit of Lilly. Except as described in the immediately preceding bullet point, Lilly may waive any condition in whole or in part at any time in its sole discretion, subject to applicable law. Lilly's failure to exercise its rights under any of the above conditions does not represent a waiver of these rights. Each right is an ongoing right which may be asserted by Lilly at any time. However, all conditions to completion of the exchange offer must be satisfied or, where legally permitted, waived by Lilly before the expiration of the exchange offer. Any determination by Lilly concerning the conditions described above may be challenged in a court of competent jurisdiction.

          If a stop order issued by the SEC is in effect with respect to the registration statement of which this prospectus forms a part, Lilly will not accept any shares of Lilly common stock tendered and will not exchange shares of Elanco common stock for any shares of Lilly common stock.

Fees and Expenses

          Lilly has retained Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC to act as dealer managers, Georgeson LLC to act as the information agent and Computershare Trust Company, N.A. to act as the exchange agent in connection with the exchange offer.

          The dealer managers, the information agent and the exchange agent each will receive reasonable compensation for their respective services, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against specified liabilities in connection with their services, including liabilities under the federal securities laws.

          Each of the dealer managers and their respective affiliates have in the past provided investment banking services to Lilly and Elanco and their respective affiliates, for which they have received customary compensation. Recently, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC served as joint lead book-running managers in the IPO. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as joint book-running managers in the Senior Notes Offering. An affiliate of J.P. Morgan Securities LLC acts as administrative agent and an affiliate of Goldman Sachs & Co. LLC acts as syndication agent, and those entities, as well affiliates of Morgan Stanley & Co. LLC, and/or their affiliates are or may be lenders, under Elanco's Credit Facilities. In the ordinary course of business,

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each of the dealer managers is engaged in securities trading and brokerage activities as well as investment banking and financial advisory services. In the ordinary course of their respective trading and brokerage activities, each of the dealer managers and certain of their respective affiliates may from time to time hold positions of Lilly common stock and Elanco common stock in their respective proprietary accounts or those of their respective customers, and to the extent they hold shares of Lilly common stock in these accounts at the time of the exchange offer, each of the dealer managers and/or certain of their respective affiliates may tender these shares.

          For the purposes of U.S. securities laws, Lilly will be deemed to be an underwriter of the shares of Elanco common stock issued in the exchange offer.

Legal and Other Limitations; Certain Matters Relating to Non-U.S. Jurisdictions

          Although Lilly may deliver this prospectus to shareholders located outside the United States, this prospectus is not an offer to sell or exchange and it is not a solicitation of an offer to buy any shares of Lilly common stock in any jurisdiction in which such offer, sale or exchange is not permitted. This prospectus has not been reviewed or approved by any stock exchange on which shares of Lilly common stock are listed.

          Countries outside the United States generally have their own legal requirements that govern securities offerings made to persons resident in those countries and often impose stringent requirements about the form and content of offers made to the general public. Lilly has not taken any action under those non-U.S. regulations to qualify the exchange offer outside the United States but may take steps to facilitate participation of shareholders from certain jurisdictions. Therefore, the ability of any non-U.S. person to tender Lilly common stock in the exchange offer will depend on whether there is an exemption available under the laws of such person's home country that would permit the person to participate in the exchange offer without the need for Lilly or Elanco to take any action to qualify or otherwise facilitate the exchange offer in that country or otherwise. For example, some countries exempt transactions from the rules governing public offerings if they involve persons who meet certain eligibility requirements relating to their status as sophisticated or professional investors.

          All tendering shareholders must make certain representations in the letter of transmittal, including, in the case of non-U.S. shareholders, as to the availability of an exemption under their home country laws that would allow them to participate in the exchange offer without the need for Lilly or Elanco to take any action to facilitate a public offering in that country or otherwise. Lilly will rely on those representations and, unless the exchange offer is terminated, plans to accept shares validly tendered by persons who properly complete the letter of transmittal and provide any other required documentation on a timely basis and as otherwise described herein.

          Non-U.S. shareholders should consult their advisors in considering whether they may participate in the exchange offer in accordance with the laws of their home countries and, if they do participate, whether there are any restrictions or limitations on transactions in Lilly common stock or Elanco common stock that may apply in their home countries. Lilly, Elanco and the dealer managers cannot provide any assurance about whether such limitations exist.

