Animal Health News & Notes for March 7, 2003

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Brakke Consulting’s
Animal Health News & Notes for March 7, 2003
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Doane Pet Care Company reported results for its fourth quarter and fiscal year ended December 28, 2002. The Company reported a net loss of $1.1 million for its fourth quarter ended December 28, 2002 on net sales of $246.6 million, compared to a net loss of $7.0 million on net sales of $221.5 million for the fourth quarter ended December 29, 2001. The Company reported net income of $15.3 million for the fiscal year 2002 on net sales of $887.3 million, compared to a net loss of $21.9 million on net sales of $895.8 million for the fiscal year 2001. Net sales in fiscal 2001 included $16.6 million of net sales from the Deep Run and Perham businesses prior to their divestiture in the 2001 second quarter. Excluding the divestitures from fiscal 2001, the Company’s net sales for fiscal 2002 increased 1%, or $8.1 million.  (PRNewswire)

>  PETsMART, Inc. announced results for its fourth quarter and fiscal 2002, which ended on February 2, 2003. The company reported fourth quarter net income of $24.6 million versus $29.7 million for the 14-week fourth quarter of 2001. In fiscal 2002, PETsMART generated net income of $88.9 million compared with $39.6 million for the 53-week fiscal year 2001. Included in the company’s results for the fourth quarter of 2002 was a charge of $13.2 million, net of taxes,  related to a previously announced legal settlement with certain former shareholders of Pet City Holdings, relating to PETsMART’s 1996 acquisition of Pet City, a United Kingdom pet supply chain. Net sales for the 13-week fourth quarter of 2002 were $740.5 million, compared to $737.8 million in the 14-week fourth quarter of last year. Total fiscal 2002 revenues were $2.7 billion, compared with $2.5 billion in the 53-week fiscal 2001. (Business Wire)

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Brakke Consulting Due Diligence Seminar 
Kansas City: March 11-12, 2003
LAST CHANCE TO REGISTER

There is still time to register for the Brakke Consulting Due Diligence Seminar being held next week in Kansas City.  We have room for a few additional participants.

The seminar is designed to fit the needs of companies with aggressive acquisition and licensing strategies.   It was successfully conducted in 2001 and 2002 in various US and international locations.  Registration is $1,500.

Please contact Jane Morgan at the Dallas office 972-243-4033 or by email at jmorgan@brakkeconsulting.com for further information.  You may also register for the presentation online at www.brakkeconsulting.com.

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COMPANY NEWS RELEASES

>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application filed by Phoenix Scientific.  The ANADA provides for oral use of lincomycin soluble powder for use in swine (for swine dysentery) or broiler chickens (for necrotic enteritis). (Feedstuffs)

>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application filed by ECO LLC.  The ANADA provides for topical use of 0.5% ivermectin solution in cattle for treatment and control of various gastrointestinal nematodes and other parasites.  (Feedstuffs)

>  Lifecore Biomedical, Inc. announced that it has renewed a key hyaluronan product supply agreement with its largest veterinary customer, an unnamed international distributor. The contract governs Lifecore’s exclusive manufacture and supply of a veterinary orthopedic injectable solution. The renewal extends the relationship, which began in 1994, through July 11, 2005. The contract retains the minimum purchase commitments and other features of the previous agreement and is expected to produce over $1 million in annual revenue for Lifecore. No other contractual details were provided.  (Business Wire)

>  Veterinary Learning Systems announced a cooperative relationship with The Longshore Media Group.  Over the next 24 months, The Longshore Group will represent VLS’s publications and selected services for the veterinary community.   VLS has instructed The Longshore Group to call upon and present comprehensive advertising opportunities that will directly benefit veterinary trade industries such as manufacturing, pharmaceutical and animal related companies.    (company press release)

>  Swift & Company has signed a licensing agreement with Certified Hereford Beef LLC to market the sales and production of Certified Hereford Beef products.  Officials from both companies are working together to begin sales and production of CHB by April 2003. Certified Hereford Beef was established in 1995 to market quality beef from Hereford and Hereford crossbred cattle. (Meating Place)

>  The US Justice Department ha started court proceedings against Smithfield Foods Inc. for failing to properly notify antitrust enforcers about shares it bought in IBP during attempts to buy the rival company three years ago.
The department’s antitrust division claims that Smithfield broke merger notification rules on two occasions. It is seeking penalties of more than $5.4 million.  The deals could be exempt if they “solely for the purpose of investment.” But the department said that was not the case in the Smithfield stock acquisitions.  (Wattnet Meatnews)

>  Nutreco Holding announced that the company has signed a memorandum of understanding with Genex Swine Group Inc.  in Canada to acquire a half interest in the latter and merge it into Nutreco’s Hypor swine breeding company.  Financial terms were not disclosed.  (Feedstuffs)

>  Maple Leaf Foods has selected Pyxis Genomics Inc. to develop a panel of genes that will support phase one of a traceability project. Through the development of DNA fingerprinting, the system will in future allow tracking of any pork product back to the farm where it originated. The Company expects this phase to be completed by the end of 2003, and to be fully capable of providing traceability for its products within the next 18 to 24 months. (company press release)

