The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for January 24, 2003

Copyright © Brakke Consulting, Inc.

>  Pfizer announced that Animal Health sales in the fourth quarter of 2002 increased 8% to $325 million, compared to the same period in 2001. This performance was led by the strong growth of companion-animal products Revolution, Clavamox, and Synulox; and livestock medicine RespiSure/Stellamune. Full-year Animal Health sales increased 10% to $1.119 billion. (company website)

>  Eli Lilly announced that worldwide sales of its animal health subsidiary Elanco in the fourth quarter of 2002 were $195.5 million, an increase of 4% compared with the fourth quarter of 2001. For the full year of 2002, animal health sales increased 1%, to $693.1 million. Excluding the effect of exchange rates, sales increased by 6% for the quarter and 3% for the year.  (Business Wire)

>  Schering-Plough reported fourth quarter 2002 sales of its animal health division were $193 million, a decrease of 4% over the fourth quarter of 2001.  Sales for the full year decreased 2% to $677 million.  (company website)

>  Novartis announced results for the year 2002.  In Animal Health, sales were up 10% in local currencies (1% in CHF) to CHF 970 million ($626 million), driven by double-digit growth in the LATAM region and the US, where the vaccine businesses acquired in January were the main contributors. Overall, acquisitions contributed approximately 6 percentage points to sales growth.  Operating income rose 4% to CHF 144 million ($93 million), leading to an operating margin of 14.8%, in spite of acquisition-related costs and the exchange rate effects. (company press release)

>  Central Garden Pet Company announced its financial results for the fiscal first quarter of 2003, ended December 28, 2002. Net sales for the first quarter were $211.9 million compared with $210.7 million in the comparable fiscal 2002 period. The Company recorded a net loss for the quarter of $717,000, compared with a net loss of $1.5 million in the comparable year-ago period before the effect of adopting SFAS No. 142 on September 30, 2001. Central typically reports a loss in the three-month period ending in December, which is the slowest time of the year for the garden industry. (Business Wire)

>  Neogen Corporation announced that net income for the second quarter of its 2003 fiscal year, which ended Nov. 30, was 22% higher than the previous year’s second quarter. Neogen’s quarterly net income increased to $1.4 million. Year-to-date net income is up 23% to $2.5 million compared to the prior year’s first six months. Neogen’s second quarter revenues were $12.3 million, 15% greater than last year’s second quarter. Revenues for the Company’s first six months were $23.2 million compared to $20.4 million in the prior year. (company website)

>  Chomp Inc., the inventor of pet “candy,” announced that the company’s sales grew 253% in 2002, versus the year before. The company further announced that it more than doubled its number of distributors in the pet channel to cover all 50 states and increased the number of stores that carry the products from 3000 in 2001 to 10,000 in 2002. A new product will join the pet candy line this March 2003: a breath freshener for cats, Pit’r Pat, also in a tin. (Petfood Industry E-news)

Brakke Consulting Due Diligence Seminar 
Kansas City: March 11-12, 2003

Whether your company is licensing technology in or out, buying, or selling a business or product line, this seminar will help you design an efficient, effective due diligence process that will help you test strategic assumptions, determine fair market value, uncover potential problems, identify opportunities and avoid costly mistakes or surprises.  The speakers at the seminar will include Brakke Consultants and senior investment bankers from a major investment bank. All of the speakers have extensive experience in product and compound licensing, divestitures, and acquisitions.

This two-day seminar was successfully conducted in 2001 and 2002 in various US and International locations.  Registration is $1,250 if registered on or before February 21, 2003 and $1,500 if registered after February 21, 2001. Registration is limited. 

Please contact Jane Morgan at the Dallas office 972-243-4033 or by email at for further information.  You may also register for the presentation online at


>  Merial and Boehringer Ingelheim Vetmedica, Inc. announced a long-term strategic alliance for their animal health business in the United States. Under the terms of the agreement, Merial will have exclusive rights to sell Boehringer Ingelheim Vetmedica’s new pharmaceutical products for companion animals in the United States.  Boehringer Ingelheim Vetmedica is well known in the U.S. market for its swine, cattle and equine portfolio.  It is expected that the first products from this business alliance will be made available in 2003.  (PRNewswire)

>  The San Diego Padres and PETCO Animal Supplies, Inc. announced a long-term sponsorship agreement that includes naming rights to San Diego’s new downtown Ballpark. The Ballpark, which will be completed for Opening Day in April 2004, will be called PETCO Park.  Financial terms were not disclosed. (Business Wire)

>  The Iams Company and Veterinary Pet Insurance (VPI) announced a new alliance to build awareness of pet health insurance among puppy and kitten owners. Through the program, VPI will provide pet owners with easier access to insurance and incentives for purchasing policies.  VPI will include a promotional offer in Iams and Eukanuba puppy and kitten starter kits that gives pet owners two free months of comprehensive VPI insurance coverage, paid for by
The Iams Company when owners sign up for a 12-month policy.  In addition to their joint promotional efforts, Veterinary Pet Insurance and The Iams Company have announced Iams will become a minority equity stakeholder in VPI, pending final satisfaction of terms and conditions.  (company press release)

>  Tyson Foods has launched a $100 million fully integrated marketing campaign that includes $40 million in advertising and $60 million in efforts ranging from in-store promotions to ads targeting ethnic groups. The new campaign is a signal that Tyson has fully integrated into its chicken operation the beef and pork production from its acquisition of IBP inc. in 2001. (Meating Place)

