Animal Health News & Notes for December 31, 2003

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 Brakke Consulting’s
 Animal Health News & Notes for December 31, 2003
 Copyright © Brakke Consulting, Inc.
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IN THE NEWS:
 
US reports first case of BSE
USDA announces new slaughterhouse policies
Reaction to BSE announcement in domestic and international markets

(see Animal Health News section for items on BSE)
 
earnings:
ConAgra
Pet Valu
 
other news:
AGEN
Asahi Kasei Pharma
Biopure
Dow AgroSciences
ETHICON
Excel
Intervet
Kyoritsu Seiyaku
Mitaka Pharmaceuticals
Norbrook Labs
Novartis
Optibrand
PETCO
PetzLife
Swift & Co.
Synbiotics
Vedco
 
 
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COMPANY EARNINGS RELEASES
 
>  ConAgra Foods reported results for the second quarter ended Nov. 23, 2003.  Second quarter earnings rose nearly 15%, despite an overall decline in sales. Net income was $270.1 million in the quarter ended Nov. 23, compared with $235.8 million in the same period last year. Sales were $3.8 billion, compared with $4.5 billion for last year’s second quarter. Comparison of year-over-year results reflect the strategic divestiture of non-core businesses during the fiscal year, and sales and operating results for the current and prior year reflect the reclassification of chicken processing and United AgriProducts as discounted operations. (company website, AP) 
 
>  Pet Valu reported net income of US$390,000 on revenues of US$30.2 million for the third quarter ended September 27, 2003, compared to net income of US$45,000 on revenues of US$28.5 million in the year-ago period.  Same-store sales in the US increased 1.3%, and fell 0.6% in Canada.  Year-to-date, the company reported net income of US$2 million on revenues of US$88 million, compared to net income of US$293,000 on revenues of US$84.9 million in the comparable year-ago period.  At the end of September, Pet Valu operated 293 stores in Canada and 65 stores in the US.  (Pet Product News)
 
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Brakke Consulting’s
2004 Animal Health and Nutrition Overview
“Your Customers, Now and in the Future”
 
New York City, The Princeton Club
 
The Overview will also be presented at the North American Veterinary Conference in Orlando and at the Western Veterinary Conference in Las Vegas.  Seating is limited, so reserve your place now.
 
For more details or to reserve your seat, please call Jane Morgan at 972-243-4033 or email jmorgan@brakkeconsulting.com, or register online at www.brakkeconsulting.com.
 
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COMPANY NEWS RELEASES
 
>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Norbrook Laboratories, Ltd.  The ANADA provides for the veterinary prescription use of flunixin meglumine injectable solution for the control of inflammation in horses, beef cattle, and nonlactating dairy cattle.  (AnimalNet – Federal Register)  
 
>  Agenix Ltd. announced that 100% subsidiary AGEN Biomedical Ltd. successfully defended a preliminary injunction hearing brought against it by Synbiotics Inc, its former distribution partner in the US.  Synbiotics based the case on a claim that a patent it holds was infringed by the Canine Heartworm product AGEN Biomedical distributes in the US. AGEN Biomedical was, and remains confident, that the company does not infringe this patent.  Accordingly, AGEN Biomedical will continue to distribute the Canine Heartworm product in the US. In October, AGEN Biomedical announced it had despatched its first order of AGEN Animal Health product, worth $A750,000, to Vedco, which will be sold by Vedco under its STATScreen brand. (company press release)
 
>  Novartis Animal Health US, Inc. and ETHICON Products have announced an exclusive distribution agreement that gives Novartis US marketing rights to the ETHICON Products premium line of sutures and future access to advanced wound care products for the veterinary market.  Terms of the agreement were not disclosed. (PRNewswire)  
 