>  Danisco Animal Nutrition and Diversa Corporation have been granted FDA authorization to market their new phytase feed enzyme, Phyzyme XP, to the US animal feed industry.  Diversa is responsible for manufacturing, while Danisco Animal Nutrition holds exclusive worldwide marketing rights.  The product will be formally launched by Danisco Animal Nutrition to the international poultry and swine industry at the VIV Asia exhibition, which will be held in Thailand in March 2003. (AnimalNet – press release)

>  THAILAND   Rovithai Ltd, a leading producer of vitamin products, has invested more than 200 million baht ($4.7 million) to build a new factory to make vitamin pre-mixes for the feed industries in Thailand and Asia. Once completed in the third quarter, the factory will be the most modern pre-mix factory in Asia, with technology that allows customers to trace ingredient origin.  The traceability of ingredient origins is a significant issue in Thai shrimp and poultry exports to the European Union after the EU found banned chemical residues in Thai products last year. (AnimalNet – Knight Ridder Tribune)

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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

>  DENMARK   Denmark has reported its 12th case of BSE after a five-year-old dairy cow was found to be infected. The rest of the 200 cows on the farm will be destroyed next week. The farm also delivered cows to neighboring farms, which means an additional 33 animals will be destroyed.  (AnimalNet – Agence France Presse)

>  SPAIN   The number of cases of BSE recorded in Spain this year has risen to 27 following the news from the Spanish Agriculture Ministry of two new recorded cases. The two new cases were found on farms in the municipalities of Abaurrea Alta in Navarra and Mala de Montacal in Gerona.  This brings the number of cases of BSE in Spain to 238 since the disease was first discovered. (Wattnet Meatnews)

>  NETHERLANDS   The Dutch government banned all exports of poultry and related farm products after a suspected outbreak of bird flu on 7 Dutch farms near the German border. The Agriculture Ministry ordered farmers to keep chickens and other birds inside and prohibited the transport or sale of eggs, poultry or animal feed.  Dutch health officials have slaughtered more than 100,000 chickens to contain the disease. The Netherlands is a main exporter of chickens and eggs in Europe.  (AP; AnimalNet – Promed Mail)

>  JAPAN  Japan has imposed a temporary ban on poultry imports from the United States after a suspected outbreak of avian influenza in Connecticut.  The ban will be lifted once Tokyo is sure proper measures had been taken to contain the disease.  (AP)

>  US   The FDA reported finding elevated levels of dioxin in feed mixes after a supplier alerted the FDA to the problem. The agency is testing whether zinc oxide or copper dioxide is the source of dioxins.  The FDA has asked manufacturers and suppliers in 11 states to recall the premixed minerals and feed products.  The agency also is asking Canadian suppliers to recall the mixes.  (AnimalNet – CP Wire)

>  US    Phenylbutazone residues found in dairy cattle carcasses has led federal regulators to warn against using it on farm animals because it can cause toxic reactions, in some people.  The FDA has issued an order prohibiting the use of phenylbutazone in livestock. The order emphasizes regulations on the books since 1996. It still can be used on horses and dogs.  Officials have not heard of anyone getting sick from eating meat containing traces of the drug.  (AP)

>  US   United Egg Producers (UEP) is the first American livestock industry to establish animal welfare guidelines and a certification program.  The guidelines, which include increased space allowance per hen, were developed by an independent scientific advisory committee that included representatives from the United States Department of Agriculture (USDA), U.S. Humane Association, scientists and academics.  More than 80% of egg producers representing more than 224 million hens are now enrolled in the program. (Business Wire)
>  US    A national advertising campaign calling on U.S. consumers to join the fight to protect the organic standards has been announced the Organic Trade Association.  The campaign breaks today with a full-page ad in The New York Times. (PRNewswire)

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AGRIBUSINESS NEWS

>  Monsanto announced that it has received an EPA commercial registration for its new YieldGard Rootworm corn technology, which will allow commercialization of the first biotech corn designed to control rootworm.  The new corn produces its own insecticide derived from Bacillus thuringiensis, a naturally occurring soil bacterium. (Feedstuffs)

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BRAKKE CONSULTING VIEWPOINT

A few days ago, Brakke Consulting had the pleasure of presenting some of our views on the changes occurring in the animal protein production industry.  When one distills down all the data and activities, it is clear that producers and producer organizations are responding to the consumer’s desires and concerns.  Consumers are being influenced positively by the improved quality, consistency, safety and convenience they get in many of the branded fresh meat products.  

Poultry is the most advanced in the branded area, and continues to improve food safety and animal welfare in response to consumer concerns. The swine market is moving quickly towards branded products that provide many of the same benefits as poultry. 

The beef area is just beginning the process with several large programs in development.  The integration of producers and retailers from seedstock genetics to the consumer’s plate is moving rapidly.

As an input supplier, does your firm have the products and ability to serve these markets properly as they evolve?

Have a great weekend!
 
Ron Brakke

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