The Experts in Animal Health

 Brakke Consulting’s
 Animal Health News & Notes for November 21, 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.
Central Garden & Pet
Webster Veterinary Supply
other news:
Cross Vetpharm
Dow AgroSciences
Elanco (transdermal)
Elanco (Merial)
Export Packers Company
Kalchem Int’l
Lohmann AH
Royal Canin
St. Merryn
Tabor Home Medical Services
Tyson Foods
Vita Plus
>  PETsMART, Inc. announced results for its third quarter, which ended November 2, 2003.    The company reported third quarter net income of $29.6 million compared with the third quarter of last year when the company reported net income of $20.6 million.  Net sales for the third quarter of 2003 were $734 million, compared to $657 million for the same period in 2002. Comparable store sales grew 7.5%, on top of 9.0% comparable store sales growth in the third quarter last year. Pet services sales for the third quarter were $46.8 million, up 27% over the third quarter of last year, an increase that reflects the company’s success in developing services that are attracting a broad and loyal base of customers and that is differentiating PETsMART from the competition. (Business Wire)  top
>  PETCO Animal Supplies, Inc. reported financial results for the third quarter ended November 1, 2003.  Net sales for the third quarter of 2003 were $415 million with a comparable store net sales increase of 6.0%. The comparable store net sales increase in the period comes on top of an 8.3% increase in the prior year’s third quarter. Overall, net sales increased 13.0% over the third quarter of 2002. Net earnings for the third quarter were $19.2 million. PETCO opened 19 new stores during the third quarter of 2003. The Company has now opened 60 new stores in 2003 and, net of relocations and closings, the addition of 52 stores has increased its store base to 652 locations. (Business Wire) top
>   Patterson Dental reported that sales of the Webster Veterinary Supply unit increased 17% in this year’s second quarter ended October 25 to $53 million. Webster’s sales benefited from a temporary pharmaceutical distribution agreement that was converted to an agency arrangement during the quarter. As a result of this conversion, Webster’s third quarter revenue growth is expected to be more in line with overall market growth. (Business Wire)  top
>  Central Garden & Pet Company announced financial results for the fiscal fourth quarter and full year ended September 27, 2003. This includes record net income for both periods.  For the fiscal fourth quarter of 2003 the Company reported net sales of $257 million, up 7% in the comparable 2002 period. Net income for the quarter increased to a record $4.6 million from $751,000 in the year ago period. The improved results were driven by continued sales growth of the Company’s branded products as well as lower administrative and litigation expenses. Net sales for fiscal 2003 were $1.15 billion, a 6% increase from fiscal 2002. Net income for the year was $34.6 million compared with a net loss of $83.7 million including the effect of the non-cash SFAS No. 142 accounting charge of $146.7 million, or $112.2 million after-tax, for fiscal 2002. (Business Wire) top
>  Smithfield Foods said its second quarter earnings soared as beef and pork prices improved. Earnings for the quarter, which ended Oct. 26, climbed to $36.2 million from $4.1 million in the year-earlier period. Sales for the quarter rose 16% to $2.06 billion from $1.77 billion in the year-earlier period. For the first half of the fiscal year, Smithfield Foods reported net income of $58.3 million,  up from $15.9 million in the year-earlier period. Sales in the first six months of the fiscal year rose 13% to $4.04 billion. (Meating Place) top
NEW Brakke Consulting study
Demystifying Regulatory And Distribution Practices
In The European Union
The European Union will be adding 10 more countries in 2004, bringing the total to 25 countries and representing a market that can rival the United States in size and influence.  But despite its size and influence, the market operates quite differently from the way the United States does.  It may be a common market or a united market, but it is far from a homogenous market.  Nowhere are the differences more pronounced than in the areas of regulation and distribution.
To help our clients who do not have parent or sister companies operating in the European Union, Brakke Consulting, Inc. has prepared a report entitled:  Demystifying the Regulatory and Distribution Practices in the European Union. 
