The Experts in Animal Health

 Brakke Consulting’s
 Animal Health News & Notes for November 7, 2003
 Copyright © Brakke Consulting, Inc.

You can now use this section to jump directly to a news item about a particular company.  Simply click on the company name.
OurPet’s Company
Pilgrim’s Pride
Virbac SA
other news:
Bayer AG
Focus Technologies
Injectile Technologies
> Virbac SA reported financial results for the third quarter 2003.  Provisional net sales were 87 million euros ($100 million), a decline of 1.7% compared to the third quarter of 2002.  After a slow down of the growth in July and August due to unfavorable climatic conditions in Europe, which have particularly penalized the Food Producing Animal Business, a strong recovery was registered in September in all activities and geographic areas.  Provisional net sales for the first nine months of 2003 were 270 million euros ($313 million), a decrease of 0.8% compared to the comparable period in 2002, but an increase of 7.1% at a constant exchange rate and excluding acquisitions and the impact of expiration of food distribution agreements for companion animals. In the first 9 months of the year, the Companion Animal segment grew by 8.2% (proforma at constant exchange rates) while the Food Producing Animal segment increased by 4.1%.  (company website) top
>  Embrex reported results for the third quarter 2003.  Consolidated revenues for the third quarter 2003 totaled $11.5 million, a 1% decrease compared to 2002 third-quarter revenues of $11.7 million. Device revenues were $11.0 million for the 2003 third quarter, an increase of 5% over the same period in 2002. This increase was generated from a $0.7 million increase in revenue primarily from new Egg Remover and Inovoject system installations. This increase was offset by lower product revenues, collaboration revenues and grant funding. EBITDA was $3.0 million for the third quarter of 2003, a decrease of 10% compared to the same period in 2002. (company website)  top
>  Pilgrim’s Pride reported a net income of $25.1 million for the fourth fiscal quarter ended Sept. 27, 2003, an increase of $28.3 million compared with a net loss of ($3.2) million in the fourth fiscal quarter of 2002. Pilgrim’s Pride reported record net sales for the quarter of $710 million, compared with net sales of $640 million for the same period last year. For fiscal 2003, Pilgrim’s Pride net income was $56.0 million, an increase of $41.7 million, compared with net income in the prior fiscal year. Pilgrim’s Pride also reported record annual net sales for fiscal 2003 of $2.62 billion, an $85.6 million increase compared with 2002. (Meating Place) top
>  OurPet’s Company reported financial results for its third quarter and nine months ended September 30, 2003. Net sales for the third quarter were $1,371,000, an increase of 4% compared to $1,312,000 for the prior year third quarter.  Net loss for the quarter was ($66,000) compared to a net loss for the prior year of ($49,000).  For the nine months of 2003 net sales were $3,800,000, an increase of 16% compared to $3,271,000 for the prior year nine months.   Net loss for the nine months was ($204,000) compared to a net loss for the prior year of ($323,000). (Business Wire)  top
>  Clorox reported results for the first fiscal quarter of 2004, ended September 30, 2003.  First-quarter sales were flat at $1.05 billion. Excluding divestitures, sales increased 1%. First-quarter volume grew 2% compared to the year-ago quarter. Excluding divestitures, volume increased 3%, reflecting growth in every segment of the business. The specialty products segment’s strong volume growth was driven by increases in shipments of food products, cat litter and charcoal. Scoop Away cat litters and Fresh Step regular cat litter achieved all-time record shipments during the quarter.  (Business Wire) top
>  Degussa reported that, in the third quarter of 2003, the Feed Additives business unit of its Fine Chemicals division benefited from an appreciable upturn in the demand for methionine and Biolys and reported a strong improvement on the previous year’s performance.  Sales for the entire Fine Chemicals division were 712 million euros ($825 million). (company website)  top
