The Experts in Animal Health

 Brakke Consulting’s
 Animal Health News & Notes for November 14, 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.
Ceva Sante Animale
Premium Standard Farms
Tyson Foods
other news:
Advanced ID
Ag Services of America
Natural Fields
>  Bayer reported net sales for the third quarter of 2003 for its animal health division were 204 million euros ($237 million), a decrease of 9% (1% in local currencies) compared to the third quarter of 2002.  Operating result was 43 million euros ($50 million), a decrease of 16% compared to the third quarter of 2002.  Sales for the first nine months of 2003 were 597 million euros ($692 million), a decrease of 6% (increase of 6% in local currencies) compared to the comparable period in 2002.  Operating result for the nine months of 2003 were 128 million euros ($148 million), a decline of 11% compared to the comparable period in 2002.  The declines in sales were mainly attributable to unfavorable currency effects.  (company website)   top
>  Ceva Sante Animale announced that turnover in the animal health division increased by 4.5% to 149 million euros ($173 million) for the third quarter 2003 compared to same period in 2002. Ceva attained good results in European Union countries due to good sales in pet ranges (appeasing pheromones and Tiludronate). Outside Europe, North America and Africa have shown very significant increases in terms of turnover as for global result.  The overall sales growth was a slowdown compared to previous quarters, mainly due to unfavorable currency fluctuations. (company communication)  top
>   Synbiotics Corporation announced that its revenues were $4.2 million for the third quarter ended September 30, 2003, a decrease of 7% the prior year quarter. Synbiotics reported a net loss for the third quarter ended September 30, 2003, of ($164,000) compared to a net loss of ($293,000) for the prior year quarter.  Revenues for the nine months ended September 30, 2003 were $15.2 million, a decrease of 11% from the prior year period. Net income for the nine months ended September 30, 2003 was $1,459,000 compared to a net loss of ($10.8 million) for the prior year period.  The results for the nine months ended September 30, 2003, include a one-time litigation settlement benefit of $515,000, whereas the prior year period was negatively impacted by one-time charges related to retention bonuses and goodwill impairment totaling $11.3 million. (Business Wire)  top
>  Heska Corporation reported financial results for its third quarter ended September 30, 2003. Total product revenue for the third quarter of 2003 was $15.4 million, up 50% from $10.3 million in the third quarter of 2002. Net loss for the third quarter was ($1.2 million), an improvement of $1.9 million over the third quarter of 2002.  For the nine months ended September 30, 2003, total product revenue was $42.8 million, up 33% from $32.1 million in the corresponding period in 2002.  Net loss for the nine months was ($4.9 million), an improvement of $4.9 million compared to the comparable period in 2002.  (company press release) top
>  BASF reported results for its Fine Chemicals division, which includes animal feed additives, for the third quarter of 2003.  Volumes increased in the third quarter, but sales declined 4.5% to 469 million euros ($545 million) because of currency effects. Sales of lysine, carotenoids and vitamin C as well as cosmetic raw materials, however, climbed. (company website) top
>   Tyson Foods Inc. reported fourth-quarter earnings rose 75% despite lower sales as the company reaped the benefits of changes to operations and products. The company posted earnings Monday of $147 million for the three months ended Sept. 27, up from $84 million a year ago. Tyson posted sales of $6.6 billion, compared to $5.8 billion in the fourth quarter last year. For the fiscal year ended September 27, earnings totaled $337 million compared to $383 million a year earlier. Sales for fiscal 2003 were $24.6 billion, up from $23.4 billion. (AP)  top
>  PSF Group Holdings, the parent company of Premium Standard Farms, reported results for the second quarter of its 2004 fiscal year, which ended Sept. 27, 2003. The company reported net income of $1.4 million for the quarter compared to a net loss of ($10.5 million) in the same period last year. Net sales for the quarter totaled $178 million, up 22% from the same period last year. For the first six months of fiscal 2004, PSF reported net loss of ($0.3 million) compared with a net loss of ($14.8 million) in the same period last year. Sales for the first six months of fiscal 2004 were $349 million, compared to $295 million last year, an increase of 18.5% percent. (Meating Place) top
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.
>  Heska announced plans to relocate its headquarters from Fort Collins, CO to Centerra, a 3,000 acre master-planned development in Loveland, CO.  The new headquarters will be a 60,000 square foot facility with potential to expand to 80,000 square feet to accommodate growth.  Heska expects construction on the new facility to be completed in spring of 2005.  (company press release) top
>  Sergeant’s Pet Care Products announced that it will be consolidating its packaging operations in Memphis, TN with the acquisition of a 41,000 square foot facility.  The new facility will be adjacent to the company’s existing 150,000 square foot distribution center.  The new building will be used to consolidate Sergeant’s natural and formulated pet treats.  (Pet Business) top
>  Nutro Products, Inc., has donated pet food to eight organizations caring for cats and dogs displaced by the recent Southern California wildfires. The company has stated that the support will continue as long as necessary. (Business Wire)  top
>  The American Pet Products Manufacturers Association (APPMA) announced that it is, for the first time, accepting to its membership manufacturers who exclusively produce equine products.  (Pet Business) top
> NETHERLANDS  Bestmeat Company announced the acquisition of a controlling interest in Germany’s Nordfleisch AG, and with it, the activities of NFZ Norddeutsche Fleischzentrale GmbH (NFZ). NFZ ’s operations include 10 cattle and pig slaughterhouses and 4 meat processing factories, with 2002 turnover of 1.6 billion euros.  With an annual throughput of 5 million pigs, the NFZ is Germany’s largest pig meat producer. The deal is the third major acquisition by Bestmeat in the last year and firmly places the company as the second leading meat processing company in Europe, behind Danish Crown.  The proposed take-over will be submitted to the relevant European cartel authorities for official approval.  Over the last year, Bestmeat also acquired a controlling interest Moksel, a German meat processor with annual turnover of Euro 1.8 billion, as well as taking over Dumeco, with a Euro 1.7 billion turnover. (Wattnet Meatnews)  top