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POTENTIAL ADDITIONAL DISTRIBUTION OF ELANCO COMMON STOCK

          Lilly has informed Elanco that, following the completion of the exchange offer, in the event that more than the minimum amount of shares are validly tendered but not enough shares of Lilly common stock are validly tendered to allow Lilly to exchange all of its shares of Elanco common stock, Lilly intends, from time to time, to conduct one or more additional exchange offers and/or a pro rata spin-off of its remaining interest in Elanco. In such event, Lilly and Elanco, as applicable, will file any documents required by U.S. securities laws in connection with such exchange offer or pro rata spin-off and will not rely on this prospectus or the registration statement of which it forms a part in connection with such distribution.

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ELI LILLY AND COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

          Pursuant to the exchange offer, Lilly is offering to exchange up to an aggregate of 293,290,000 shares of Elanco common stock for outstanding shares of Lilly common stock that are validly tendered and not validly withdrawn. For each $100 of Lilly common stock accepted in the exchange offer, shareholders will receive approximately $107.53 of Elanco common stock, subject to an upper limit of 4.5262 shares of Elanco common stock per share of Lilly common stock accepted in the exchange offer. The exchange offer does not provide for a lower limit or minimum exchange ratio. Upon completion of the exchange offer, Elanco's historical results will be shown in Lilly's financial statements as discontinued operations, and, in subsequent periods, Lilly's financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco.

          The following unaudited pro forma condensed consolidated statement of financial position of Lilly as of December 31, 2018 is presented as if the exchange offer, as described in the notes to these unaudited pro forma condensed consolidated financial statements, had occurred at December 31, 2018, assuming the exchange offer is completed and fully subscribed. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2018 is presented as if such events had occurred on January 1, 2018. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of Lilly and Elanco for each period presented and, in the opinion of Lilly management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made.

          These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had the exchange offer been completed as of the date indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read together with the following:

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ELI LILLY AND COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
AT DECEMBER 31, 2018

 
   
  Deconsolidation    
   
 
 
  Lilly
Historical
  Effects of the
Exchange
  Lilly
Pro Forma
 
 
  Elanco   Adjustments  
 
  (In millions)
 

Assets:

                               

Cash and cash equivalents

  $ 7,998.2   $ (474.8 ) $ (202.7 )     $ 7,320.7  

Short-term investments

    88.2                 88.2  

Accounts receivable, net of allowances

    5,246.5     (652.6 )           4,593.9  

Receivables from Elanco

            268.7         268.7  

Other receivables

    958.4     (44.2 )           914.2  

Inventories

    4,111.8     (1,013.7 )           3,098.1  

Prepaid expenses and other

    2,146.5     (109.8 )           2,036.7  

Total current assets

    20,549.6     (2,295.1 )   66.0         18,320.5  

Investments

    2,020.7     (15.3 )           2,005.4  

Investment in Elanco

            4,219.5     (4,219.5 )    

Goodwill

    4,347.5     (2,958.0 )             1,389.5  

Other intangibles, net

    3,521.0     (2,453.0 )             1,068.0  

Deferred tax assets

    2,657.7     (35.6 )             2,622.1  

Sundry

    1,892.4     (67.5 )             1,824.9  

Total other assets

    14,439.3     (5,529.4 )   4,219.5     (4,219.5 )   8,909.9  

Property and equipment, net

    8,919.5     (923.4 )           7,996.1  

Total assets

  $ 43,908.4   $ (8,747.9 ) $ 4,285.5   $ (4,219.5 ) $ 35,226.5  

Liabilities and Equity:

                               

Short-term borrowings and current maturities of long-term debt

  $ 1,131.2   $ (29.0 )         $ 1,102.2  

Accounts payable

    1,412.3     (205.2 )           1,207.1  

Employee compensation

    1,054.5     (98.9 )           955.6  

Sales rebates and discounts

    5,021.9     (172.4 )           4,849.5  

Dividend payable

    650.8                 650.8  

Income taxes payable

    404.0     (10.6 )           393.4  

Other current liabilities

    2,213.4     (189.4 )   12.6     30.0     2,066.6  

Total current liabilities

    11,888.1     (705.5 )   12.6     30.0     11,225.2  

Long-term debt

    11,639.7     2,443.3             9,196.4  

Accrued retirement benefits

    2,911.3     (109.1 )           2,802.2  

Long-term income taxes payable

    3,724.6     (131.0 )           3,593.6  

Other noncurrent liabilities

    2,835.6     (121.5 )           2,714.1  

Total other liabilities

    21,111.2     (2,804.9 )           18,306.3  

Common stock

    661.0                 661.0  

Additional paid-in capital

    6,583.6                 6,583.6  

Retained earnings

    11,395.9             3,645.1     15,041.0  

Employee benefit trust

    (3,013.2 )               (3,013.2 )

