German drugmaker Boehringer Ingelheim is selling the pet vaccines portfolio of its US subsidiary Vetmedica to Eli Lilly’s animal health subsidiary Elanco for $885 million to allay competition concerns related to its portfolio swap with France’s Sanofi. The swap between the France- and Germany-based companies, agreed at the end of this year’s second quarter, calls for Boehringer to transfer its consumer healthcare business with an enterprise value of €6.7 billion to Sanofi, with Sanofi handing over its Merial animal health business – with an enterprise value of €11.4 billion – to Boehringer. This transaction includes a cash payment to Sanofi of €4.7 billion to reflect the difference in value of the two businesses.

Through the deal with Boehringer, Elanco’s portfolio will be expanded to include   parparasiticides, pain and dermatology medicines, as well as vaccines against bordetella, Lyme disease, rabies and parvovirus, The company will also pick up a manufacturing and research site at Fort Dodge, Iowa, which has an on-site veterinary research center and several potential drugs in the research pipeline. Lilly has continuously expanded its animal health activities in recent years, which now generate sales of just over $3 billion. In early 2015, the US drugmaker acquired the Novartis animal health business for $5.4 billion.

Closing of the Boehringer-Lilly deal is targeted for early 2017, subject to approval by the US Federal Trade Commission (FTC) and other regulatory authorities, as well as the closing of the Boehringer-Sanofi asset swap.