>  ARGENTINA   Advanced ID Corporation announced that it has executed a joint marketing agreement with Natural Fields SA, wherein Natural Fields has distribution rights in Argentina for Advanced ID’s radio frequency identification (RFID) products for livestock identification.  Natural Fields is an affiliate of one of the largest distributors of cattle feed and veterinary products in Argentina.  Upon satisfactory results from preliminary testing, initial requirements for Argentina cattle are expected to be approximately 1 – 2 million RFID tags for the first year. Natural Fields is a major distributor throughout South America and has requested the distribution rights for Brazil, Paraguay and Uruguay, who have also acknowledged their desire to implement a livestock identification system. (Business Wire)  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
>  GERMANY   Germany has finally been declared free from highly pathogenic avian influenza. The country first found a case of the disease in a flock back in May of this year. Following the outbreak, the German government put in place a series of strict control measures to eliminate the disease. The head of the animal health division of the German ministry of Consumer Protection, Food and Agriculture has informed the World Animal Health Organization, OIE, that now further cases have been recorded and the country is clear.  From 10 November the OIE has declared the country free of avian flu. (Wattnet Meatnews)
>  US   The Senate passed and sent to the President The Animal Drug User Fee Act, designed to speed Food and Drug Administration (FDA) review of new animal drugs. The Animal Drug User Fee Act will place performance goals, or timelines, on the FDA review of new animal drug applications.  In exchange, the animal health industry will pay user fees to FDA to increase the budget used to hire reviewers and perform other tasks essential to the review process. (AHI press release)
>   US   The Senate voted 58-36 in favor of mandatory country-of-origin labeling (COOL). The vote was on a motion to table an amendment by two senators to disapprove a provision of the House Agriculture Appropriations bill that would cut off funding to implement mandatory country-of-origin labeling for meat. The appropriations bill will now go to conference with the House of Representatives with a strong message from the Senate to remove the House language.  (Meating Place)
>  US   The Senate approved a measure that would prohibit the USDA from purchasing chickens that have been treated with fluoroquinolones for the school lunch program.  The measure was approved as an amendment to the 2004 Agriculture appropriations bill. The FDA has previously proposed withdrawing fluoroquinolones in poultry. Several major chicken producers, including Tyson, Gold Kist, and Perdue, have committed to eliminating the use of fluoroquinolones in their chickens.  Similar legislation has been proposed in the House of Representatives. (AnimalNet – CSPI)      
>  US   The US and Canada rejected a European Union request to drop more than $120 million of sanctions imposed on the EU for banning imports of beef treated with growth hormones. The EU told the World Trade Organization’s disputes-settlement body it had complied with a demand it provide more scientific information to back up its ban, and so the sanctions should be lifted. But US and Canadian representatives told the WTO they did not accept that the ban had any scientific basis and that sanctions would remain. The WTO ruled against the EU in the dispute in 1998. (Drovers Alert)
>  US   Leaders from every sector of the USA’s beef industry have released industry-wide standards for best safety and management practices. The Beef Industry Food Safety Council (BIFSCo) compiled and reviewed the written practices to help the industry reach its goal of reducing and eventually eliminating E. coli O157:H7 from beef.  Funded by beef producers from the checkoff fund, BIFSCo includes cow/calf producers, feedlot operators, packers, processors, retailers and foodservice operators.  These best practices were compiled from the safety and management practices of individuals and groups who are already applying them in their own operations and making great strides in combating foodborne pathogens and other food safety issues. The beef production and processing best practices are available on the BIFSCo web-site ( as they are completed. (Wattnet Meatnews)
>  US  Research at the University of Nebraska has further confirmed that feeding or grazing livestock on genetically modified corn has no effect on performance.  The studies, which involved Bt corn for rootworms and Roundup Ready corn, evaluated performance of beef and dairy cattle and swine fed (or grazed on) GM corn for the last three years.  The bottom line was that livestock perform the same whether they are fed currently available GM corn or conventional corn.  Sixty percent of the US corn supply is fed to livestock. (AnimalNet – U. of Nebraska press release)  
>   Rabobank International announced that it has reached agreement to acquire Ag Services of America Inc., a supplier of crop production financing to primarily corn and soybean growers in the US.  Under the terms of the agreement, Rabobank will purchase 100% of the company’s shares at a 39% premium over Ag Services’ Oct. 31 closing price.  The sale is valued at approximately $47million. (Feedstuffs)  top

The next few weeks are the time when the final plans and budgets for 2004 for most companies serving the industry are determined.  Are your plans and objectives in line with the anticipated growth in the market place you serve, or are they being driven by the needs of the corporate parent?  As we’ve stated earlier, we believe 2004 could be a very good year for the industry and that we might well experience growth in excess of the average of the past few years.  We hope you’re as optimistic as we are regarding the coming months. 

We have noted in our conversations with management the past few weeks that it will be a strong employment market. You’ll need to work hard to attract and train the new staff many of you plan to add next year. It is great to hear about the increased staffing versus the rationalization and reductions that have occurred the past few years.  We wish you all the best in 2004 and look forward to being part of assisting each firm in the accomplishment of your objectives.

Have a Great Weekend.
Ron Brakke

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