The report contains basic population and production data, a background section on the formation and history of the European Union, a summary of the regulations and profiles of the distribution systems in all 25 countries.  In addition, the report has extensive lists of regulatory authorities, contacts and industry associations which alone are worth the US$3,500 cost of the report.  The report is ready to ship and can be ordered from the Dallas office by calling 972-243-4033.
>  IDEXX announced that it has received FDA approval to market and sell Navigator Antiprotozoal Oral Paste for horses.  Navigator contains 32% nitazoxanide and is a treatment for equine protozoal myeloencephalitis (EPM). (company press release) top
>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Cross Vetpharm Group, Ltd.  The ANADA provides for the veterinary prescription use of dexamethasone injectable solution in dogs, cats, cattle and horses.  (AnimalNet – Federal Register)   top
>  American Vanguard Corp. announced that AMVAC Chemical Corporation (AMVAC), a wholly-owned subsidiary of the Company, has signed a definitive agreement to acquire certain assets related to the active ingredient dichlorvos (“DDVP”) used in the animal health business and marketed primarily under the trade name Nuvan from Novartis Animal Health, Inc. The terms of the transaction, which is expected to close by the end of the year, were not disclosed.  The business sells product in over 30 countries, excluding the US. Amvac will continue to market Nuvan through the existing customer base established by Novartis. Nuvan is used primarily for animal health to control flies and ectoparasites. The Company expects to begin selling the acquired products in the first quarter of 2004. (Business Wire)  top
>  Elanco announced it signed a global licensing deal with Australian Acrux to develop the latter’s metered dose transdermal applicator for the animal health market.  Acrux will receive a $1 million initial payment and an estimated $8.75 million in milestone payments, as well as royalties from future products.  Elanco will finance the research, development and commercialization of the transdermal technology.  (Feedstuffs)  top
>  Merial and Elanco Animal Health announced a strategic alliance that will leverage their products and strengths in meeting the needs of the US swine industry. Effective immediately, Elanco will have exclusive rights to market and distribute in the United States, Merial’s Ivomec brands for swine, including Ivomec Premix for Swine, Ivomec 1% Injection for Swine and Ivomec 0.27% Injection for Grower and Feeder Pigs.  Financial details were not disclosed.  (company press release)  top
>  Bayer filed suit in US district court against Tabor Home Medical Services and Kalchem International Inc. for alleged deceptive trade practices on Baytril 100.   Bayer’s suit states that Bayer is the only FDA-approved manufacturer of Baytril Injectable solution, and therefore the only legitimate source of the product.  The civil action charges that Tabor and Kalchem knowingly purchased counterfeit enrofloxacin from illegal sources, manufactured unapproved material and misrepresented the quality of the antibiotic product to veterinarians.  Bayer is seeking an injunction against these two companies to prevent any future sales and distribution of the counterfeit product, and to recover actual damages due to loss of sales, unfair competition and dilution of the Baytril 100 brand.  Tabor and Kalchem were advertising for sale “compounded enrofloxacin.”  (Feedstuffs)   top
>  AVANT Immunotherapeutics, Inc. announced that it has received notification from the USDA of the licensure of its MeganEgg vaccine for use in breeding and laying hens.   MeganEgg is a double gene-modified vaccine for use in commercial breeders and egg-layers to protect against infection from Salmonella bacteria that is known to contaminate eggs. Pullets generally receive three vaccinations during the growing period and are protected throughout lay without further vaccination. Lohmann Animal Health International (LAHI) will distribute MeganEgg exclusively in North America. (Business Wire)  top
>  DRAXIS Health Inc., the University of Toronto and the University’s Innovation Foundation have mutually agreed to dismiss, without payment, the lawsuits between them with respect to Anipryl, a tablet for the treatment of cognitive disorders in dogs and Canine Cushing’s Disease.  This brings to an end all of the disputes between the University of Toronto and DRAXIS according to the President and CEO of DRAXIS Health, removing uncertainty around the intellectual property related to Anipryl.  The animal health subsidiary of DRAXIS will continue to license the animal health applications of l-deprenyl technologies owned by UTIF.  (Business Wire)  top
