Animal Health News & Notes for September 13, 2002

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Brakke Consulting’s
Animal Health News & Notes for September 13, 2002
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  H.J. Heinz reported results for the first quarter ended July 31, 2002.  Sales in the U.S. Pet Products and Seafood segment decreased 10.3%. Volume decreased 7.7% primarily in pet snacks, canned cat food and dry dog food partially offset by volume increases in tuna. (Business Wire)

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COMPANY NEWS RELEASES

>  Pfizer announced that Rimadyl caplets have been approved by the FDA for use in controlling postoperative pain associated with both soft tissue and orthopedic surgery in dogs. This means the leading veterinary pain reliever in the United States can now be administered before and after surgery to manage pain. The dosage and administration of Rimadyl for perioperative pain is the same as that for osteoarthritis pain and inflammation. (company news release)

>  Bayer A.G., parent company of Bayer Animal Health, announced it will cut 4,700 more jobs, or 3.7% of its global work force, by 2005, citing the company’s restructuring efforts and the weakness of the global economy. A Bayer statement said that 40% of the jobs targeted for elimination will be in Germany but did not specify where the rest of the cuts would be made.  The latest cuts come on top of 10,300 job reductions over the next four years that Bayer previously announced. (AP)

>  The FDA amended the animal drug regulations to reflect approval of a supplemental new animal drug application (NADA) filed by Fort Dodge Animal Health. The supplemental NADA provides for veterinary prescription use of a sustained-release injectable moxidectin formulation (ProHeart 6) for treatment of existing hookworm infections in dogs. (AnimalNet – Federal Register)

>  Vets Plus announced a strategic alliance with Chr. Hansen to exclusively manufacture and market Probios microbial packaged products.  The agreement provides for the use of Chr. Hansen’s proprietary strains of beneficial bacteria in Vets Plus’ manufacturing of current Probios packaged goods and future product developments. (Feedstuffs)

>  Biomune has received a conditional approval from the USDA for a vaccine to protect turkeys from a new virus, avian pneumovirus, which is threatening turkey flocks with serious respiratory infection. The virus arrived in Minnesota and surrounding states in 1997.  The vaccine technology was licensed by Biomune from the University of Minnesota.  (AnimalNet – Knight Ridder Tribune)

>  Heska announced that its application to transfer the trading of its common stock to the NASDAQ SmallCap Market has been accepted effective September 16.  The company will continue to trade under the symbol “HSKA.” (company press release)

>  Dozens of pork producers have filed suit against Tyson Foods Inc., alleging the meatpacking giant abandoned them in a recent restructuring.  Tyson announced last month that it would close its company-owned and leased hog farms and end contracts with 132 contract hog producers in Arkansas and eastern Oklahoma.  Tyson said transportation costs were a big factor in the decision to carry out the restructuring; competing companies have pork processing operations closer to packing facilities, avoiding higher transportation costs for both finished hogs and grain.  (AP)

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ANIMAL HEALTH NEWS

>  EUROPE   The European Commission has said that vaccination must be a priority option to tackle future outbreaks of animal disease, in a move seen as a rebuff to the British government, which rejected vaccination and opted for a controversial mass slaughter policy in a bid to eradicate last year’s foot-and-mouth disease outbreak. The UK Agriculture Minister told a European Parliamentary inquiry hearing that the Government had done its “level best” to cope with the outbreak and was ready to learn the lessons and collaborate with other EU countries to prevent any repeat of the appalling consequences of the epidemic. The Commission is of the view that emergency vaccination should be moved to the forefront of the response mechanism in the event of future outbreaks. (AnimalNet – PA News)

>  US   The FDA proposed guidelines for animal drug makers that suggest procedures the drug manufacturers could use to determine whether new animal antibiotics would contribute to the escalating problem of drug-resistant bacteria. The FDA is seeking comments from the public on its proposed guidelines. (AP)

> US   Frontier Beef Systems LLC and GeneSeek Inc. have signed an agreement to provide state-of-the-art, affordable genetic services to the North American beef industry. The companies will offer tissue sample storage and DNA-based testing services to producers, branded beef companies, packers, cooperatives and alliances.  The initial product list includes SireTRACE parentage identification, DoubleBLACK homozygous black test, GeneSTAR Marbling test, and SureTRAK traceability and source verification for the meat production chain (PRNewswire)

>  US   To help the ailing pork market, the USDA will purchase up to $30 million of pork products for use in school lunch and nutrition programs, according to USDA secretary Ann Veneman.  The USDA has already purchased 13.8 million pounds of pork products this school year. The new purchases could bring the total up to 66 million pounds of fresh and processed pork products. That compares to 29.9 million pounds for the 2001/2002 school year and 22.8 million pounds in 2000/2001.  The consensus is that the purchases won’t offer real-world price support, but they are positive to the market from a physiological standpoint. (Pork Alert)

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AGRIBUSINESS NEWS

>  A federal appeals court has upheld a lower court ruling that a Saskatchewan farmer violated the patent held by Monsanto Co. on herbicide-resistant canola.  Monsanto sued the farmer for growing its Roundup Ready canola without the company’s permission.  He was ordered last year to pay 19,000 Canadian dollars ($12,450) in damages and Monsanto’s court costs of 153,000 Canadian dollars ($100,000). The farmer had argued the herbicide-resistant canola seed arrived in his field by accident, either from blowing off a passing truck or by cross-pollination. The lower court judge rejected his explanation, saying it was more likely he planted the seed himself. (AP)
>  Transgenic or genetically modified plants are contributing to many areas of industry, including increased crop production and enhanced food quality in agriculture; production of monoclonal antibodies, therapeutic proteins, and edible vaccines for the pharmaceutical industry; and environmentally friendly outputs such as biodegradable plastics.  As the practice of inserting desirable gene sequences continues to find new markets, the companies involved continue to change drastically. There have been a number of cross-industry mergers and a proliferation of new entrants vying to cash in on the latest technologies. (PRNewswire)

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BRAKKE CONSULTING VIEWPOINT

The news this week was heavy on downbeat financial reports and light on innovation.  Restructurings at large companies like Bayer and Tyson should remind us that the Animal Health industry is not immune to the trends that affect the economy in general. 

Several of us at Brakke Consulting have been reading the book Good to Great by Jim Collins.  One finding that may be surprising is that the companies who went from good to great were not necessarily in high growth industries.  The opportunity for above-average profits depends more on leadership and discipline than the good graces of the market. 

We have found that the process of changing direction takes several years and is not something that can be accomplished through a one-time exercise.  It also helps to have an outside party monitor the process and provide feedback. 

[John Mannhaupt, Dallas]

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