The Experts in Animal Health

 Brakke Consulting’s
 Animal Health News & Notes for October 31, 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.
Doane Pet Care
other news:
Large Scale Biology
Meow Mix
Multimin USA
National Beef
Novus Int’l
Phibro AH
United Agri Products
Veterinary Product Laboratories
>  Aventis reported that sales by the Merial animal health joint venture were 470 million euros ($545 million) in the third quarter of 2003, up 12% from the year-ago period on an activity basis. This includes the poultry genetics business.
>  Alpharma reported that third quarter 2003 revenues for its animal health division declined to $74 million, a decline of 13% compared to $85 million in 2002.  Revenue declines reflect increased competition in the swine and cattle segments. Sales for the first nine months of 2003 were $210 million, compared to $234 million in the comparable period in 2002. (company press release).
>  Doane Pet Care Company reported results for its third quarter and nine months ended September 27, 2003.  For the three months ended September 27, 2003, the Company’s net sales increased 12.7% to $244 million. The 2003 third quarter sales increase was primarily due to sales volume growth and the favorable currency exchange rate between the dollar and the Euro. The Company reported a net loss of ($10.6) million for its 2003 third quarter compared to net income of $2.8 million for the 2002 third quarter. For the nine months ended September 27, 2003, the Company’s net sales increased 15.2% to $738 million.  The Company reported a net loss of ($21.9) million for the first nine months of 2003 compared to net income of $16.4 million for the 2002 nine month period.  The positive impact on performance from higher sales volume was more than offset by higher commodity and natural gas costs. (PRNewswire) top
>  ImmuCell Corporation announced the results of its operations for the three and nine month periods ended September 30, 2003.  Due principally to a license termination, total product sales decreased by 43% to $745,000 and by 48% to $2,350,000 during the three and nine month periods ended September 30, 2003, respectively, in comparison to the same periods in 2002. In the fourth quarter of 2002, the Company accepted a payment of $930,000 in consideration for the early termination, effective October 1, 2002, of the Kamar product license. Excluding these sales from the 2002 results, sales of the Company’s other proprietary products (principally First Defense and Wipe Out Dairy Wipes) were essentially unchanged in the third quarter of 2003 and increased by approximately 3% during the nine month period ended September 30, 2003 in comparison to the same periods in 2002. (company website)  top
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. The report is valued at $24,500. 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
>  Smithfield Foods has completed of the acquisition of Farmland Foods, the pork production and processing business of Farmland Industries, following the approval of the sale by the United States Bankruptcy Court in Kansas City, Mo. Smithfield was the successful bidder at an auction held Oct. 12. The purchase price for the Farmland Foods business was $367.4 million in cash, plus the assumption of certain Farmland liabilities (including the pension obligations and associated assets of both Farmland Foods and Farmland Industries), with Smithfield’s agreeing to assume pension obligations valued at $90 million in the auction by the debtor. (Meating Place) top
>  The Cypress Group LLC, a private investment entity, announced that it has acquired a majority interest in Meow Mix Co. for approximately $425 million in cash.  JW Childs Equity Partners, had acquired Meow Mix from Ralston Purina in early 2002 for a reported $165 million.  Both JW Childs and Meow Mix managers will retain an equity stake in the company.  The company’s sales have grown 8% since February 2002. (Pet Food Industry)  top
>  Veterinary Products Laboratories (VPL) announced that they will launch Duralactin Equine, a new aid for equine inflammatory conditions, at the upcoming American Association of Equine Practitioners (AAEP) annual conference at the end of November.  Duralactin Equine contains the proprietary ingredient MicroLactin.  Duralactin Canine was launched successfully in January 2003. Duralactin Equine is not a drug or a steroid, but a product derived from a patented milk derivative that works differently from NSAIDs or steroids.  Duralactin Equine is a vanilla-flavored granule packaged in an 850-gram bucket.  (company press release) top
>  Large Scale Biology Corporation (LSBC) announced an exclusive collaborative agreement with Schering-Plough Animal Health (SPAH) to evaluate several vaccines for control of viral infections in animals. Under the terms of the agreement, LSBC will produce trial quantities of vaccine antigens using its proprietary Geneware biomanufacturing platform and SPAH will evaluate the vaccines for efficacy and safety in clinical models. The agreement includes a research program and, upon its successful completion, an option for a toll manufacturing agreement under which LSBC would manufacture and supply vaccine products for clinical trials and commercialization by SPAH. Financial details of the agreement were not disclosed. (Business Wire) top
> Farnam announced the addition of Next Level Hoof Fluid to its Sure Nutrition product line.  Next Level Hoof Fluid includes methionine, MSM, biotin, lysine, zinc and copper, in an easy-to-feed liquid supplement that can be top-dressed, drizzled on hay, fed in the water or administered with a dosing syringe. (company press release)   top
>  Novus International announced that it has completed negotiations to acquire the feed ingredient business of Solutia Inc., effective January 1, 2004.  The acquisition consists of those feed preservative products sold under the name Santoquin and Agrado.  Novus will own all assets of the business, including trademarks, patents, and technology.  Novus is already the exclusive worldwide distributor of Santoquin (ethoxyquin).  This acquisition positions Novus as the world’s largest supplier of ethoxyquin. (Feedstuffs) top