>  Smithfield Foods Inc. has begun buying debt from the creditors of Farmland Industries Inc., signaling Smithfield still seeks control of the farm cooperatives meat assets. Documents filed with the U.S. bankruptcy Court show Smithfield has been buying Farmland claims through a subsidiary called Debt Acquisition Company of America. By becoming a creditor, Smithfield will be entitled to a place at the table when the cooperative seeks creditor approval for its plan to emerge from bankruptcy. (Meating Place) 

>  GTC Biotherapeutics and Trans Ova Genetics announced that they have signed a licensing agreement that enables Trans Ova to develop the production of veterinary antibodies, initially for three cattle diseases.  GTC granted Trans Ova an exclusive license to develop and maintain a production herd for these antibodies, along with the associated downstream processing rights.  Trans Ova will contract with GTC to develop the cattle that produce these antibodies in their milk.  Financial terms were not disclosed.  (Feedstuffs)

MAY 12 – 14, 2003

The Animal Agriculture Alliance has announced plans to host a two-day, industry-wide Summit Meeting.  The Summit, “Challenges to the US Animal Protein Businesses: Domestic and International Responses, Risks and Repositioning” is scheduled for May 12th – 14th at the Hyatt Hotel, Crystal City, Virginia.

In cooperation with Brakke Consulting, and the major sponsorship from Rabobank International, the Summit is targeted at senior management of all companies involved from “farm to fork.”  The goal is to provide CEO’s, COO’s and CFO’s with the insight and information to successfully meet future challenges.

For more information regarding the Summit, contact the Animal Agriculture Alliance at (703) 562-5160.


>  JAPAN   Japan reported its sixth and seventh case of BSE after it confirmed the illness in two cows in Wakayama Prefecture. The Holstein cows in Hokkaido were found to be infected with the disease. (AnimalNet – AP)

>  HONG KONG  Authorities in Hong Kong distributed vaccines against bird flu to farmers of 10 more farms after another 100 chickens were found dead. The vaccination program now covers 112 out of a total of 157 chicken farms in the territory, involving some 200,000 chickens. (AnimalNet – Agence France Presse)

>  SPAIN   A group of Spanish sheep farmers filed a lawsuit against Schering-Plough following the death of thousands of animals after vaccination.  The farmers claim in a statement that some 40,000 sheep have been harmed, a third of them killed, by faulty Schering-Plough enterotoxemia vaccines distributed last year. Schering-Plough answered that the company had already recalled the products and compensated the ranchers for their dead animals. (AnimalNet – Reuters)

>  US   West Hollywood, CA, the city that reclassified pet owners as guardians two years ago, is now pushing what could become the first U.S. ban on declawing cats.  The City Council voted unanimously to publicly condemn declawing and proposed a ban on the surgery.  The city attorney has a month to draft a proposal. Declawing is banned in already several European nations. (AP)

>  US   A report in the scientific journal Nature Science says that combined with vaccination, interferon gives slow-acting FMD vaccines time to kick in. Research has shown that interferon protects pigs from infection for at least 24 hours, and starts working within a day. To deliver the interferon, the researchers engineered harmless viruses to carry a pig interferon gene. High doses of the virus delivered enough interferon to protect pigs from clinical FMD, and a shot of interferon alongside conventional vaccination completely protected pigs from the disease for up to five days. (Wattnet Meatnews)


Congratulations to Dr. Colin Burrows and his staff on a very successful conference this week.  The attendance set a record at 16,141, including 5,662 veterinarians, over 2,000 technicians and practice managers, and over 3,300 exhibitors.  The exhibitors and attendees seemed to be very pleased with the spaciousness and accommodations at the Gaylord Palms Convention Center and Resort.  The quality of the continuing education at all levels continues to escalate, just as does the attendance.   The global world of animal health is evident in the increasing quantity of veterinarians from Europe, South America, and Asia attending this meeting.


>  Locus Pharmaceuticals, Inc., announced today the initiation of a research collaboration with DuPont Crop Protection to discover and develop novel compounds for agricultural crop protection. Under the agreement, Locus will apply its proprietary computational technology to discover and develop novel small molecule compounds that have activity against key protein targets identified by DuPont Crop Protection.  In addition, Locus will obtain exclusive rights to such targets for human therapeutic uses. Under the agreement, Locus will receive reimbursement of research costs and also milestone and royalty payments from DuPont Crop Protection. Other specific terms of the agreement were not disclosed. (PRNewswire)


It was great to see so many of you in Orlando these past few days. If the 2003 sales results match the growth in attendance at the North American Veterinary Conference in Orlando this week, we’re going to have a great year.  We felt the enthusiasm and atmosphere at the conference was the most positive that it has been in a few years.  A positive attitude adjustment will be good for the industry.

We noted several new product and program launches that will be helpful in bringing more customers into the market place creating new sales volume. We continue to remain concern over downward pricing trends in some of the categories. We hope that all participants will view the impact of deflation on the industry as negative and do their part to keep it from happening.

Brakke Consulting is pleased to be a supporter and participant in The Animal Agriculture Alliance Summit Meeting in May.  We encourage the industry executives to become a part of this Summit. Brakke Consulting believes it is vital that all segments of the animal protein production business work together for the improvement of the industry. 

Have a great weekend.
Ron Brakke

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