>  PETCO Animal Supplies, Inc. announced that it is commencing a modified “Dutch Auction” tender offer with respect to up to $50 million aggregate principal amount of the $170 million aggregate principal amount of its outstanding 10.75% Senior Subordinated Notes due 2011. PETCO intends to fund consummation of the Offer from its existing cash-on-hand. The Offer is conditioned on the conditions set forth in PETCO’s Offer to Purchase dated December 22, 2003. The Offer is not conditioned on a minimum principal amount of Notes being tendered in the Offer. (Business Wire)  
 
>  Dow AgroSciences Canada Inc. announced the signing of a research and licensing agreement with the University of Guelph, which is conducting research on a promising new vaccine to combat Mannheimia haemolytica infections in cattle.  Terms of the agreement were not disclosed. Researchers at the University of Guelph have been developing plant-made antigens that have shown effectiveness against Mannheimia haemolytica, a serious respiratory pathogen that can infect entire herds of cattle.  Dow AgroSciences is actively pursuing plant-derived treatments for livestock. (PRNewswire)  
>  Optibrand Ltd. LLC,  announced that Swift and Company, the nation’s third largest beef processor, is adopting the Optibrand retinal imaging livestock identification and tracking system as a part of their Swift Trace food safety system. Optibrand uses the retinal-vascular pattern, a biological trait or “fingerprint” that is different for each animal, and then links this secure identification method with the Global Positioning System (GPS) to provide reliable and very rapid livestock tracking. The first phase of Swift Trace was introduced earlier this year to international customers, and gives Swift & Company the ability to trace boxed beef back through the entire production process, from the feedlot to finished boxed beef. (company press release, PRNewswire) 
>  Biopure Corp. announced that it had received a “Wells Notice’’ from the SEC indicating a preliminary decision to bring a civil action against the Cambridge-based biotech company. Biopure said it believes the SEC is concerned with communications between the company and the FDA about a proposed trial for a higher dosage of artificial blood that the FDA declined to approve for safety reasons. In a news release, Biopure said it did not believe disclosing the planned trial or its cancellation was material. The Wells Notice disclosure comes at a critical time for Biopure, whose product is derived from cow’s blood. In October, the company laid off about 70 workers, or one-third of its work force, to conserve cash as it responds to questions from federal regulators. Two weeks ago, the company said it expected to receive a “going-concern’’ notice from auditors. Biopure said it is cooperating with the SEC. (AP)  
 
>  Sterling Silver Premium Meats, a product of Excel, is now selling its premium meats online. Consumers can buy pork, beef and turkey products at the company’s website. According to a company press release, buying food on the Internet is a growing trend. Forrester Research estimates that Internet food and beverage sales will total $3.7 billion in 2003, up more than 40% from 2002.  (Pork Alert)
 
>  PetzLife Products Inc. announced the launch of its Life for Teeth pet dental spray in November.  The company claims that the herbal formula will eliminate tartar and plaque when used as directed for dogs and cats.  The product is currently available only on the company’s website.  (Pet Product News)   
 
> JAPAN   Kyoritsu Seiyaku announced the acquisition of Mitaka Pharmaceuticals, a local animal health company jointly owned by Asahi Kasei Pharma of Japan and Intervet Holding B.V.  Mitaka manufactures, imports, markets and sells animal health products for livestock, aquaculture, and the feed additive markets. (company press release)  
 
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Brakke Consulting’s 2003
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This year’s report includes 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.  Other features include:
  – Discussion of pet owner compliance, the latest hot-button topic in small animal veterinary practice. 
  – Discussion of the impact of retail sales of veterinary flea products
  – Up-to-date product sales and trends for the veterinary products
  – An overview of the trends in OTC sales
 
The report is available for immediate shipping for $4,500.
 
For more information, call 972-243-4033 or email Dr. Lynn Fondon at lfondon@brakkeconsulting.com.
 
