The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for July 25, 2003
Copyright © Brakke Consulting, Inc.

>  Pfizer reported that second quarter 2003 sales for its animal health division increased 40% to $383 million.  Pfizer completed its acquisition of Pharmacia on April 16, 2003.  Using the combined sales for the two companies in the second quarter of 2002, sales declined 3%.  Sales for the first half of 2003 were $652 million, an increase of 27% over Pfizer’s 2002 sales. (company website)

>  Wyeth reported that second quarter 2003 sales for its animal health division Fort Dodge were $214 million, a 10% increase compared to the second quarter of 2002.  First half sales were $396 million, an 11% increase compared to the comparable period in the prior year.  The increase in revenues was primarily due to domestic sales of its West Nile Innovator vaccine for horses. (company website)

>  Eli Lilly reported that second quarter 2003 sales of its animal health division Elanco were $166.5 million, an increase of 3% compared to the second quarter in the prior year.  (company website)

>  Novartis reported that first half 2003 sales of its animal health division were $339 million, an 8% increase over the first half of 2002.  Sales for the second quarter were $182 million.  New products rolled out since the beginning of the year contributed five percent to total sales.  (company press release)

>  Schering-Plough reported that second quarter 2003 sales of its animal health division were $171 million, flat compared to the comparable quarter in 2002.  First half sales were $313 million, down 3% compared to the first half of 2002. (company website)

>  Virbac SA reported that turnover for the second quarter 2003 were 95 million euros ($109 million), a 1% increase over the second quarter of 2002.  Turnover for the first half of 2003 was 184 million euros ($210 million), flat compared to the first half of 2002.  Real growth accelerated in the second quarter, with all geographic areas and business segments contributing.  The company reported 9.2% growth at constant perimeter and exchange rates for the second quarter of 2003. (company website)

>  IDEXX Laboratories, Inc. reported that revenue for the second quarter of 2003 increased 15% to $121.8 million from $105.7 million for the second quarter of 2002. Net income increased 29% to $16.7 million for the quarter ended June 30, 2003.  Companion Animal Group (CAG) revenue for the second quarter of 2003 increased 17% to $98.8 million, primarily from increased sales of instruments and consumables and increased sales of rapid assays and laboratory services. Food and Environmental Group (FEG) revenue for the second quarter of 2003 increased 9% to $23.1 million primarily due to increased sales of water testing and production animal diagnostic products. Year-to-date revenue increased 14% to $231.1 million from $202.2 million for the same period in 2002. Net income increased 43% to $28.8 million for the six months ended June 30, 2003, from $20.1 million for the same period in 2002. (company website)

>  Alpharma reported that second quarter 2003 revenues for its animal health division declined to $68.8 million compared to $78.4 million in 2002.  Revenue declines reflect increased generic competition in the swine and cattle segments.  Operating margins declined to 4.4% compared to 8.8% in last year’s second quarter reflecting lower prices. (company press release)

>  Colgate-Palmolive reported second quarter 2003 sales at Hill’s Pet Nutrition. Dollar sales increased 11.5% and unit volume grew 4.5% in the second quarter. Dollar operating profit increased 5% after record levels of commercial and media investment during the quarter and on top of a very strong performance in the year ago period.  In the first half, Hill’s sales and operating profit excluding exchange rose 8% and 10%, respectively. (company website)

>  VCA Antech, Inc. reported financial results for the second quarter ended June 30, 2003 as follows: revenue increased 12.9% to a second quarter record of $132 million, and net income increased 46.3% to $15.4 million.  The Company also reported the financial results for the six months ended June 30, 2003 as follows:  revenue increased 11.9% to a record $248 million and net income increased to $20.5 million from $16.1 million in 2002.  The laboratory division increased revenues by 15.0% for the second quarter of 2003, while the animal hospital division increased revenues by 12.5% (company press release)

>  Neogen Corporation announced results for its 2003 fiscal year, which ended May 31. FY 2003 revenues were $46.5 million, compared to revenues of $41.1 million in Neogen’s previous fiscal year. Operating income increased 23% in FY 2003 to $6.8 million. Fourth quarter revenues were $12.2 million, a record fourth quarter for the company, compared to fourth quarter revenues of $11.0 million in the prior year. (company website)