>  Phibro Animal Health Corporation announced  the successful completion on October 21, 2003 of a private offering of $105 million 13% senior secured notes due 2007. Proceeds from the offering were used to (1) satisfy current outstanding and future contingent obligations to Pfizer, Inc. related to the Company’s acquisition of the medicated feed additives business; (2) repurchase approximately $52 million aggregate principal amount of the Company’s outstanding 9 7/8 % senior subordinated notes due 2008; and (3) repay its domestic senior working capital credit facility and replace it with a new domestic senior working capital credit facility. (Business Wire)  top
>  National Beef, one of the nation’s largest beef packing companies, has implemented a new, natural food safety technology that will further protect consumers from harmful bacteria that may be present in meat, including E. coli O157:H7, Salmonella, and Listeria. The technology, branded under the name Activin, involves the use of an activated form of lactoferrin, a natural protein that is credited with protecting infants from bacteria while their immune system is developing. By discovering how to activate the lactoferrin molecule, scientists were able to mimic its bacteria-fighting properties on the surface of beef. The system includes an electrostatic application of Activin, followed by a water rinse to detach any remaining pathogenic bacteria from the meat surface. (Business Wire) top
>  VCA Animal Hospitals announced that local VCAs in southern California are offering free boarding for companion animals for fire victims who have been evacuated or displaced. While hundreds of local shelters have been set up to provide housing and food for affected residents, locating facilities that offer specialized care for animals has added to the stress of the situation. In order to provide a safe haven for pets and relief for their owners, VCA Animal Hospitals is offering this aid to individuals who have been displaced due to the fires throughout the crisis period. A sampling of the pets that have already received care at VCA as a result of the recent fires includes dogs, cats, turtles, rabbits and even an ostrich and a peacock. (Business Wire)   top 
>  Multimin USA announced that the US Patent Office has issued a patent for Multimin. Multimin is a mineral supplement containing zinc, manganese, copper and selenium.  The company has a significant data base of research conducted in the US and globally to demonstrate that Multimin improves trace mineral-dependent functions in the body.  Practical trials have shown economical benefit on reproduction and immune response that are statistically significant. (company press release)  top   
>  US   Commercial red meat production for the US totaled 4.01 billion pounds in September, a 3% increase compared to September 2002 production and a new monthly record. Beef production, at 2.31 billion pounds, was up approximately 5% and a monthly record high. Pork production totaled 1.66 billion pounds, and was also a monthly record high, up 2% from the previous year.  (Wattnet Meatnews)
>  US   The USDA issued the proposed rule for the mandatory country-of-origin-labeling program (as required by the 2002 Farm Bill). Along with the proposed rule, the Agricultural Marketing Service released a cost-benefit analysis that  estimates first-year implementation costs for directly affected firms in a range from $582 million to $3.9 billion.  The AMS also reviewed available studies on potential benefits of mandatory COOL and concluded that there is “little tangible evidence found to support the view that consumers’ stated preferences for COOL information will lead to increased demands for covered commodities bearing a U.S.-origin label.” The proposed final rule is likely to be a very close approximation of the actual final regulations that would be implemented, although there is an additional public comment period before these regulations become final. Copies of the proposed rule and additional information can be found at . (AnimalNet – NPPC news release)
>  US   The FDA has concluded in a report that there is no evidence that meat or milk derived from healthy cloned farm animals can harm people.  However, that doesn’t mean Americans will be eating cloned meat any time soon, according to Dr. Stephen Sundlof, the FDA’s veterinary medicine chief. The FDA wants public reaction to its assessment of cloning’s impact on the food supply before it decides if cloned farm animals will require government approval before being sold as food – a decision expected to take another year. Meanwhile, the industry has voluntarily agreed for the last several years not to allow any products from cloned animals into the food supply, a moratorium Sundlof said the FDA expects to be upheld until it settles the issue. The report was based on research by the prestigious National Research Council. (AP)
>  FRANCE  Researchers reported in the scientific journal Nature that domestic cats can be infected by the SARS virus, although there is no evidence that these pets pose any significant threat to human health.  The study involved six cats and six ferrets, which were given a dose of SARS virus that had been obtained from a Hong Kong patient who died from the virus.  Mucosal swabs and an autopsy conducted on eight of the 12 animals four days post-infection found traces of the virus in the throat and lungs, as well as typical lung lesions seen in cases of human SARS.  The other four animals were checked 28 days post-infection and found to have antibodies to the SARS virus.  Two healthy cats and two ferrets were subsequently placed with the infected animals and they in turn caught the virus. (AnimalNet – Agence France Presse) 
>  US   “Fulfillment” is the new buzzword among trendy California dog lovers, according to the Los Angeles Times. The idea is to figure out what a dog was born to do — herd, hunt, retrieve, sit decoratively on laps — and find ways to do it. Some enterprising California farmers have capitalized on the trend. For instance, some provide (for a fee, of course) a field stocked with sheep where a dog owner can let his mutt actually “embrace their destiny” by herding sheep. Many dog owners enroll their pets in recreational and sporting associations, sometimes organized by activity (obedience, therapy, search and rescue) and other times by breed. Dogs have play dates or walking dates. Dog day-care centers cater to those guilt-ridden owners who find it necessary to go to work. (Drover’s Alert)