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ANIMAL HEALTH NEWS
 
>  US   The first-ever case of BSE (bovine spongiform encephalopathy) in the US has been found in a single cow in Washington state.  The single Holstein cow arrived at a Washington state processing plant as a downer and subsequently tested positive for BSE. The USDA has found records indicating that the cow was imported from Canada. These records suggest this cow is more than six years old, and was born a few months before the US and Canada began banning the inclusion of brain and spinal cord tissue in cattle feed.  While meat from the infected cow was shipped to eight states and has been recalled, USDA authorities have confirmed the central nervous system tissue from this animal never entered the human food chain. (Meating Place, AP)
 
>  US   On Tuesday, the US Agriculture Secretary announced federal policy changes aimed at strengthening US safeguards against BSE.  The USDA will ban the use of downer cows for human food while maintaining an aggressive disease surveillance system for high-risk cattle, such as older animals. The USDA will adopt a policy requiring the removal of specified risk material from the human food chain from all animals more than 30 months of age. The USDA will also issue a regulation, effective immediately on publication, that will require additional process controls on advanced meat recovery systems, preventing any central nervous system tissue from entering the food supply. Meat from cattle that are tested for BSE will be withheld from the food supply until test results are known to be negative, and the use of air injection stunning devices at slaughter plants will be prohibited in order to prevent contamination of meat with brain tissue. The Secretary pointed out that several of these measures were under consideration prior to the December 23 discovery of a case of BSE in Washington state. (Feedstuffs News Flash)  

>  US   Responding to the announcement of the first positive case of BSE in the US, dozens of countries representing close to 90% of the US’ beef exports have imposed a ban on imports of beef originating in the US.  Included in this number are Mexico, Japan, and South Korea, the three largest importers of US beef. Domestically, however, major hamburger chains including McDonalds, Burger King, Wendy’s, Jack in the Box, and Sonic reported that hamburger sales were steady over the weekend. (Meating Place, AP)

>  SOUTH KOREA   South Korea’s agriculture ministry reported the latest outbreak of avian influenza has spread beyond the quarantine zone and has hit the country’s southern poultry base. The ministry confirmed new outbreaks of the highly contagious disease at poultry farms more than 120 miles away from the site of the initial outbreak a week ago. The latest outbreaks bring the total number of farms hit by the H5N1 virus to nine. So far, about 950,000 chickens and ducks have been slaughtered or were destined to be culled to contain the spread of the disease. It still remains unknown where the virus originally came from and how it is spreading in South Korea. (Meating Place)
 
>  SOUTH AFRICA   An outbreak of equine influenza in South Africa has led to the postponement of one of the country’s richest and most prestigious races, the 1 million rand ($145,000) J & B Met, by more than two months.  Three races were previously cancelled in the Western Cape region following the discovery of the flu outbreak at a training center in Cape Town, and has led to more than 1,000 horses being quarantined.  (AnimalNet – Agence France Presse)
 
>  US   Officials in Iowa have postponed, for at least 12 months, plans to pull animal supplements containing glucosamine and chondroitin from the shelves of retailers.  The grace period is designed to give manufacturers the opportunity to change the labels on these products, which would categorize them as animal drugs and result in the products falling under the jurisdiction of the FDA.  Under current federal policy, the supplements are neither approved as animal feed nor animal drugs, and so are not explicitly approved for sale by regulatory authorities.  Iowa would have been the first state to enforce its policy that animal feed additives must be approved by the FDA or listed with the Association of Animal Feed Control Officials (AAFCO).  (Pet Product News)
 
>  EU   The European Commission has backed proposals to amend the transmissible spongiform encephalopathies (TSE) Regulation. The move will ease the heightened level of testing for TSEs in sheep and goats in the EU. Testing was introduced in 2002 to provide more information on the level of TSEs in the EU sheep and goat population. This target has now been achieved and future surveillance will be focused on specific target groups. TSEs are a family of diseases characterized by a degeneration of brain tissue which include Creutzfeldt-Jakob disease (CJD) in humans, bovine spongiform encephalopathy (BSE) in cattle and scrapie in sheep. (Wattnet Meatnews)
 