>  Smithfield Foods Inc. announced that it plans to keep plants operated by Farmland Foods Inc.’s pork division open and bring their maintenance up to date.  Smithfield also plans to retain all of about 6,100 Farmland workers. Most of those employees work in livestock production and processing plants in Illinois, Iowa, Kansas, Massachusetts, Nebraska, Ohio and Utah. Smithfield is acquiring Farmland’s pork division under an agreement worked out in federal bankruptcy court. (AP) top
>  The recently FDA-approved petition for Alltech’s selenium yeast product, Sel-Plex, for inclusion in dairy and beef diets, is leading to new industry standards for mineral nutrition. The supporting data developed in Alltech’s petition with Sel-Plex has helped the FDA establish acceptable daily intake levels of selenium in human diets based on animal tissue residues. The company stated that the FDA felt there was a need to establish acceptable levels of selenium in human diets after reviewing the Sel-Plex petition.  Alltech played a key role in helping the FDA define those levels. No other organic selenium product has been shown to achieve both the acceptable levels of selenium accumulation in edible animal tissue and the acceptable daily intake carryover into the human diet. (company press release)  top
>  Dow AgroSciences obtained worldwide licensing rights from the National Research Council of Canada (NRC) to market technologies that reduce the risk of food-borne pathogens.  The agreement gives the company exclusive rights to specific antibody technologies that are being developed under a 2001 collaborative agreement between Dow AgroSciences Canada Inc. and NRC’s Institute for Biological Sciences (NRC-IBS) in Ottawa. The collaboration already has developed inventions that hold great promise in combating two of the most common and challenging food-related health threats, E. coli O157:H7 in cattle and Campylobacter jejuni in poultry.  Financial terms were not disclosed.  (PRNewswire)  top
>  A Central Texas woman whose dog was run over by a car and killed after it got away from a PETCO employee was awarded $47,000 by a state district judge in Travis County. A pet store employee lost the dog when he dropped the leash while walking it after grooming. The woman sued PETCO when her 14-month miniature schnauzer was found dead four days after the visit to the pet store. The judge’s ruling included $10,000 each for emotional anguish, loss of companionship and punitive damages. PETCO is appealing the ruling to the 3rd Court of Appeals. (AP) top
>  MetaFarms, Inc., a leading provider of software-as-a-service to livestock producers, announced the signing of a business solutions partnership agreement with Vita Plus Corporation. The partnership agreement allows Vita Plus to market i-Production, the swine industry ERP solution developed by MetaFarms.  Under the terms of the agreement, Vita Plus has contributed funding and intellectual property for developing i-Production’s Finishing Management module.  Financial details were not disclosed. (PRNewswire)  top
>  CANADA   GangaGen Life Sciences, Inc., a new company focusing on the control of foodborne bacteria that are pathogenic in humans, unveiled its bacteriophage technology, which will initially be used to control bacterial contamination in food animal and animal wastes.  Phases are a family of naturally-occurring organisms that target and destroy specific bacteria.  The company has targeted E. coli 0157:H7 infection in cattle as its initial priority for its phage-based treatment.  (Feedstuffs) top
>  UK   Grampian Country Food Group in the UK has bought the St Merryn Food Group, the only company currently exporting beef from the UK. The St Merryn Group has a turnover of 280 million pounds sterling. (Wattnet Meatnews) top
>  CANADA   Tyson Foods, Inc. and Export Packers Company Ltd of Toronto announced a joint venture to produce fully-cooked chicken products for sale in the Canadian market. The name of the joint venture is Export Packers Foods Ltd.  The venture will produce Tyson brand products as well as products sold under Export Packers’ brands, for both foodservice and consumer markets. (AnimalNet)  top
> FRANCE   Royal Canin launched two new pet diets tailored for specific breeds.  German Shepherd 24 and Labrador Retriever 30 can be given to dogs 15 months or older.  The German Shepherd 24 diet is designed to reinforce the dog’s immune system, while Labrador Retriever 30 includes high levels of glucosamine and chondroitin to limit the risk of joint disease.  The products have been launched in France, and will be launched in other countries in 2004.  (Animal Pharm) 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