The debate on the use of non-therapeutic use of antibiotics in animal feed has in the past few years has increased the emphasis on the possible use of “natural” products as a possible replacement.

Several years ago Brakke Consulting, Inc. issued a report on Direct Fed Microbial products and Enzymes as part of this group of natural products. We have now updated those sections and added two more — acidifiers and botanicals — to make a more complete report.
The report answers the following questions:

–  Has the increased emphasis on these products led to a dramatic sales increase? The report details sales by product group, species and global region.
–  Who are the main players involved in this business? The report profiles 17 companies who we believe hold at least 80% of the market.
–  What do producers and veterinarians think of these products? We conducted a small market survey and selected producer comments are incorporated into the report.
–  How are these products regulated? Sections on the US and European product regulations are included.
–  Just what are acidifiers used for? The report discusses obvious and not so obvious uses.
 –  What products are involved in the section on Direct Fed Microbials? The report segments products by main type and offers a commentary on each.

In total this report of 100 pages looks in depth at emerging products, trends and uses of products, and the outcomes of use these products which we now call Nutritional Growth Enhancers.
If your company currently participates in this market segment, or competes with it, we believe you will find value in the insights and direction provided in this report.
For information or orders, please call 972-243-4033 or email John Short at
>   ConAgra Foods Inc. announced the sale its farm supply business to a group led by management and a New York-based investment firm for $600 million in cash and securities. ConAgra hopes to complete the sale of United Agri Products, which produces seeds, fertilizers, pest and weed inhibitors and horticultural supply products, to the private investment firm Apollo Management before the end of the year. UAP had annual sales of approximately $2.5 billion in its fiscal year ended Feb. 28. The sale of UAP is ConAgra’s sixth divestiture in the last 13 months. Since September 2002, ConAgra has completed or announced the sale of its fresh beef and pork businesses, its poultry business, canned seafood and cheese processing divisions. (AP)  top
A number of the stories this week reflect the continued consolidation in the animal health and nutrition markets.  The future is bright for companies with a commitment to animal agriculture and a supportive parent or financial banker.  In the past few months we have been contacted by numerous investment firms looking to invest in this segment.  What a switch from 3 to 5 years ago!
As many companies are demonstrating, there are some exciting growth and profit opportunities in animal health and nutrition.  The successful companies in the next decade will be those that provide research dollars for innovation and the awareness of the changing producer and consumer attitudes toward food and pets.
This past week, Brakke Consulting completed two major industry market studies.  The first was the Distributor Effectiveness Study that was a follow-up to the 2002 Sales Force Effectiveness Study.  There are some very interesting results reported in the study to those firms that have already purchased it.
We also completed and began shipping the Nutritional Growth Enhancers study, which was highlighted in last week’s newsletter.  This is probably the longest and most comprehensive study ever done in this rapidly developing  segment of animal nutrition.  Thanks to those that have already ordered, and for those who are considering purchasing the report, today, October 31, is the last day to get the $1,000 price discount.
Happy “trick or treat” – don’t eat too much candy.
Ron Brakke
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Consulting, Inc.
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