>  US   A modified version of the Puppy Protection Act has been reintroduced in Congress.  The act would require the USDA to regulate dog breeders’ practices, including the age and frequency with which bitches could be bred.  Unlike the originally introduced act, this version would not require socialization standards for puppies.  (Pet Product News)
 
>  US   Two Iowa companies, Global Resource Recovery Organization and United Suppliers, plan to build a swine-confinement facility without manure storage in north-central Iowa. The goal is to use the facility to demonstrate that hog manure can be removed daily and dried without the need for a manure-storage lagoon.  Global Resource Recovery will use its Tempest Drying System to treat about 2,000 gallons of liquid manure produced daily by the 2,400 hogs that will be housed in two buildings. The system separates manure solids from the liquid wastes and water from the buildings. The water is atomized into a fine mist and dispersed, while the solids can be used as crop fertilizer. Engineering and equipment development is underway. (Pork Alert)
 
>  US   Researchers at the College of Veterinary Medicine at Texas A&M University have cloned a white-tailed deer.  The fawn was born on May 23, 2003; the announcement of the successful deer cloning was delayed until DNA analysis could be performed to confirm genetic identity. The project was a joint project with Viagen, Inc. and may be useful in conserving endangered deer species including the Key West deer of Florida. (university press release)
 
>  US   New York’s Court of Appeals said in a 6-0 ruling that dog fancier Jon Hammer cannot get the courts to change the breed standards for Brittany spaniels that were established by the American Kennel Club and American Brittany Club. Specifically, Hammer sought to stop having points deducted from his Brittany spaniel, Ms. Dale’s Spooner, at dog shows because the animal does not have a docked, or clipped, tail.  Hammer, a New York City lawyer, argued that docking a dog’s tail violates state laws against mutilating animals unjustifiably. The court ruled that, since Hammer’s case does not allege that either the American Kennel Club and the American Brittany Club are cruelly or unjustifiably maiming dogs, the groups did not engage in any conduct that violated the law. The judges also found that private citizens have no standing to bring a claim under the animal cruelty law, which is a criminal statute. (AP)
 
>  US  A researcher at the University of Connecticut believes that he has identified a gene in cats that, if removed, stops them shedding the hair and dander that cause allergic reactions.  The world’s first “non-allergenic” cat could follow in two years.  The researcher and his business partners claim that this finding should help the team devise other modifications that, within the next decade, will enable them to develop a flea-repellent strain of dog using genetic engineering. (AnimalNet – Calgary Herald)
 
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BRAKKE CONSULTING VIEWPOINT
 
WOW!  And we all thought we’d have a relaxing holiday.  That was before the December 23rd announcement that a case of BSE had been diagnosed in Washington state.

There has been a great deal of activity over the holidays by the US government officials and various organizations representing the beef industry and suppliers.  I’m not sure how many press releases or stories I’ve read in the past 8 days, but it’s been a lot.  So I’ll not add to the stack of information undoubtedly coming across your desks, I’ll just add that it’s food safety, food safety, food safety.

Last night, I visited some friends who had been out of town for Christmas.  I learned that earlier in the month, the couple had both contracted food poisoning from the Chicken Breast Special of the Day at a leading Dallas restaurant.  Both found themselves quite ill, and were still a bit uncomfortable after three weeks.  The woman, who grew up on a farm in Iowa, made this comment:  “And now BSE has gotten into our country.  This is going to make vegetarians out of all of us!”  While this may be only one case, the food safety issues we are facing have a significant impact on the animal protein-consuming public.

During the holidays, I was watching and listening to a roundtable of respected journalists and political observers.  One of the questions raised was “what has happened to candor?”  It’s become impossible to get a straight answer these days.  Everyone puts their “spin” on the issue of the day.

It’s going to take some straight talk and action to put this BSE episode behind us.  We commend the decisive actions taken yesterday by the Secretary of Agriculture.  We believe that they will be just the first steps of many that we’ll see in food safety in 2004.

Happy New Year; 2004 will certainly be an interesting year.

Ron Brakke
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