Animal Health News & Notes for March 14, 2003

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Brakke Consulting’s
Animal Health News & Notes for March 14, 2003
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Bayer reported that year-end 2002 sales for its animal health division were 850 million euros ($891 million), a decrease of 1% over the prior year.  Operating results before exceptional items was 180 million euros ($189 million), an increase of 12% over the prior year.  The company reported that while business was hampered by the economic crisis in Argentina and lower demand for Advantage, the North American launch of Advantix K9 was a resounding success. (company website)

>  PETCO Animal Supplies reported financial results for the fourth quarter and fiscal year 2002 ended February 1, 2003. Net sales in the fourth quarter of 2002 were $405.4 million with a comparable store net sales increase of 6.0%. Overall, net sales increased 11.5% over the fourth quarter of fiscal 2001. Net earnings available to common stockholders for the fourth quarter were $19.4 million, compared with net loss available to common stockholders of $18.2 million in the prior-year fourth quarter. For the full year, net sales in fiscal 2002 were $1.48 billion with a comparable store net sales increase of 8.0%. Overall, net sales increased 13.5% over fiscal 2001.  Net earnings available to common stockholders in fiscal 2002 were $11.7 million compared with net loss available to common stockholders of ($50.5) million in the prior-year. PETCO completed an initial public offering in the first quarter of fiscal 2002. PETCO opened 61 new stores during fiscal 2002, compared with 50 new stores in fiscal 2001.  (Business Wire)

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COMPANY NEWS RELEASES

>  Vet-Kem announced that it is discontinuing production of Paramite, a product containing phosmet.  Sales to veterinary distributors will cease on March 30, but remaining inventories can be sold until supplies are exhausted.  Vet-Kem’s discontinuation of Paramite is a voluntary recall.  (DVM Newsmagazine)

>  Hill’s Pet Nutrition announced its first direct-to-consumer education initiative for its pet foods, including Prescription Diet.  The campaign will kick off this spring.  The mailing will include a check redeemable at a veterinary hospital,  to be used towards the purchase of a Prescription Diet or Science Diet pet food product. (DVM newsmagazine)

>  Vetoquinol USA announced the launch of Propalin (phenylpropanolamine) for management of urinary incontinence in spayed female dogs.  The product is available as chewable tablets or in liquid form.  (DVM Newsmagazine)

>  The University of Pennsylvania reached an agreement with Synbiotics that transfers the PennHip license back to the university.  PennHip analysis is used to evaluate dogs for hip laxity and the presence of arthritis to screen for canine hip dysplasia.  (DVM Newsmagazine)

>  ImmuCell Corporation announced the sale of its 50% interest in the joint venture, AgriCell Company, LLC, to DMV International Nutritionals for $1.1 million.  AgriCell was formed in 1996 between ImmuCell and Agri-Mark, Inc., New England’s largest dairy cooperative, to produce and sell lactoferrin. Lactoferrin is a nutritional protein that is purified from milk whey. In 2001, ImmuCell entered into an option agreement with DMV under which DMV invested in the joint venture and evaluated its operations with an option to purchase ImmuCell’s interest. DMV paid ImmuCell $100,000 for this option in 2001. (company website)

>  The FDA announced that BASF Corp. has filed a petition proposing that the food additive regulations be amended to provide for the safe use of conjugated linoleic acid in animal feed. (AnimalNet – Federal Register)

>  Degussa AG announced that it will reorganize its food and feed activities. The feed additives business unit will be incorporated into the fine and industrial chemicals unit starting April 1, 2003. The main reason for the shift is that differences between the food and feed markets made it difficult for the company to pursue synergistic potential. The pre-products that feed additives share with fine chemicals may make the group fit better in that division. (Watt Feed E-news)

>  Kemira Agro, a Finnish chemicals multinational selling animal nutrition and fertilizer products, announced that it has changed its name to Kemira GrowHow. The company adopts this change to emphasize its 80-year tradition of serving the food chain and its renewed commitment to becoming a preferred partner in the food chain. (Watt Feed E-news)

>  Pet Supermarket, the nation’s largest independently owned pet specialty store, opened the doors to its 95th store.  Pet Supermarket is headquartered in Florida. Pet Supermarket continues to grow and expand, adding stores and markets on an ongoing basis. (Business Wire)

>  Focus Technologies announced the April 2003 availability of laboratory reagents for detecting West Nile Virus antibodies using a recombinant protein antigen licensed from the Centers for Disease Control and Prevention (CDC).  Human testing was performed mainly at public health departments and at Focus Technologies’ reference laboratory in California, where over 35,000 specimens were tested.  To expand WNV testing access throughout the US, Focus Technologies will manufacture and distribute ELISA Flavivirus (WNV) reagents in 2003 to public health departments and to commercial laboratories and hospitals.  Focus plans to submit an application to the FDA for Flavivirus (West Nile) ELISA diagnostic kits once the data from formal clinical trials is complete in Summer 2003. In addition, Focus Technologies will continue to perform WNV testing in its reference laboratory using the same products now available to other laboratories.  (PRNewswire)
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ANIMAL AGRICULTURE ALLIANCE ANNOUNCES STAKEHOLDERS SUMMIT       MAY 12 – 14, 2003

