Animal Health News & Notes for April 25, 2003

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Brakke Consulting’s
Animal Health News & Notes for April 25, 2003
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Pfizer reported that Animal Health sales for the first quarter 2003 increased 13% in the period to $269 million, as both the livestock and companion animal businesses recorded revenue growth in excess of 10%. This figure does not include the Pharmacia animal health sales.  (company website)

>  Wyeth reported that first quarter sales of its animal health division Fort Dodge increased 13% for the 2003 first quarter to $182 million. The increase in sales of animal health products was due primarily to higher domestic sales of the company’s West Nile Innovator biological vaccine for horses. Excluding the impact of foreign exchange, worldwide animal health product net revenue increased 11% for the quarter. (company website)

>  Eli Lilly reported that first quarter 2003 sales for its animal health division Elanco were $173 million, an increase of 3% compared to the first quarter of 2002.  Excluding the effect of exchange rates, sales increased by 1% for the quarter. (company website)

>   Alpharma reported that first quarter 2003 revenues for its animal health division declined 5% to $67 million compared to $71 million in 2002.  Revenue declines reflect decreased poultry demand and increased competition in the swine and cattle segments.  Operating margins increased to 3.9% compared to 2.8% in last year’s first quarter, reflecting cost reduction activities. (company press release)

>  IDEXX Laboratories, Inc. reported that net income increased 68% to $12.1 million for the quarter ended March 31, 2003. Revenue for the first quarter of 2003 increased 13% to $109 million from $97 million for the first quarter of 2002.  Companion Animal Group (CAG) revenue for the first quarter of 2003 increased 15% to $88 million from $76 million for the first quarter of 2002. (company website)

>  Nestle reported that first quarter sales of its petcare division declined 0.4% to CHF 2,257 million ($1,650 million). (company website)

>  VCA Antech, Inc. reported financial results for the first quarter ended March 31, 2003 as follows: revenue increased 10.8% to a first quarter record of $116.0 million; operating income increased 15.9% to $23.5 million; and net income decreased to $5.2 million from $5.6 million in 2002.  During the first quarter of 2003, the company incurred an after-tax charge of $4.4 million for costs incurred in connection with the early payoff of its 15.5% senior notes.  Excluding the impact of this charge in the first quarter of 2003, net income would have increased 69.6% to $9.6 million from 2002.  (company press release)

>   ImmuCell Corporation announced the results of its operations for the three months ended March 31, 2003.  Total revenues decreased by 41% to $1.1 million compared to the same period 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 a license to a product that had generated sales of $727,000 during the three months ended March 31, 2002. Net income of $701,000 during the three months ended March 31, 2003, increased by 315%, or from the same period in 2002. (Business Wire)

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BRAKKE CONSULTING EXECUTIVE RECRUITING SERVICES

Since 1986, Brakke Consulting, Inc. has successfully assisted many clients in finding and employing exceptional employees at all levels, in the many departments of animal health, pet, veterinary and specialty chemical companies.   In the past three years alone, we have filled over 75 positions in the markets we serve. We have a unique consulting and search agreement program that we feel fits the industries we serve more appropriately than the standard retainer search. With Brakke Consulting’s insights and experience in the markets you serve, we can pre-qualify candidates, permitting clients to choose from a few of the best applicants instead of interviewing dozens of candidates.  Our approach increases the efficiency and effectiveness of our clients’ Human Resources Departments.  For more information on our Search process and the positions we have filled recently please contact any of our offices or www.BrakkeConsulting.com

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COMPANY NEWS RELEASES

>  As part of the merger between Pfizer and Pharmacia, the Federal Trade Commission required that Pfizer sell Pharmacia’s mastitis products and renegotiate a Novartis-Pharmacia license for canine arthritis products.  The canine arthritis license, currently a partnership, will be rewritten so that Novartis will be an independent operator rather than a partner.  (Feedstuffs)

>  Veterinary Pet Services, Inc. (VPSI), the parent company of Veterinary Pet Insurance Company (VPI) and its subsidiary, DVM Insurance Agency, announced the completion of two separate equity investments, resulting in gross proceeds of  $15 million.  Scottsdale Insurance Company, a wholly owned subsidiary of Nationwide Mutual Insurance Company, purchased an additional 750,000 shares of VPSI’s common stock at $12 per share for a total of $9 million. The additional investment maintains Scottsdale’s majority ownership stake in VPSI at 60.8%.  The Iams Company purchased 500,000 shares of VPSI’s common stock at $12 per share for a total of $6 million. Iams now owns an 8.9% stake in VPSI. Of the total $15 million in investments, $11 million will be used to increase VPI’s statutory capital and surplus.  The surplus contributions strengthen VPI’s financial base and will help support future growth opportunities. (company press release)

>  Smart Drug Systems Inc. announced it has entered into an agreement with Daiichi Fine Chemicals, Inc., for the marketing and distribution in the USA and Canada to launch Extend-A-Cool for the treatment of tendonitis in horses. The product is a therapeutic transdermal cooling system resulting from many years of research on transdermal delivery systems.  Extend-A-Cool consists of a cotton sheet with a proprietary silica gel matrix, impregnated with water, and  provides an evaporative cooling affect that is sustained for up to six hours. Financial terms were not disclosed.  (company press release)