>  CZECH REPUBLIC  Czech Republic officials are set to slaughter nearly 1,100 cattle due to BSE findings. Test results showed that a 4-year-old cow from a southeastern farm had BSE, the eighth confirmed case among cattle in the Czech Republic. More than 200 cattle will be tested and killed, in addition to the 874 already slaughtered after a seventh case was discovered in late October. According to Czech officials, the losses will total some 50 million Koruna, or $1.9 million dollars.  (Drovers Alert)
>  POLAND   Poland confirmed a new case of BSE, bringing the total number of cattle infected with the disease in Poland to nine.  (AnimalNet – People’s Daily)
>  US  President Bush signed into law the Animal Drug User Fee Act, legislation that provides user fees to the FDA for its animal drug review work. The law establishes a funding system for the new animal drug review process that is similar to that established for the human drug review process over a decade ago.  (AnimalNet – FDA press release)
>  US   The EPA has released its Producers’ Compliance Guide for CAFOs, describing EPA’s regulations for Concentrated Animal Feeding Operations.  The guide includes sections that describe the CAFO regulations, who they affect, what they require and what assistance is available. The Guide may be downloaded at (Drover’s Alert)
>  CANADA   A study commissioned by the Canadian government shows Canada’s beef industry has lost an estimated $2.5 billion since it detected its first and only case of BSE six months ago, according to a new study written by Serecon Management Consultants Inc. of Edmonton. The new study, which assumes existing trade bans will continue until early 2004, said the beef industry has lost about $800 million in meat exports. (Meating Place)
>  US   Cases of West Nile virus in horses have dropped off sharply across the country, and experts say a campaign of vaccinations is one reason why. More than 15,000 horses were struck last year, but only about 3,500 cases have been reported this year. In Nebraska, the number dropped off from 1,100 to only 38 so far this year. Experts say other factors, including naturally developed immunities and underreporting of cases, also may be partly responsible for the decline. (AP)
>  US  The  USDA’s Animal and Plant Health Inspection service announced that it is amending the user fee regulations for inspection and approval of pet food manufacturing, rendering, blending, digest and spraying and drying facilities.  The current flat rate annual user fee will be replaced with user fees based on hourly rates for inspections and approval. APHIS stated that the flat rate annual user fees no longer covered the cost of inspections and cannot be adequately formulated to cover the cost of inspections and re-inspections mandated by various foreign regions to which those facilities export their pet food ingredients or products.  (AnimalNet – Federal Register) 
>  EU   A total of 12 European countries have signed up to the new Council of Europe Convention on the Protection of Animals During International Transport. The Convention, which will extend improved animal welfare standards beyond EU borders, was agreed at a two day meeting on November 5-6.  The countries that signed the Convention were Belgium, Croatia, Finland, Germany, Greece, Italy, Luxembourg, Moldova, Norway, Romania, Sweden, and the UK.  The revised Convention mirrors improvements currently being negotiated by EU member states and the European Commission in the EU Directive on the protection of animals in transport. (Wattnet Meatnews)
>  US   The National Animal Supplement Council (NASC), along with the Iowa Department of Agriculture and Land Stewardship (IDALS), have resolved the issue of pet supplements, which are not approved or recognized by the FDA.  In September, IDALS issued a letter to all pet supplement distributors stating, in part, that non-FDA approved pet supplements would no longer be allowed to be sold in Iowa, since doing so would be a clear violation of Iowa feed regulations. The NASC met with IDALS officials, and together a compromise was reached allowing pet supplements to be sold in Iowa only if labeling was changed.  The new labeling would not include claims such as dietary or nutritional supplement, or make nutritional guarantees.  Pet supplement suppliers are given one year to complete the label changes. (Farnam company press release)
>  US   The USDA’s Centers for Epidemiology and Animal Health, a division of the Animal and Plant Health Inspection Service’s Veterinary Services program, is working with six states on a pilot project that would allow state and federal animal health officials to have instantaneous access to information regarding livestock movements in and out of their states.  Accredited veterinarians will be able to voluntarily use the Web-based Interstate Certificate of Veterinary Inspection (ICVI).  By using an electronic Web-based application, officials and veterinarians will be able to electronically produce, transmit, and obtain reports of interstate animal movement information.  This pilot project is Phase I implementation of an electronic ICVI, and uses the existing paper-based ICVI process as a framework.  The USDA purchased an 8-year license for an ICVI software application from GlobalVetLink.  (AnimalNet – APHIS)
