The Experts in Animal Health

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 Brakke Consulting’s
 Animal Health News & Notes for January 28, 2005

 Copyright © Brakke Consulting, Inc.
******************************************************************* – over 170 jobs posted!
see below for details
earnings news:
Hill’s Pet Nutrition
IDEXX Laboratories
PetMed Express
Pilgrim’s Pride
Virbac SA
other news:
Boehringer Ingelheim Vetmedica
Canopy Scientific
Central Garden & Pet
Kent Marine
Land O’Lakes
Brakke Consulting will once again be presenting our annual overview of the Animal Health Industry at the 2005 Western Veterinary Conference. There will be a single presentation at the conference.
The Overview will be presented at the WVC on Tuesday, February 22 from 9:30 – 11:30 am.
Registration fees are $325 for early registration for the first attendee from a company, and $300 for additional attendees.  Early registration ends February 9th . 
To register, please visit our website at or call Jane Morgan at

>  Merck & Co. announced results for the fourth quarter and full year 2004.  Fourth-quarter sales for Merial, the 50:50 animal health joint venture with Sanofi-Aventis, were $459 million, an increase of 7% compared to the fourth quarter of 2003.  Full-year sales were $1,974 million, an increase of 8% compared to 2003. (company website)
>  Pfizer reported financial results for the 2004 fourth quarter and full year.  Pfizer’s Animal Health revenues increased 11% in the quarter to $566 million.  For the full year, Animal Health revenues were $1,956 million, an increase of 22% compared to 2003 (14% increase when including full year for Pharmacia in 2003).  (company website)
> Schering-Plough Corporation reported financial results for the 2004 fourth quarter and full year. Animal Health sales grew 8% in the fourth quarter to $230 million, reflecting solid growth across core brands and a favorable foreign exchange impact of 5%.   Sales for the full year were $770 million, an increase of 10% compared to 2003.  (company website)
>  Eli Lilly reported financial results for the fourth quarter and full year 2004.  Worldwide sales of animal health products division Elanco in the fourth quarter were $251 million, an increase of 18% compared with the fourth quarter of 2003, primarily driven by strong volume growth. For the full year of 2004, animal health sales increased 10%, to $799 million. (company website) 
>  Virbac SA reported sales of 92.4 million euros ($125 million) in the fourth quarter of 2004, an increase of 9.3% (12% proforma at constant exchange rates) compared to the fourth quarter of 2003.  For the full year, sales were 357 million euros ($487 million), a 2.1% proforma increase at constant exchange rates compared to 2003. The company reported growth of 7.5% in the companion animal business coming from nearly all the segments and mainly specialties and electronic identification, but a decrease of 6.5% in the food producing animal business impacted by temporary difficulties in the swine and poultry sector in some European and Asian countries. (company website)  
> IDEXX Laboratories, Inc. reported that net income increased 37% to $16.9 million for the quarter ended December 31, 2004, compared to the same period in the prior year. Revenue for the fourth quarter of 2004 increased 16% to $144 million. Companion Animal Group (CAG) revenue for the fourth quarter of 2004 increased 17% to $117 million. For the full year, net income increased 37% to $78.3 million for the year ended December 31, 2004, from $57.1 million for 2003. Revenue for the year increased 15% to $549 million from $476 million for 2003. The favorable impact of currency contributed 3% to revenue growth.  Companion Animal Group (CAG) revenue for the year increased 17% to $449 million from $384 million for 2003, as a result of increased sales from all lines within the CAG segment. (company press release)  
>  Colgate-Palmolive Company announced financial results for the fourth quarter 2004.   The company reported sales for Hill’s Pet Nutrition were $392 million in the fourth quarter, an increase of 9% compared to the fourth quarter of 2003.  Hill’s full-year 2004 sales were $1,433 million, an increase of 9% compared to 2003.  (company press release)  
> PetMed Express, Inc. announced results for the third quarter ended December 31, 2004. Net sales for the quarter were $20.8 million, an increase of 21% compared to the prior year third quarter. Net income was $2.0 million, an increase of 60%. Net sales for the nine months ended December 31, 2004 were $84.8 million, an increase of 17%. Net income was $5.6 million, an increase of 25%. (Business Wire)
> Pilgrim’s Pride reported that for the fiscal first quarter ended Jan. 1, sales rose to $1.37 billion from $1.04 billion a year ago. Fiscal first-quarter net income rose to $48.5 million, compared to $10.3 million in the year-ago quarter. (AP) 
New Dental Study Available
from Brakke Consulting, Inc.
Income from dental products and services now account for more than 10 percent of revenues in companion animal practices, according to the new Brakke Companion Animal Dental Study.  Already one of the largest income generators, pet dentistry is growing significantly, the study shows.
In sharp contrast, pet owners have limited knowledge of pet dental health, and fewer than 20 percent of pets have had dental cleanings.  So there is considerable upside potential for veterinarians.
The 2005 Brakke Companion Animal Dental Study is based on national surveys and in-depth interviews of both veterinarians and pet owners.  It includes detailed information on market potential, preferences in client education materials, product use for prevention and treatment, brand loyalty, perceived brand leadership, and consumer expenditures through veterinary and OTC channels.
Reports are available immediately for $9,500.  Please contact Jane Morgan at or 972-243-4033. 
>  Merial and Boehringer Ingelheim Vetmedica, Inc. announced a co-marketing agreement for the Merial  Surehealth calf-preconditioning program that will create a more robust offering of eligible products. The Surehealth program features best management practices that add value to feeder calves throughout the production chain.  As part of the agreement, the number of qualified products will grow to include brands from both Boehringer Ingelheim Vetmedica and Merial.  In total, Boehringer will market 10 vaccines and Merial will market another 16 cattle products inside the Surehealth program.  (company press release)  
