The Experts in Animal Health

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 Brakke Consulting’s
 Animal Health News & Notes for December 3, 2004

 Copyright © Brakke Consulting, Inc.

earnings news:
Del Monte
Smithfield Foods
other news:
Boehringer Ingelheim Vetmedica
Chr. Hansen
Newport Labs
>  Bayer reported results for the third quarter and nine months of 2004.  Animal Health sales were 195 million euros ($240 million) in the third quarter, a decrease of 4% compared to the third quarter of 2003.  Sales remained steady in local currencies. Sales for the first nine months were 598 million euros ($737 million), flat compared to the comparable period in the prior year. (company website) 
>  Smithfield Foods Inc. reported that its second-quarter earnings rose 61% as live hog prices soared, reflecting strong demand for pork nationally and internationally. Net income rose to $58.4 million in the quarter ended Oct. 31, from $36.2 million in the year-ago period. Sales rose from $2.1 billion to $2.7 billion in the quarter. (AP, Meating Place)
>  Del Monte reported results for its second fiscal quarter ended October 31, 2005.  Sales for the Pet Products division were $218 million, an increase of 13% compared to $192 million in the second quarter of last year. (Business Wire) 
Brakke Consulting will once again be presenting our annual overview of the Animal Health Industry at the 2005 North American Veterinary Conference and also at the Western Veterinary Conference. There will be a single presentation at each of the conferences.
The Overview will be presented at the NAVC on Monday, January 10 from 1:00 – 3:00 pm. 
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 December 28th for the NAVC Overview and February 9th for the WVC Overview. 
To register, please visit our website at or call Jane Morgan at
>  The FDA amended the animal drug regulations to reflect approval of two supplemental new animal drug applications (NADAs) filed by Boehringer Ingelheim Vetmedica, Inc. The first supplemental NADA provides for use of meloxicam (Metacam) injectable solution in cats for control of postoperative pain and inflammation associated with orthopedic surgery, ovariohysterectomy, and castration when administered prior to surgery. It also provides revised dosage labeling for this product in dogs. The other supplemental NADA provides revised dosage labeling for use of meloxicam oral suspension in dogs. (AnimalNet – Federal Register)
>  MWI Veterinary Supply Co. and Vetpo Distributors, Inc. have entered into an agreement for MWI to acquire Vetpo in a transaction that will close on January 3, 2005.  MWI’s business in the Great Lakes region will be called MWI Vetpo. Financial terms were not disclosed. (company press release)
> Chr. Hansen is reportedly up for sale as its major stakeholder, the Lundbeck Foundation, has decided to  focus on the pharmaceutical unit. The ingredients operations of Chr. Hansen include cultures, enzymes, colors (where it is the number one natural color supplier) flavors, seasonings and sweeteners. Last week the ingredients unit at Chr Hansen announced an 8% increase in revenue for the year to DKK 3.4 billion ($600 million), up from DKK 3.34 billion in the previous year.  (Food Production Daily)  
> Bioniche Life Sciences Inc. announced that it has received approval from the USDA to market its proprietary product, SETTLE, for the treatment of equine endometritis caused by Streptococcus zooepidemicus.  In August of this year, Bioniche released the first results of a fully controlled and monitored (GCP) study using a proprietary formulation of mycobacterial cell walls (SETTLE) to treat bacterial-induced endometritis in susceptible mares. The study demonstrated that immunomodulation with a single dose of SETTLE resolved the bacterial infection and normalized the uterine inflammatory responses, resulting in successful treatment of the endometritis. (AnimalNet)
>  Phibro Animal Health Corporation announced that the Center for Veterinary Medicine (CVM) of the FDA has released the findings of its draft risk assessment for the animal drug virginiamycin. In the FDA’s draft report, the authors demonstrate that the continued use of virginiamycin,  a medicated feed additive manufactured and marketed by Phibro Animal Health, in livestock and poultry feed poses no significant risk to human health. (Business Wire)  
>  Newport Laboratories announced that it has assumed the CAVL autogenous biologic production business from Walco International.  Newport will utilize the former CAVL site in Amarillo, Texas as a diagnostic center as well as a manufacturing facility.  The agreement between Newport and Walco specifies that Newport will also assume responsibility for the former CAVL accounts. Financial terms were not disclosed. (Feedstuffs)
>  SteriFx Inc. announced that the USDA has approved FreshFx antimicrobial solution for On-Line Reprocessing (OLR) of poultry carcasses. The use of FreshFx for OLR significantly reduces Salmonella and E. coli on poultry carcasses when compared to those processed traditionally. FreshFx has also received the following clearances: (1) satisfied EPA requirements to be identified as a non-toxic agent USDA/FSIS clearance for use as a shelf life extender and food processing aid, and (2) FDA recognizes all ingredients as GRAS (Generally Recognized As Safe). (AnimalNet)
>  JAPAN – BSE   Japan is conducting follow-up tests on a 20-month-old steer from the northern island Hokkaido after an initial test Monday detected BSE. If confirmed, it would be the youngest BSE-infected animal in Japan. (Drovers Alert)
>  CANADA  – FINANCIAL IMPACT OF BSE   Canadian cattle producers have lost about $5 billion Canadian since the discovery of an animal with BSE in May 2003, according to a report from the Bank of Montreal’s economics department. Cash receipts for cattle through the first six months of this year were close to 30 percent lower than the average for the five years ending in 2002, according to the report. The Canadian packing segment has recovered more quickly than producers, the report notes, and further processors were least affected by the discovery of BSE. (Drovers Alert)
>  UK – NEW BSE RULES   Cattle in the UK over 30 months of age will be allowed back in the food chain next year, as Great Britain substitutes a “robust” BSE testing regime for its “Over Thirty Month” rule.  The governmental Food Standards Agency (FSA) told the BBC that in light of the huge drop in incidence of BSE in Britain, where positive results have fallen from 124.4 per 10,000 animals tested in 2001 to 6.49 per 10,000 tested so far this year, the reintroduction of older cattle was justified. The chairman of the FSA said that nothing would change until the FSA was assured that all cattle born on or after Aug. 1, 1996, would be tested rigorously for the disease. Shipments could resume by late next year.  (Meating Place)
>  RUSSIA – POULTRY BAN LIFTED   Russia, the largest foreign market for US poultry, has lifted a ban on poultry imports from Texas imposed nine months ago in the wake of bird flu cases there.  The ban had covered live birds, eggs and all poultry products that had not undergone thermal treatment. Russia had also prohibited such products from Maryland and Delaware, but the ban was previously lifted. (Meating Place)
The sales numbers for 2004 continue to be positive for most companies.  As we review our database sources for the first nine months of the year and visit with senior industry managers, it appears that the industry will have sales gains of 7 – 8% in 2004.  What a nice change from some of the past years!  This growth in revenue increases the attractiveness and value of the participating companies.  We’re also hearing about some aggressive investments in R&D and personnel in 2005.
We believe the animal health and pet product sectors will continue to offer above average returns on investment for
well-managed companies.
Have a great weekend.
Ron Brakke
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Brakke Consulting, Inc.
2735 Villa Creek, Suite 140
Dallas, TX  75234    USA

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