Accumulated other comprehensive loss

    (5,729.2 )   222.2     (177.5 )       (5,684.5 )

Cost of common stock in treasury

    (69.4 )           (7,894.6 )   (7,964.0 )

Other capital

        (5,459.7 )   5,459.7          

Total Eli Lilly and Company shareholders' equity

    9,828.7     (5,237.5 )   5,282.2     (4,249.5 )   5,623.9  

Noncontrolling interest

    1,080.4         (1,009.3 )       71.1  

Total equity

    10,909.1     (5,237.5 )   4,272.9     (4,249.5 )   5,695.0  

Total liabilities and equity

  $ 43,908.4   $ (8,747.9 ) $ 4,285.5   $ (4,219.5 ) $ 35,226.5  

See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.

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ELI LILLY AND COMPANY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2018

    Lilly     Deconsolidation     Effects of the     Lilly
 

    Historical     Elanco     Adjustments     Exchange     Pro Forma
 

    (In millions)  

Revenue

  $ 24,555.7   $ (3,066.8 )         $ 21,488.9  

Cost of sales

    6,430.0     (1,778.1 )   26.6         4,678.5  

Research and development

    5,307.1     (258.9 )   3.0         5,051.2  

Marketing, selling and administrative

    6,631.8     (760.6 )   103.9         5,975.1  

Acquired in-process research and development

    1,983.9                 1,983.9  

Asset impairment, restructuring and other special charges

    482.0     (129.0 )   (86.1 )       266.9  

Other — (income) expense, net

    (74.8 )   (26.1 )   (44.8 )       (145.7 )

Costs, expenses, and other

    20,760.0     (2,952.7 )   2.6         17,809.9  

Income before income taxes

    3,795.7     (114.1 )   (2.6 )       3,679.0  

Income taxes

    563.7     (27.6 )   10.3         546.4  

Income (loss) from continuing operations

  $ 3,232.0   $ (86.5 ) $ (12.9 )     $ 3,132.6  

Per Share Amounts

                               

Earnings (loss) from continuing operations

                               

Basic earnings (loss) per share

  $ 3.14                     $ 3.26  

Diluted earnings (loss) per share

  $ 3.13                     $ 3.24  

Average equivalent shares (in millions)

                               

Basic

    1,027.7                 67.2     960.5  

Diluted

    1,033.7                 67.2     966.5  

See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.

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Notes to Eli Lilly and Company Unaudited Pro Forma Condensed Consolidated Financial Statements

(1) Deconsolidation of Elanco

          Prior to the completion of its IPO on September 24, 2018, Elanco was a wholly owned subsidiary of Lilly. Following the IPO, Lilly beneficially owns 293,290,000 shares of Elanco common stock in the aggregate, representing approximately 80.2% of the outstanding shares of Elanco common stock. In connection with the exchange offer, Lilly intends to divest its remaining interest in Elanco in a tax-efficient way.

          Following the completion of the exchange offer, Elanco's historical results will be shown, in Lilly's consolidated financial statements, as discontinued operations and, in subsequent periods, Lilly's consolidated financial statements will no longer reflect the assets, liabilities, results of operations or cash flows attributable to Elanco. The deconsolidation adjustments reflect the reversal of the historical assets and liabilities and results of operations of Elanco that will no longer be reflected in Lilly's continuing operations financial statements and the reversal of consolidation entries and intercompany eliminations between Elanco and Lilly to present Elanco as an unconsolidated subsidiary. The pro forma income tax is calculated using the Lilly historical effective rate and may differ in Lilly's presentation of the continuing operations results post exchange.