> Virbac Corporation has been notified by the staff of the Securities and Exchange Commission (SEC) that the staff is considering recommending to the SEC that it bring a civil action against the Company alleging that the Company violated certain provisions of the federal securities laws. The staff’s notification, commonly referred to as a “Wells Notice,” arises out of the SEC’s investigation of the Company that commenced in February 2004.  Under the SEC procedures, before the staff can make any formal recommendation regarding what action, if any, should be brought by the SEC, the Company has the opportunity to make a submission to the staff outlining why it believes any proposed enforcement action should not be brought. The Company is currently engaged in discussions with the SEC staff regarding the Wells Notice and the possible resolution of this matter, and continues to cooperate fully with the SEC in respect of its investigation. (company website) 
> Central Garden & Pet announced that it is moving the Canopy Scientific product line from the Kent Marine division to the Kaytee family of avian and small animal products.  The Canopy product line includes animal mists, cage cleaners and diet supplements. (Pet Product News) 
>  Land O’Lakes Farmland Feed announced a name change to Land O’Lakes Purina Feed in order to highlight the brand identity with its American subsidiary Purina Mills.  (Pig International)  
>  JAPAN  Animal health companies Kawasaki Pharmaceuticals and Mitaka Pharmaceuticals have become part of a single entity, changing the name to Kawasaki Mitaka Pharmaceuticals.  Kyoritsu, the parent of both companies via acquisition, is reorganizing the two companies into a single entity.  (Animal Pharm)   
>  EU   Schering-Plough Animal Health announced the pan-European launch of antibiotic Aivlosin for the treatment of mycoplasmal (enzootic) pneumonia in finishing pigs. Roll-outs in the UK and Denmark will be followed by Italy in April. Launches for other countries of Europe are in the pipeline. Aivlosin is derived from further fermentation of tylosin and presented as a premix for medicating complete feeds.  (Pig e-news)  
>  FRANCE   ID-Vet, a new diagnostics company, announced the launch of its product range.  The company specializes in immunological antigen and antibody detection tests, with plans to work in partnership with institutional research organizations or companies in the veterinary field to develop a full line of reagents for large animals.  ID-Vet intends to develop reagents designed to detect emerging illnesses, as well as improving the performance of existing tests.  (Animal Pharm)
The job site dedicated to the Animal Health Industry
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To introduce this new service to the industry, we are waiving the $375 fee to post a job at until February 15, 2005.  Through this time, your company can post available positions at AnimalHealthJobs at NO CHARGE.
We invite you to follow the link below and visit the site to see for yourself how AnimalHealthJobs can streamline your recruiting or job search efforts.
>   IRELAND – BSE   Ireland’s Department of Agriculture reported that two BSE cases have been detected in Irish cattle in the past week, aged 6 and 11 years in Leitrim and Cork. One of the infected cattle was born after enhanced BSE controls were introduced in 1996 and early 1997, but the department said the underlying trend remained positive. (AnimalNet – Evening Echo)
>  US – LIVESTOCK EMISSIONS STUDY   National Pork Producers Council finalized a consent agreement with the U.S. Environmental Protection Agency.  A major component of the agreement is a two-year study of air emissions from livestock and poultry operations across the country. Based on the study’s findings, EPA will set national air policies. Producers who sign the consent agreement and pay a small penalty will be released from liability for past violations, under the agreement.  All producers, whether they signed the agreement or not, will be subject to applicable permitting, emissions reporting and other compliance requirements once the data are analyzed and EPA publishes new national livestock air emissions standards.  University scientists will conduct the study; Purdue University will manage the study and provide status reports to the EPA, industry and other public. (Meating Place)
>  US – NEW FOOD SAFETY AGENCY   The FDA’s Center for Food Safety and Nutrition has created a new agency: the Office of Food Safety, Defense, and Outreach, which consolidates the Center’s outreach and education on food safety and defense with its counter terrorism and chief medical officer responsibilities. OFSDO will serve as the overall center responsible for coordinating, developing, and delivering high-quality outreach and education products to consumers, the food industry, health professionals, and other regulatory authorities. (Wattnet Meatnews)
Nearly 15,000 veterinary practitioners, technicians, staff and their families flocked to Orlando Jan. 8-12 for the 2005 North American Veterinary Conferences. 5,600 veterinarians, including 1,500 from overseas, attended the conference, along with 3,450 exhibitors and thousands of technicians, practice managers, and veterinary students.   Next year’s conference is scheduled for January 7-11 again in Orlando.  For information call (352) 375-5772 or visit .
Growth appears to have been good in the animal health industry in 2004.  I say “appears” because the exchange rate changes between the US dollar and the Euro also appear to have had an impact.  European firms are hurt when they report results in Euros and have major operations in the US.  US firms or those who report in dollars are helped. (I apologize for recycling this comment from last year.)  You can tell who is who by the length they go to in explaining their results.  Good news needs little explanation; bad news necessitates construction of pro forma statements to explain that bad news is really good news.
A colleague of mine once said his business was not dependent on whether the industry had a good or bad year.  I wonder if the animal health industry is similarly insulated from the larger economy.  I’m thinking here beyond currency fluctuations.  The money markets are very concerned about the US deficits:  trade, budget and Social Security.  Will these impact our industry?  Certainly higher interest rates will hurt the agricultural sector.  What about companion animals?  If household costs increase due to higher taxes and interest rates, what happens to discretionary spending on pets?
You might dismiss this as the result of the weather turning from sunny to rainy here and my mood is not helped by the dire forecasts on the financial pages.  But planning means having an idea of how to handle adversity rather than just hoping for the best. 
But I do hope you have a good weekend.
John Mannhaupt, Dallas
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