Brakke Consulting’s 2003 US Flea Control and Heartworm Markets will be available the first week of December, immediately after the US Thanksgiving holiday. 
This year’s report will include an all-new veterinarian survey, exploring such topics as K9 Advantix, ProHeart 6, the use of prescription fulfillment services, and the impact of internet and pet store sales of the products traditionally sold through veterinarians.  A poll of pet stores to determine the prevalence of the sale of veterinary flea products is also included.  The report will discuss pet owner compliance, the latest hot-button topic in small animal veterinary practice.  Up-to-date product sales and trends for the veterinary products, as well as an overview of the trends in OTC sales, including internet sales of traditionally veterinary-exclusive products, are also be included in the report. 
The report will be available until December 19, 2002 at an early-order price of $4,000.  Studies ordered after the Christmas holiday will be priced at $4,500.
For more information, call 972-243-4033 or email Dr. Lynn Fondon at
> The FDA amended the animal drug regulations to reflect approval of a new animal drug application filed by Intervet.  The NADA provides for use of an altrenogest oral solution in gilts for synchronization of estrus.  (AnimalNet – Federal Register)  top
>  US Health Services, a unit of Standard Management Corp, this fall launched HomeMedVet, a veterinary prescription delivery service. The program is similar to VetCentric’s service, and allows veterinarians and clients to order medications and veterinary diets online.  Clients must have an existing veterinary-client relationship and prescriptions must be authorized before products are shipped. Registration for veterinarians is free. (Veterinary Practice News)  top
>  Waltham launched the Waltham Veterinary Tab Wrap Supplements, a palatable low-calorie supplement that is molded around a tablet to make medication administration easier.  The supplements come in two formats for dogs and cats of all sizes.  (JAVMA) top
> Veterinary Products Laboratories (VPL) and Stolle Milk Biologics, Inc., (SMBI) announced the development of Duralactin Feline, which contains the proprietary ingredient of MicroLactin.  Duralactin Canine was launched successfully in December 2002.   VPL recently completed a 5X safety assessment in cats that demonstrated no clinical or laboratory evidence of toxicity.  Duralactin Feline can be used for treating a variety of inflammatory conditions in cats. (company press release)   top
>  Cargill Inc. will move all of its meat operations under one name, Cargill Meat Solutions, according to American City Business Journals Inc. Cargill had been working towards establishing the new unit for nearly a year. The new venture will be based in Wichita, Kansas., where Excel Corp.,  Cargill’s beef and pork business unit, has had its headquarters since 1941. The new organization will continue to use current Cargill meat brands such as Honeysuckle White turkey, Excel beef and pork, and Sterling Silver meats. Klein expects Cargill Meat Solutions to be formally launched in January or February. (Wattnet Meatnews) top
>  Degussa announced that it has divested its B3 business as part of the Feed Additives business unit’s strategy to concentrate on amino acids for animal feeds.  The B3 business unit was sold to the Reilly Group.  Financial terms were not disclosed. (company website)  top
>  VetInsite announced the addition of Horse Portals to its stable of online communications tools for horse and pet owners.  Horse Portals provide a mechanism for clients to securely view their own animals’ health services and interact with their veterinarian online. Portals are accessed through the veterinarian’s website and are branded to the veterinarian’s clinic. VetInsite has offered Pet Portals to small animal owners and veterinarians since 2001. (company press release)  top
>  American Capital Strategies Ltd. announced it has invested $54 million in the buyout of Flexi-Mat Corporation, a leading producer, importer and marketer of pet beds. American Capital’s investment takes the form of a revolving credit facility, senior term loans, senior and junior subordinated debt and preferred and common equity. Management also invested significantly in the transaction. (PRNewswire) top