>  On April 9, 2003, Synbiotics was notified by Agen Biomedical, Ltd. that Agen was terminating its supply agreement with Synbiotics due to Synbiotics’ alleged breach of contract. Agen currently manufactures certain Synbiotics Witness in-clinic diagnostic products including canine heartworm, feline leukemia, feline heartworm and canine parvovirus. These Witness products represent a significant percentage of Synbiotics’ sales. Based on discussions with its legal counsel, Synbiotics notified Agen that Agen does not have the right to terminate the Agreement. Synbiotics is attempting to amicably resolve the dispute with Agen. (Business Wire)

>  AUSTRALIA   Novus International and Nutrition Specialties announced the merger of operations of both companies into a new entity, Novus Nutrition Pty Ltd.  Nutrition Specialties is a leading supplier of nutrition and specialty products to Australia and New Zealand.  Both companies are majority-owned by Mitsui & Co. Ltd.  (Feedstuffs)

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ANIMAL AGRICULTURE ALLIANCE STAKEHOLDERS SUMMIT  MAY 12-14, 2003

There is still time to register for the second industry-wide Stakeholders Summit, sponsored by the Animal Agriculture Alliance.  This two-day conference, “Challenges to the U.S. Animal Protein Businesses: Domestic and International Responses, Risks and Repositioning,” will be held May 12–14, at the Hyatt Regency Crystal City Hotel in Arlington, Virginia.  In cooperation with Rabobank International and Brakke Consulting, Inc., the Summit is targeted at senior management of all companies involved from “farm to fork.” 

For registration prior to April 19th, the cost for attendance is $375 per person, or $350 per person for more than one attendee from the same organization.  After April 19th, the cost is $425 and $400 respectively.  Registration for the Summit can be made securely via the Alliance website at www.AnimalAgAlliance.org.

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ANIMAL HEALTH NEWS

>  NETHERLANDS   Dutch authorities will destroy an additional six million chickens in an effort to isolate a severe outbreak of avian influenza and create a buffer with neighboring countries. To date, the latest Dutch outbreak of avian influenza has infected 234 farms, and another 24 are suspected of contamination. More than 18 million chickens, nearly 20% of the country’s poultry, have been culled since the outbreak began in February. (Meating Place)

>  BELGIUM   A spokesman for the food safety agency AFSCA reported that two new suspected cases of the avian influenza have been discovered in Belgian farms near the Dutch border, and that all poultry within a three kilometer radius of the affected farms would be slaughtered. This could amount to 270,000 birds on top of the 250,000 Belgium has already slaughtered after a first case was discovered last week. (AnimalNet – Reuters)

>  US   The USDA announced it will provide $4 million in new funding to assist state wildlife agencies address concerns over chronic wasting disease (CWD).
The funding is the latest in a series of steps USDA has taken to aid states in managing CWD concerns. The department began a CWD surveillance, depopulation and indemnity program in September 2001, formed a joint working group to ensure coordinated and cooperative federal approach to disease management and recently increased APHIS surveillance capacity and the number of laboratories certified to test for CWD.  (Wattnet Meatnews)

>  US   Nymox Pharmaceutical Corporation has developed NXC-4720, a novel antibacterial product which targets an important pressing need for the public and for the meat industry. Recent studies have shown that treatment with NXC-4720 cleared infected beef of E. coli O157 contamination and helped prevent further E. coli contamination. (Business Wire)

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BRAKKE CONSULTING VIEWPOINT

Have you and others from your firm registered for the ANIMAL AGRICULTURE ALLIANCE STAKEHOLDERS SUMMIT?  If you have not, let me encourage you to do so now!! Yes, I hate to be a pest, but it is too easy to let someone else carry the ball on Industry Issues.  In most meetings I attend with managers of the animal industry, I find the issues that will be covered at this Summit of concern to many of you. So I know there is a high level of interest in where animal agriculture is headed.

Is your firm’s well being dependent on the health of the animal agriculture?  Is your company participating in the resolution and improvement of the industry in a positive manner? Or are you sitting on the fence and your pocketbook hoping others will solve the issues, so your firm can benefit?  

Yes, I know there are lots of other meetings to attend in May and vacation is right around the corner. However, what other meeting can you attend that will have the following quality speakers in one place:  Ann Veneman, Secretary of Agriculture; Dr. Stephen Sundlof, Director of the Center for Veterinary Medicine; Mary Neal, Associate Commissioner, AQI Policy and Program, Customs and Border Protection (CBP), Department of Homeland Security; Dr. J. B. Penn, Under Secretary Farm & Foreign Agricultural Services; and Ken Parnell, VP Meat/Seafood Division, Wal-Mart, just to name a few.

A great deal of thought went into developing the theme for the Summit: “Challenges to the U.S. Animal Protein Businesses: Domestic and International Responses, Risks, and Repositioning.”

Brakke Consulting is pleased to participate as one of the sponsors of this Summit. It has been designed for senior management of all companies involved in animal protein production from the “farm to fork”.  We believe that participants will come away from the Summit with new insights and thoughts related to their firms’ participation in the industry. We would hope every company would have several attendees at the Summit.  We’re trying to do our part to support the industry, now it is time for you to do yours. Please register yourself and others today if you’ve not already done so.  We can make a difference.

Have a great weekend.

Ron Brakke

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