(2) Exchange Offer of Elanco Common Stock

          These unaudited pro forma condensed consolidated financial statements assume an exchange ratio of 4.3652 shares of Elanco common stock for each share of Lilly common stock tendered, which represents the indicative exchange ratio that would have been in effect following the official close of trading on the NYSE on February 7, 2019, based on the VWAPs of Lilly common stock and Elanco common stock on February 5, 6 and 7, 2019. Such indicative exchange ratio is calculated as the Average Lilly Price of 119.2065 per share, divided by 93% of the Average Elanco Price of 29.3636 per share, reflecting a discount of 7%. The Average Lilly Price will be equal to the simple arithmetic average of the daily VWAPs of shares of Lilly common stock on the NYSE during the Averaging Period, as determined by Lilly, and the Average Elanco Price will be equal to the simple arithmetic average of the daily VWAPs of shares of Elanco common stock on the NYSE during the Averaging Period, as determined by Lilly.

          These unaudited pro forma condensed consolidated financial statements assume the exchange offer is fully subscribed, with 67,188,216 shares of Lilly common stock being exchanged for the 293,290,000 shares of Elanco common stock that are owned by Lilly in the aggregate.

Shares of Elanco common stock owned by Lilly (pro forma prior to the completion of the exchange offer)

    293,290,000  

Pro forma exchange ratio

    4.3652  

Pro forma total shares of Lilly common stock accepted

    67,188,216  

          The final exchange ratio will be determined based on the Average Lilly Price and the Average Elanco Price on the NYSE during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer (which expiration date, if the exchange offer is not extended or terminated, would be March 8, 2019), subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock tendered. The actual number of shares of Lilly common stock that will be accepted if the exchange offer is completed will depend on the final exchange ratio and the number of shares of Lilly common stock validly tendered and not validly withdrawn and the actual amount may differ materially from the pro forma total shares of Lilly common stock accepted set forth above. For example, assuming the

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upper limit is in effect at the expiration of the exchange offer and the exchange offer is fully subscribed, Lilly would acquire 64,798,286 shares of Lilly common stock.

          If Lilly does not exchange all of the shares of Elanco common stock it holds, Lilly intends, from time to time, to complete subsequent exchange offers and/or a pro rata spin-off of its remaining interest in Elanco.

          The shares of Lilly common stock acquired by Lilly in the exchange offer will be recorded as an acquisition of treasury stock at a cost equal to the market value of the shares of Lilly common stock accepted in the exchange offer at its expiration. Any difference between the net book value of Elanco attributable to Lilly and the market value of the shares of Lilly common stock acquired at that date will be recognized by Lilly as a gain on disposal of discontinued operations, net of any direct and incremental expenses of the exchange offer on the disposal of its Elanco common stock.

          The 67,188,216 shares of Lilly common stock assumed for the purposes of these pro formas to be acquired in the exchange offer have been reflected as treasury stock on the unaudited pro forma condensed consolidated statement of financial position. This transaction results in a pro forma one-time gain to Lilly estimated to be approximately $3,645.1 million calculated as follows:

 
  (in millions)  

Estimated fair value of Lilly common stock tendered (assuming 67,188,216 shares acquired at the Lilly closing price of $117.50 per share as of February 7, 2019)

  $ 7,894.6  

Lilly's carrying value in Elanco

    (4,219.5 )

Estimated transaction costs

    (30.0 )

Pro forma net gain on exchange offer of Elanco common stock

  $ 3,645.1  

          The pro forma net gain, which would be reflected in discontinued operations in Lilly's consolidated statement of operations, has not been reflected in the unaudited pro forma condensed consolidated statements of operations. The amount of the actual gain will be determined as of the expiration of the exchange offer and may differ materially from the pro forma net gain set forth above based on several factors, including the final exchange ratio, the value of Lilly's and Elanco's common stock and Lilly's carrying value of Elanco at the time the exchange offer is consummated.

          For example, assuming the upper limit is in effect at the expiration of the exchange offer (each share of Lilly common stock will be exchanged for 4.5262 shares of Elanco common stock), the exchange offer is fully subscribed, the market value of Lilly's common stock is $117.50 per share, and there is no change to any other assumptions presented in the gain calculation above, the fair value of Lilly common stock tendered would be $7,613.8 million and the pro forma net gain on the exchange offer of Elanco common stock would be approximately $3,364.3 million.