>   Focus Technologies announced FDA clearance of its IgM and IgG ELISA antibody detection diagnostic kits based on a West Nile Virus recombinant protein antigen licensed by the CDC (Centers for Disease Control and Prevention). The West Nile Virus products are third generation assays developed by Focus and currently in use in the company’s infectious disease reference laboratory in Cypress, California.   (PRNewswire) top
> GERMANY   Injectile Technologies is developing a new way of delivering vaccines that uses a hollow carbohydrate needle.  The Injectile is designed to be placed under the skin or into muscle, where it dissolves in minutes and releases its contents into the body.   Studies have demonstrated that a model antigen delivered by the Injectile caused seroconversion in the recipient, and human volunteers have preferred to receive the Injectile rather than a traditional needle and syringe.  (Animal Pharm) top
>  JAPAN  Japan may have discovered its ninth case of BSE, in a 21 month old cow, according to reports from the Japanese ministry of Health, Labor and Welfare. The case has been found in a Holstein cow in the Hiroshima prefecture. The cow was born in January 2002 in the Hyogo prefecture. If the case is confirmed, it will be the youngest incidence of the disease in the country. The last case to be recorded in Japan was in a two year old cow. (Wattnet Meatnews)
>  ITALY  Italy has reported another cow testing positive for BSE, raising to 114 the total number of cases in the country’s herds since 2001.  (AnimalNet – CP Wire)  
> US  The director of the FDA’s Center for Veterinary Medicine has stated that the FDA will revisit its preliminary determination that food from cloned animals is safe for consumers, after several independent science advisors raised questions about the finding.  Several members of an FDA advisory panel of scientists said that there was not enough data in the agency’s report, especially on cloned pigs, to reach a conclusion that all milk and meat products were safe.  The CVM still believes that food from cloned animals is safe, but will review the panel’s comments.  A final risk assessment is expected next year. (AnimalNet – Reuters)   
>  US   The FDA has sent warning letters to four milk and ice cream manufacturers, informing them “that their products are misbranded because the labels contain the false statements ’No Hormones’ or ’Hormone Free’.  In the letter, the FDA informed the companies that it may take further action if the companies fail to correct the labels promptly.  The statements are considered false because all milk contains hormones naturally.  The FDA had earlier this year outlined the agency’s intended actions regarding labeling of dairy products that use milk from cows not treated with recombinant bovine somatotropin (Posilac).  The FDA suggested that companies use such wording as “from cows not treated with rBST.” (Animal Pharm)
>  US   The US may let Canadian cattle and some fresh beef into the country early next year for the first time since a case of BSE was found in May. A USDA undersecretary said US officials are proposing to allow in from Canada cattle that are 30-months-old or younger. Meat allowed in would be from animals that age. The department is taking comments on the proposal until January. (AP)
>  US   The US Senate moved to ban the human consumption of “downer” animals, which are livestock too sick to stand or walk unassisted.  The proposal was offered as an amendment to an agriculture spending bill, according to its author, because many of these animals are dying from infectious diseases and present a significant pathway for the spread of disease. The House, in passing its version of the spending bill for the 2004 budget year, defeated a similar amendment on a 202-199 vote. The two chambers must negotiate a common stance on the issue when they meet to come up with a final bill. (AP)
>  ARGENTINA   More than 40,000 cattle and goats have died in Argentina, because of continuing drought conditions in the western part of the country. Reports from the province of Mendoza show that 20,000 head of cattle, about 4% of the herd in the province, and 22,000 goats have died. The region is experiencing the worst drought conditions since the 1960s. The drought is affecting about half the country’s provinces and is also hitting the wheat and sunflower crops – major crops on the world market. (Wattnet Meatnews)
>  US   The US Court of Appeals for the 8th Circuit approved a request to allow the Beef Checkoff Program to continue while the US Department of Justice seeks Supreme Court review of a case challenging the program’s constitutionality. With the stay in place, producers must continue to pay the mandatory $1-per-head checkoff each time a bovine animal is sold as the case moves forward toward the Supreme Court. At the same time this case is unfolding, the Court of Appeals for the 9th Circuit has been asked to consider an opposing ruling declaring the Beef Checkoff Program constitutional. A US District Judge in Montana issued that ruling in favor of the checkoff in November 2002, based on the exact same trial transcript as the South Dakota case but reaching a different conclusion. (Drover’s Alert)
>  US   The Associated Press reported that cattle are quietly being cloned and sold for high prices as some in the livestock industry anticipate government approval for letting their offspring into the food chain. Last month, the FDA tentatively concluded that milk and meat from cloned animals are safe to eat, a finding that eventually could clear the way for such products to reach supermarket shelves and for cloning to be widely used to breed livestock. FDA is still trying to decide if cloned farm animals will require government approval before being sold as food. That decision is expected to take another year. There already are as many as 300 cloned bulls in existence, according to the Biotechnology Industry Organization, a Washington lobbying group.   The cost of a cloned calf currently is estimated at $19,000. (Meating Place)