>  US   The USDA announced the release of a new publication, “Food Safety and Food Security: What Consumers Need to Know.”  The brochure, developed by USDA’s Food Safety and Inspection Service, will be available in both English and Spanish.  In a concise and easy to follow format, the brochure lays out food handling practices, foodborne illness, product recalls, keeping foods safe during an emergency and reporting suspected instances of food tampering. (PRNewswire)
>  US   The USDA has granted $14 million in research funds to 26 colleges and universities under the National Integrated Food Safety Initiative. The money will fund 34 new integrated food safety research projects. The projects address a broad spectrum of food safety concerns; from on-farm production, post-harvest processing and distribution, to food selection, preparation, and consumption. Each year NIFSI awards these funds to faculty at land-grant and non-land colleges and universities to ensure that valuable research, education and extension knowledge is transferred to teachers, scientists, health professionals, researchers, farmers, food processors, foodservice workers, consumers, and all others making crucial decisions about the safety of the US food supply. (Wattnet Meatnews)
>  US   An Indiana farm news broadcaster who recently launched a Web site to allow Indiana farmers to meet other ag producers online says more than 30 producers are now using it to market their products. is made up of farm families across the state of Indiana who feel the Internet is a great way to reach customers. The site was built with a grant from the USDA, which is administered by the Indiana Office of the Commissioner of Agriculture.  The Web site was launched in September and includes links to farms selling everything from steaks, alfalfa, and tomatoes to cut flowers and Christmas trees. (Meating Place)
>  US   Nearly 90% of pet owners will buy their four-legged companions holiday gifts this year, according to a just-released November 2003 national survey of nearly 6,000 pet owners.  The survey also found that nearly 40% of pet owners responding to the survey plan to have their furry friends photographed for the holidays this year.  The survey was conducted by Taubman Centers Inc., a major shopping center developer. (PRNewswire)
Brakke Consulting’s
2004 Animal Health and Nutrition Overview
“Your Customers, Now and in the Future”

The Brakke Consulting team is spending a great deal of time creating our 2004 Annual Overview Presentation of the industries we serve. The 2004 Overview will focus on the following areas:

 -How the customer has changed, and how that will impact your business in the future
 -Insights from our Practice Management Group on the small and large animal veterinary markets
 -Analysis and projections for the OTC animal markets
 -Analysis and review of the consolidation in food animals
 -How product mixes have changed and will change in the future
 -How management and personnel has changed, and will need to change to successfully meet future challenges
 -How companies will need to change in their recruitment and training programs to keep pace with the needs of a changing market
 -Brakke Consulting’s views on successes and challenges for the leading companies
 -Brakke Consulting’s industry projections for 2004        
Your first opportunity to attend the 2004 Industry Overview is in New York City on January 12, 2004.  The Overview will also be presented at the North American Veterinary Conference in Orlando and at the Western Veterinary Conference in Las Vegas.  For more details or to reserve your seat, please call Jane Morgan at 972-243-4033 or email Online reservation will be available soon.
It has been a busy week and fall, based on the number of items reported in this week’s newsletter.  A number of the stories address, in one way or another, the growth in the companion animal market in all categories. We see this continuing for the next few years.  When we overlay the probable strong food animal market trend, we think 2004 will be a great year for most companies.
With this being the last regular Friday newsletter before the US Thanksgiving holiday, we want to thank all of our friends and clients for your support and business this year.  We wish each of you a pleasant and safe Thanksgiving and Holiday season.

Have a great weekend.
Ron Brakke
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