Cooperation Agreement

Cooperation Agreement

Sachem Head Capital Management LP

250 West 55th Street, 34th Floor

New York, New York 10019

Attn: Scott D. Ferguson

Ladies and Gentlemen:

Elanco Animal Health Incorporated (the "Company"),

on the one hand, and Sachem Head Capital Management LP ("Sachem Head"), on behalf of the entities listed on

Schedule A, on the other hand, have mutually agreed to the terms contained in this letter agreement (this "Letter Agreement").

For purposes of this Letter Agreement, we refer to each of the Company and Sachem Head as a "Party" and, collectively,

of the date of this Letter Agreement, the board of directors (the "Board of Directors" or the "Board")

of the Company has duly appointed William ("Bill") Doyle, Scott Ferguson and Paul Herendeen (the "New Directors")

as directors of the Company with a term expiring at, in the case of Bill Doyle, the Company's 2021 annual meeting of shareholders

(including any adjournments or postponements thereof, the "2021 Annual Meeting"), and in the case of Scott Ferguson

and Paul Herendeen, the Company's 2022 annual meeting of shareholders (including any adjournments or postponements thereof,

the "2022 Annual Meeting") (it being understood that as a matter of mechanics in order to comply with applicable

law and the Company's organizational documents, given the current allocation of directors across classes and the requirement

to have the three classes be as nearly equal in number as possible, Mr. Herendeen will initially be appointed to the 2023

class and then ultimately be a member of, and be appointed to, the 2022 class in connection with the classes being rebalanced by

the Board re-allocating an existing member of the 2022 class (other than Scott Ferguson) to the 2023 class, with such rebalancing

occurring no later than completion of the 2021 Annual Meeting), in each case, effective as of the date and time this Letter Agreement

is fully executed and delivered, and has expanded the size of the Board to permit the appointment of the New Directors. During

the term of this Letter Agreement while Mr. Ferguson serves on the Board, the size of the Board will not be more than thirteen

(13) directors absent Sachem Head's consent and, except as required by applicable law or the Company's organizational

documents, the Company shall not call or hold any interim special meeting of shareholders for the purposes of electing directors

or removing any New Director.

of the date of this Letter Agreement, the Company has taken all action necessary to ensure that (i) the Finance and Oversight

Committee shall be comprised of no more than 7 members and each of Bill Doyle, Scott Ferguson and Paul Herendeen will be appointed

to join such committee upon joining the Board and, subject to their continued willingness to serve, not be removed from such committee

while a member of the Board and (ii) that Bill Doyle will be appointed to join the Innovation, Science and Technology Committee

upon joining the Board. During the term of this Letter Agreement while Mr. Ferguson serves on the Board, the Finance and Oversight

Committee shall not be disbanded and the Charter of the Finance and Oversight Committee shall not be amended other than with the

consent of Sachem Head (which shall not be unreasonably withheld with respect to ordinary course committee self-evaluation and

assessments processes as conducted similarly by other committees). Other committee appointments if any will be determined by the

Board in accordance with its customary practices and considerations. To the same extent as other directors, each New Director will

have access to all Board committee materials and shall be entitled to notice of, and to attend and participate in, any and all

Board committee meetings, subject to addressing conflicts of interests.

Company will include each of Scott Ferguson and Paul Herendeen on the slate of nominees recommended by the Board of Directors in

the Company's proxy statement and on its proxy card relating to the 2022 Annual Meeting, subject to such individual (i) agreeing

to serve and providing to the Company all customary materials and information as are provided by all other director candidates

and as are required to be or customarily included in a proxy statement filed pursuant to the proxy rules of the Securities

and Exchange Commission (the "SEC"), including consents to be named in the Company's proxy statement for

the applicable annual meeting and to serve as a director of the Company if elected and (ii) executing all documents required

to be executed by all other directors nominated for election at the 2022 Annual Meeting prior to the applicable annual meeting

(such conditions, the "Director Nomination Conditions"). Subject to the Director Nomination Conditions and while

such individuals serve on the Board, the Company shall use its reasonable best efforts to cause the election of Scott Ferguson

and Paul Herendeen at the 2022 Annual Meeting (including listing such individual in the proxy statement and proxy card prepared,

filed and delivered in connection with such meeting and recommending that the Company's stockholders vote in favor of the

election of such individual along with all other Company nominees (and otherwise supporting such individual for election in a manner

no less rigorous and favorable than the manner in which the Company supports its other nominees in the aggregate)). Subject to

applicable law, the Company's 2023 annual meeting of shareholders (the "2023 Annual Meeting") shall be

held no later than June 30, 2023. Subject to the terms of this Letter Agreement, Sachem Head acknowledges that the policies

and procedures applicable to other directors (collectively, "Company Policies") will be applicable to Bill Doyle,

Company Policies currently in effect are publicly available on the Company's website or described in the Company's

previously proxy statements or have otherwise been provided to Sachem Head. The Company will not alter its Amended and Restated

Articles of Incorporation or Amended and Restated Bylaws or alter or adopt any Company Policies in any manner which would interfere

with the ability of any New Director to remain on the Board in accordance with the terms hereof or intended to interfere with the

purpose of this Letter Agreement with respect to the rights and obligations set forth herein, including having the New Directors

serve as members of the Board. Subject to addressing conflicts of interests and enabling committees to perform their work within

their respective ambits with committee members, the Board will not utilize committees of the Board or Company Policies for the

purpose of discriminating against a New Director.