>  US   The Senate has passed legislation passed by voice vote, to ban transporting big cats across state lines. Accredited circuses, zoos and sanctuaries are exempt, as are animal trainers such as magician Roy Horn. The measure is instead aimed at pet owners such as Antoine Yates, who earlier this month was attacked by the tiger he raised in his New York City apartment. The multibillion-dollar exotic animal industry, boosted in recent years by more Internet sales, is loosely monitored by regulations that vary from state to state and even county to county. Proponents of stricter laws say interstate transport is the glue holding the industry together. There are currently some 15,000 pet tigers, lions and other big cats around the country, according to the Humane Society of the United States. The 5,000 to 7,000 privately owned tigers probably exceed the total number in the wild. (AP)
>  US   The pork checkoff program in the USA is launching a new Internet site – – to help connect pork producers with consumers who want to buy specialty pork products. The Pork Checkoff designed this website to connect producers, packers and buyers across the country. This is a way for pork producers, regardless of the size of their operation, to learn more about niche marketing and unique production practices. And, it’s a way for consumers to locate sources of specialty pork products.  Any pork producer who is marketing pork outside the traditional commodity marketing channels can be included in the database. Producers wanting to be included can contact the Pork Checkoff Service Centre. The ’locate a producer’ link will provide a way for restaurants and individuals to contact specific producers directly.  In addition to the database of pork producers and processors, the site includes links to niche pork information at universities, Extension, USDA and the National Pork Board. (Wattnet Meatnews)
>  US  The new “Walk a Mile in My Boots” exchange program between US cattle ranchers and US Fish and Wildlife services employees has hit the ground running. The program was launched this past summer, and exchanges have taken place in several states.  The National Cattlemen’s Beef Association (NCBA) and the FWS worked together to create the program, providing an unprecedented opportunity for cattle ranchers and FWS employees to learn more about each other’s lifestyles.  An NCBA spokesperson reported that all the exchanges have been rewarding experiences for those involved.  Future plans for the exchange program will extend to additional states and Puerto Rico.  (AnimalNet – NCBA)  
>  US   Results of a newly released study aimed at exploring the connection between pet weight loss and that of their owners reveal 55% of human participants and 82% of dogs lost weight when they adopted a shared exercise regime and an individualized healthy-eating program. The research, which was conducted by The Iams Company and Bassett Healthcare Center, also shows the joint owner/pet program improved exercise habits and eating behaviors of the owners, including increased consumption of vegetables, low-fat dairy foods and water.  (Business Wire) top
>  AUSTRIA   Animal psychologists from Vienna’s University of Veterinary Medicine have developed a CD of music composed especially for cats.  The researchers noted that aggression levels dropped and the cats would sit by the loudspeakers when the music was played.  In Austria, the CD’s are available exclusively from veterinarians.  (Animal Pharm)
Brakke Consulting announces completion of
The 2003 Distributor Effectiveness Study is now available. This study examined veterinarians’ opinions on many topics related to purchasing preferences, preferred supply sources, and the business performance of distributors that serve their practices. The study consisted of four focus groups with veterinarians and a quantitative survey of 864 decision makers in companion animal veterinary practices from across the US. The quantitative survey was designed to provide information from eight separate regions with approximately 100 responses from each region.
Below are examples of the information contained in the report:
 – Veterinarians rated the importance of 38 different attributes of distributors, distributor field sales reps, and distributor inside sales reps when selecting a distributor.
 – Veterinarians rated the performance of up to three distributors which they did business with on the 38 performance attributes of distributors, field sales reps and inside sales reps.
 – Regression Analyses identified key drivers of a high overall distributor performance rating and the key drivers of where veterinarians spent the most money.
 – Data was analyzed to identify differences due to practice size, gender, years in practice, and practice location.
This valuable study can be used by both distributors and manufacturers to identify opportunities for improving performance in the market place.
The report is bound in a two volume set and is available for immediate shipment. Please call our Dallas office at 972-243-4033 to purchase a copy of the report. More detailed information about the study is also available from Jay Lockhart at (314) 821-3368 or
>   Bayer AG plans to spin off its industrial chemical division and part of its polymers division by early 2005 in an effort to strengthen its remaining businesses. The move represents a major restructuring for the German company. The restructuring will benefit the spun-off unit as well as the remaining company, which would keep three core businesses: drugs and health care equipment, farm chemicals, and specialized materials. (AP) top

It’s been a good week visiting with clients in the Midwest. Hearing their successes and disappointments for the year is always interesting.  One has to be impressed with the sales and profit increases that are occurring in 2003.  In a highly competitive environment, what started out to be a difficult year for some companies now appears to be a positive year. A great deal of the success is obviously tied directly to effective management.

As I commented last week, the financial community seems to be focusing on the animal health and nutrition markets as a place to put some of their funds. We believe that is good for the industry.  The discussions regarding mergers, acquisitions and failures and the impact on customers, producers and consumers are not new.  Managers need to remember that in a competitive marketplace, the customer or consumer is ultimately in control. Those companies that understand this should prosper in the current market place.

Have a good weekend.
Ron Brakke

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