The Animal Agriculture Alliance announced its second industry-wide Stakeholders Summit.  This two-day conference, “Challenges to the US Animal Protein Businesses: Domestic and International Responses, Risks and Repositioning,” is scheduled for May 12th – 14th at the Hyatt Regency Hotel, Crystal City, Virginia. In cooperation with Brakke Consulting, Inc. and Rabobank International, the Summit is targeted at senior management of all companies involved from “farm to fork.”  Summit registration and hotel information is available on the Alliance website at http://www.animalagalliance.org/main/home.cfm?Section=2nd%20Summit%202003&Category=ConferencesEvents. 

The Animal Agriculture Alliance is a broad-based coalition of individual producers, producer organizations, private industry, packer-processors and retailers, whose mission is to support and promote animal agriculture practices that provide for farm animal well-being through sound science and public information.

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ANIMAL HEALTH NEWS

>  NETHERLANDS   Dutch authorities have discovered the first farm suspected to be infected with avian influenza outside the original contaminated zone.  Exports have been banned from the Dutch poultry sector, which has around 100 million birds, since the outbreak was discovered last week The area around the new farm near the southwestern coast is not a main agricultural region, with only seven other farms within 10 km of the suspected one. (AnimalNet – Reuters)

>  BELGIUM   The European Commission has reinforced the control measures already put in place by Belgian authorities, following a possible outbreak of avian influenza.
Suspicion of an outbreak of avian influenza in the province of Antwerp, close to the Dutch border, arose on March 11.
The Belgian authorities, in co-operation with the European Commission services, immediately put in place measures to prevent the spread of the outbreak. (Wattnet Meatnews)

>  US   Connecticut agriculture officials are investigating a possible avian influenza outbreak at an Eastern Connecticut egg farm that has led to the quarantine of 4.7 million birds.
Samples from the farm have been sent to a diagnostic laboratory in Iowa and results are expected soon. The particular strain suspected is considered a low-grade pathogen and in some cases is not fatal to chickens. (Meating Place)

>  US   A new industry trade association, the American Lamb Board, officially debuted this week at the Annual Meat Conference in Atlanta, launching marketing activity to increase market share for US lamb meat.  The board is comprised of 13 lamb industry representatives and funded through a check-off.  Initial marketing efforts will be geared toward educating consumers that American lamb offers larger, more tender and milder cuts of meat. Initial check-off marketing activities will kick-off in April with an Easter and Passover media relations’ initiative. (Meating Place)

>  US   The National Chicken Council (NCC) and several other agricultural groups have filed lawsuits concerning the EPA’s new regulation on Concentrated Animal Feeding Operations (CAFOs).  Environmental advocacy groups have also filed lawsuits.  The NCC lawsuit was filed for the purpose of securing the industry’s legal rights in what is expected to be multi-faceted, multi-party litigation concerning the regulation.  Environmental protection is already well established in the broiler industry, with more than three-quarters of the nation’s chicken farmers either having implemented nutrient management plans or in the process of developing them. (AnimalNet – NCC press release)

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AGRIBUSINESS NEWS

>  Certis U.S.A. L.L.C., a subsidiary of Mitsui & Co., Ltd., announced the divestiture of its public health biological larvacide, Teknar, to Valent BioSciences.  Under the agreement to sell its Teknar brand products to Valent, Certis USA transfers its Bacillus thuringiensis israelensis strains, patents, trademarks, registrations, manufacturing process, R&D programs and customer contracts. In addition, Certis USA grants Valent BioSciences exclusive worldwide rights to market to forestry markets its Thuricide biological insecticide, which controls Lepidopteran (worm) pests, such as gypsy moth and spruce budworm. Certis USA will continue to manufacture both Teknar and Thuricide for Valent.  (Business Wire)

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BRAKKE CONSULTING VIEWPOINT

The news within the industry continues the trend of product line and technology consolidations to improve the efficiency of marketing to the customer. We believe this will continue because the industry pipelines for new technology are limited and this puts pressure on management to create both top and bottom line performance from products already on the market.  We’ve been saying for some time that companies need to continue to support what would have been considered “old products” a few years ago.  These products may be all many of you will have to market for the next few years.

Thanks to all of the participants at the Brakke Consulting Due Diligence Seminar in Kansas City earlier this week.  We hope this training session improves your success in the evaluation of company, product line and technology acquisitions and divestitures.  It was a great group and we appreciate your contributions to a successful meeting.

Have a great weekend:
 
Ron Brakke

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