In the past year or two, the exhibit halls at veterinary conferences have seen a proliferation of veterinary compounding pharmacies.  In response to frequent questions about this topic, Brakke Consulting will be conducting a study of the phenomenon of veterinary compounding.  The study will answer questions such as
– what do veterinary compounders offer?
– what types of companies are offering compounding services?
– how many and how big are they?
– how frequently are veterinarians using compounding services?
– are there differences in veterinary usage between equine and small animal practitioners?
– are veterinary compounders taking business away from traditional pharmaceutical manufacturers?
The study is available at a price of $3,250 and will begin shipping Monday, July 28.  For more information, please call 972-243-4033 or email .
>  The FDA amended the animal drug regulations to reflect approval of a supplemental new animal drug application (NADA) filed by Merial, Ltd. The supplemental NADA provides for the addition of several new species of internal parasites to product labeling for ivermectin paste for horses. This action is being taken to ensure accuracy and clarity in the agency’s regulations.  (AnimalNet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Phoenix Scientific, Inc. The ANADA provides for the use of gentamicin sulfate, betamethasone valerate, and clotrimazole ointment for the treatment of canine otitis externa. (AnimalNet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of a supplemental abbreviated new animal drug application (ANADA) filed by Cross Vetpharm Group Ltd. The supplemental ANADA provides for a new pouch size of oxytetracycline hydrochloride soluble powder used to make medicated drinking water for swine. (AnimalNet – Federal Register)

>  Quantum Genetics, Inc. and Merial Limited announced they have entered into a Global Marketing Agreement. The agreement provides Merial with exclusive rights to market Quantum’s new patent-pending DNA test to determine an animal’s leptin genotype, as well as the application of this knowledge. The leptin protein is demonstrated to be a major determinant of feed intake and energy balance in beef and dairy cattle. The test helps to determine an animal’s genetic propensity to “marble”, a driving determinant of beef quality grade in North America, and also helps to determine an animal’s genetic propensity for increased milk production. Quantum and Merial will be collaborating to recommend best practices to beef and dairy producers for gaining efficiencies of production while marketing wholesome product with superior quality characteristics. (company press release)

> Monsanto has filed a civil suit against Oakhurst Dairy Inc. for allegedly using misleading claims in its product labeling and advertising to consumers.  Monsanto is seeking to prevent Oakhurst from using the statement “Our Farmer’s Pledge: No Artificial Growth Hormones” on the labels of its milk and milk products, or in any of their commercial advertising or promotion.  The action would also prohibit Oakhurst from stating or implying that there are health or safety risks or any differences in quality associated with milk from cows supplemented with recombinant bovine somatotropin.  Oakhurst is a family-owned dairy that grossed about $85 million in its most recent fiscal year.  (Feedstuffs)

>  In the midst of the uncertainty over vaccination schedules, Merial has introduced canine and feline vaccine charts that offer suggested vaccination protocols based on the individual lifestyle and the risks associated with that lifestyle. The charts will help veterinarians make educated decisions when choosing a vaccine protocol that is best for a particular patient. Merial’s vaccine charts are divided into five lifestyle categories for both canines and felines. The categories and their accompanying descriptions were created by Dr. Craig E. Greene, D.V.M., M.S., Diplomate A.C.V.I.M., College of Veterinary Medicine at the University of Georgia. They range from the high-risk outdoor dog and cat, which probably should get annual core vaccinations, to those pampered canines and felines who rarely come in contact with other dogs or cats. (company press release)

>  Tyson Foods announced that it has signed an exclusive license with Active Life Foods Inc, and Active Life Pet Products Inc. to produce and market cartilage products that deliver a natural source of glycosaminoglycans, including chondroitin sulfate and glucosamine.  These ingredient products will be marketed to manufacturers of human supplements as well as to suppliers of pet foods and supplements.  Active Life developed the technology and created the initial market.  Tyson will now assume responsibility for sales to existing customers and develop additional customer, as well as producing processed cartilage. Financial terms were not disclosed. (Feedstuffs)

>  Only days after announcing its planned purchase of Farmland Foods’ pork business, Smithfield Foods announced the acquisition of Global Culinary Solutions, Inc. and the formation of the Smithfield Innovation Group to develop new products for customers in retail, club store, and foodservice channels. Financial terms were not disclosed. Global Culinary Solutions is an integrated food product development, manufacturing, and marketing company headed by Michael J. Brando, a certified master chef with over 30 years of experience in culinary arts. Brando will assume the role of president of the Smithfield Innovation Group. (Meating Place)

>  Italy-based The Classica Group Inc., reported that its United States subsidiary, Classica Microwave Technologies, would seek a US patent for its process for sanitization of ground beef. The Classica Group’s proprietary process involves processing ground beef under pressure in a bulk, non-packaged format through a three-stage microwave heat treatment process. According to the company, this process has been successfully tested and proven to eliminate Salmonella and E. coli O157:H7.
(Meating Place)

>  PETsMART’s first national “yappy hour” promotion was a great success, according to the company.  The event was held in all 600 PETsMART stores on June 3 between 6 and 8 pm.  Although individual stores had held similar events in the past, this marked the first time all stores in the chain held such an event together.  (Pet Product News)

>  CANADA   Plantigen Inc. announced it has signed a collaborative research agreement with Dow AgroSciences Canada Inc.  The research agreement is focused on plant-made antigens that prevent auto-immune disease in companion animals.  The collaboration will build on Plantigen’s intellectual property and expertise in immune modulation using mammalian proteins derived from plants. (AnimalNet)


The annual AVMA convention concluded this week in Denver.  The conference had a total registration of 9,430, with 4,582 veterinarians registered; that figure was 1,200 more than any prior meeting.  There were 380 veterinary students, 520 techs, 98 and 762 foreign registrations. There was heavy activity in the exhibit area most of the time, and those companies that were exhibiting were extremely pleased with the traffic at the conference.