Sachem Head's and its affiliates' aggregate economic exposure is less than 4.5% of the shares of common stock, no par

value, of the Company ("Common Stock") outstanding (provided, that for purposes of such calculation, the total

outstanding shares of Common Stock as of the date of such determination shall be deemed to be the lesser of (1) the aggregate

number of shares of Common Stock outstanding as of the date hereof or (2) the aggregate number of shares of Common Stock outstanding

as of the date of such determination (in each case, adjusted for any combinations, splits, recapitalizations or similar actions

by the Company) (the "Minimum Ownership Requirement"), Sachem Head shall (i) promptly notify the Company

that Sachem Head ceases to satisfy the Minimum Ownership Requirement and (ii) cause Scott Ferguson to tender his resignation

from the Board of Directors to the Board, effective immediately, and cause Paul Herendeen to tender his resignation from the Board

of Directors to the Board, effective as of immediately prior to the next annual meeting, even if prior to the expiration of his

then current term. In furtherance of the foregoing, Sachem Head represents and warrants to the Company that it has the power to,

and shall, ensure that the foregoing resignation occurs. For the avoidance of doubt, the Company's obligations under paragraphs

1(c) and 1(f) of this Letter Agreement shall cease once Sachem Head ceases to meet the Minimum Ownership Requirement.

the Standstill Termination Date, each member of Sachem Head will (i) cause, in the case of all shares of Common Stock

owned of record, and (ii) cause the record owner, in the case of all shares of Common Stock beneficially owned but not owned

of record, in each case directly or indirectly, by it or by any of its controlled affiliates, as of the record date for the applicable

annual meeting, (x) to be present for quorum purposes and (y) voted in favor of all nominees of the Company in its proxy

statement for the applicable annual meeting for election to the Board of Directors at the applicable annual meeting, any advisory

vote on executive compensation and the ratification of the appointment of the Company's independent registered public accounting

firm and against (A) any stockholder nominations for director which are not recommended by the Board of Directors for election

at the applicable annual meeting, and (B) any proposals or resolutions to remove any member of the Board of Directors.

agreed by the parties, a Successor Director (defined below) may also be identified by the Nominating and Corporate Governance Committee

and Sachem Head jointly conducting a search process (including with the use of a nationally recognized search firm) to identify

as promptly as reasonably practicable a Successor Director who is mutually agreeable to the Company and Sachem Head and meets the

standards set forth herein. The foregoing notwithstanding, if prior to the Standstill Termination Date, Scott Ferguson or Paul

Herendeen ceases to serve as a member of the Board of Directors before his term expires (other than due to (x) a resignation

from the Board of Directors pursuant to Section 1(d) or (y) a resignation from the Board of Directors over a disagreement

with the Board or management, other than with respect to clause (y), a resignation by Scott Ferguson after the date that is forty-five

days before the closing of the non-proxy access shareholder director nomination window for the 2023 Annual Meeting (such

scenario, a "2023 Or Later Successor Scenario"), Sachem Head shall be entitled to privately recommend another

individual to be appointed to the Board of Directors (a "Successor Director") who, in the case of a 2023 Or

Later Successor Scenario or a replacement for Paul Herendeen, is independent from and unaffiliated with Sachem Head or Scott Ferguson

(including by not being a current or former Sachem Head Insider, an investor in or consultant or advisor to Sachem Head, a prior

nominee of Sachem Head or its affiliates or otherwise affiliated with Sachem Head or with Scott Ferguson), and the Board shall

appoint such individual to the same class of the Board on which Mr. Ferguson or Mr. Herendeen, as applicable, served,

who is reasonably approved by the Board and the Nominating and Corporate Governance Committee in the exercise of their fiduciary

duties (which approval shall not be unreasonably withheld, conditioned or delayed), so long as the Company reasonably determines

that such individual (i) has no disqualifying attributes relating to his or her reputation, integrity, competence and experience,

(ii) meets all director independence and other standards of the New York Stock Exchange (the "NYSE") and

the SEC and (iii) has provided the other customary materials and information as are provided by all other director candidates