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ELANCO ANIMAL HEALTH INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

          The following unaudited pro forma condensed consolidated and combined statement of operations should be read in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations of Elanco" and Elanco's consolidated and combined financial statements and accompanying notes included elsewhere in this prospectus.

          Elanco's unaudited pro forma condensed consolidated and combined statement of operations is based on and has been derived from Elanco's historical consolidated and combined financial statements included elsewhere in this prospectus.

          In management's opinion, the unaudited pro forma condensed consolidated and combined statement of operations reflect certain adjustments that are necessary to present fairly Elanco's unaudited pro forma condensed consolidated and combined results of operations for the period indicated. The pro forma adjustments give effect to events that are (i) directly attributable to the transactions described below, (ii) factually supportable, and (iii) expected to have a continuing impact on Elanco. The pro forma adjustments are based on assumptions that Elanco's management believes are reasonable given the best information currently available.

          The unaudited pro forma condensed consolidated and combined statement of operations is for illustrative and informational purposes only and is not intended to represent what Elanco's results of operations would have been had it operated as an independent, publicly traded company during the period presented or if the transactions described below had actually occurred as of the date indicated. The unaudited pro forma condensed consolidated and combined statement of operations also should not be considered indicative of Elanco's future results of operations as an independent, publicly traded company.

          The unaudited pro forma condensed consolidated and combined statement of operations give effect to the following transactions, which are referred to as the "Transactions," as if they each had occurred on January 1, 2018:

          Due to local regulatory and operational requirements, in certain non-U.S. jurisdictions, the transfer of certain assets and liabilities of Lilly's animal health businesses have not legally occurred. Elanco has not adjusted the accompanying unaudited pro forma condensed consolidated and combined statement of operations for the potential impact of the delayed transfers because any impact of these transfers is not material to its unaudited pro forma condensed consolidated and combined statement of operations, individually or in the aggregate.

          Elanco's condensed consolidated and combined statement of operations includes expense allocations related to certain Lilly corporate functions prior to the IPO, including, but not limited to, executive oversight, treasury, legal, finance, human resources, tax, internal audit, financial reporting, information technology and investor relations. These expenses have been allocated to Elanco based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount or other measures. Elanco's management believes that this expense methodology, and the results thereof, is reasonable for all periods presented. However, the allocations may not be indicative of the actual expense that would have been incurred if Elanco would have operated as an independent, publicly traded company for the entirety of the period presented. Lilly continues to provide Elanco with some of the services related to these functions on a transitional basis in exchange for agreed-upon fees and Elanco expects to incur other costs to replace the services and resources that will not be provided by Lilly. Elanco will also continue to incur new costs relating to its public reporting and compliance obligations as an independent, publicly traded company. The accompanying unaudited pro forma condensed

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consolidated and combined statement of operations has not been adjusted for any change in such costs, as they are projected amounts based on estimates and are not factually supportable.

          The unaudited pro forma condensed consolidated and combined statement of operations excludes certain adjustments for non-recurring costs that Elanco has incurred or expects to incur related to the separation, including, among other things, the creation of a standalone infrastructure in areas such as information technology, facilities management, distribution, human resources, manufacturing, finance and other functions. Elanco currently estimates these costs in the aggregate to be in a range from $240 million to $290 million, of which a portion will be capitalized and the remainder will be expensed.

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ELANCO ANIMAL HEALTH INCORPORATED UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2018

    Historical     Pro Forma Adjustments   Notes     Pro Forma
 

    (In millions, except per share data)  

Revenue

  $ 3,066.8           $ 3,066.8  

Costs, expenses and other:

                       

Cost of sales

    1,573.8             1,573.8  

Research and development

    246.6             246.6  

Marketing, selling and administrative

    735.2             736.2  

Amortization of intangible assets

    197.4             197.4  

Asset impairment, restructuring and other special charges

    128.8             128.8  

Interest expense, net of capitalized interest

    29.6     81.1   (a)     110.7  

Other (income) expense, net

    41.3             41.3  

Income / (loss) before income tax expense

    114.1     (81.1 )       33.0  

Income tax expense (benefit)

    27.6     (19.5 ) (b)     8.1  

Net loss

  $ 86.5   $ (61.6 )     $ 24.9  

Net loss per share — basic and diluted

  $ 0.28             $ 0.08  

Weighted average shares outstanding — basic and diluted

    313.7               313.7  

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated and Combined Statement of Operations.

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