>  EU   The EU Commissioner for Health and Consumer Protection has welcomed the final adoption, at the Agriculture Council, of an EU Regulation controlling the use of additives in animal feed. The new Regulation will strengthen the control of all types of additives in animal feed, but in particular it completes the EU’s drive to phase out antibiotics as growth promoters. The Regulation will come into force later this year, once it has been published in the EU’s Official Journal. The EU has already banned antibiotics used in human medicine from being added to animal feed. The new Regulation completes this ban on antibiotic growth promoters in feed by prohibiting the use of four substances: monensin sodium, salinomycin sodium, avilamycin, and flavophospholipol.  (Wattnet Meatnews)

>  US   US Senator Olympia Snowe, R-Maine, will join Senator Edward Kennedy, D-Mass., in introducing a bill to ban eight antibiotics commonly used in agriculture to promote the growth of poultry and livestock. Snowe is the first Republican to endorse the measure, which is a revision of a bill that failed last year. The bill would phase out the routine, non-therapeutic use of the antibiotics in agriculture over two years. (Pork Alert)

>  CHINA   China has agreed to upgrade its vaccination program for chickens exported to Hong Kong to ensure birds are not infected with avian influenza. Every shipment of birds from mainland China into Hong Kong now must come from a registered farm and have a health certificate. The immune status of birds will be monitored, with H5 antibody tests conducted randomly. Vaccinated birds will start appearing in Hong Kong before the end of the year. (Meating Place)
>  CANADA   The Canadian Agriculture and Agri-food Minister and the Canadian Health Minister announced an additional measure to enhance existing food safety controls regarding bovine spongiform encephalopathy (BSE).
This new measure requires that specified risk materials (SRM) be removed from cattle at slaughter. This policy takes into account current science and the recommendations of the international team that examined the investigation into Canada’s single case of BSE. (Wattnet Meatnews)

>  US   Through the formation of BeefOrigins, LLC, beef producers in South Dakota will now be able to expand their marketing opportunities and satisfy pending regulatory requirements by identifying and tracking individual calves.  The BeefOrigins service provides cattle producers with simple and cost-effective options for individual animal identification, production data collection, and reporting services.   BeefOrigins will offer an animal ID and tracking system that will allow for either manual or automated data collection.  The service will be active beginning August 1, 2003.  (company press release)

>  US   A testing company called will begin including pet products containing glucosamine, chondroitin, MSM and SAMe in its Joint Supplement Review Series, expected to be published before the end of the year.  The company tests health products to verify that they contain the amount of ingredients their labels claim.  This will be ConsumerLab’s first venture into pet products.  (Pet Product News)

>  US   This fall, New Jersey may become the first state to enact statewide humane-livestock standards. The proposed rules come from a 1996 state law calling for humane treatment of farm animals, but the state just now has the funds and resources to create the rules. The standards address humane raising, care, treatment, marketing and sale of farm animals, and would apply to all livestock operations including those owning just one animal. Regulations include standards for animal weight, require protection from the elements, mandate that penned animals be able to move around and be on surfaces that do not cause injury. A comment period ended earlier this month, and final rules are expected later this year. (Pork Alert)

>  JAPAN   Secom, Japan’s largest home and office security provider, plans to use a satellite-based GPS system and mobile phone networks to track lost pets.  A sensor attaches to the animals collar or harness.  Dog owners can locate their missing pet within 164 feet by typing in a username and password on a website, or by placing a phone call to Secom.  The technology is similar to a service offered for tracking young children, the elderly and missing automobiles.  (Pet Product News)


Congratulations to Dr. Bruce Little and the staff at AVMA on the meeting in Denver this week. If you were not there, you missed a great meeting. Be sure to include next year’s meetings in your plans.

There are some very positive 2nd quarter financial reports from several of the leading companies.  Congratulations to all of you that achieved or exceeded your objectives. There were some great performances in a period that was not uniformly positive for the industry. 

During the past few days we’ve visited with several of the leading distributors. These interviews resulted in some very positive numbers. At least two reported to us that their sales have grown by more than 20% the first 6 months, and others reported sales growth in excess of 10%.   This type of increased revenue performance is good for the industry.  The last 6 months will have additional challenges to be overcome but with the current momentum, we believe the increase in sales for 2003 will exceed that reported in recent years. 

Have a great weekend.

Ron Brakke

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