The Experts in Animal Health

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Brakke Consulting’s
Animal Health News & Notes for January 18, 2002

Copyright © Brakke Consulting, Inc.

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Company News Releases

>  Novartis has acquired U.S. biologicals firms Grand Laboratories Inc and ImmTech Biologics Inc, marking its entry into the world’s largest farm animal vaccine market. It did not give a purchase price. Novartis, whose animal health division had 2000 sales of 1.08 billion Swiss francs ($647.5 million), said the two firms, which target the cattle and pig health markets, had 2001 sales of $33 million.  Novartis said in a statement the two firms complemented each other and had an “exciting” development portfolio in what it called important disease areas.  (Reuters)

>  Doskocil Manufacturing Company, Inc. announced that it has reached agreement with its bondholders to significantly reduce the amount of its outstanding debt.  The transaction, which was finalized on December 21, 2001, reduced the Company’s debt from $176 million to $58 million.  Doskocil now operates as a private company.  Doskocil’s holders of 10 1/8 percent notes due 2007 voted unanimously to exchange debt for minority ownership in the Company.  The agreement also provided for the majority owner, Westar Capital. to make an additional investment in the Company.  Further, Doskocil revised its senior credit facility in cooperation with its existing eleven-member bank group led by Bank of America (Dallas). (Business Wire)

>  CANADA   Foragen Technologies and Urgel Delisle & Associés (UDA) announced the creation of Codéna, a development and commercialization firm of a unique biopesticide in Canada. This biopesticide, developed by UDA from a plant extract cultivated in Québec, eliminates or controls the vast majority of pests found in greenhouses. It is compatible with the biological control used by many producers and its shelf life meets U.S. Environmental Protection Agency (EPA) norms. (company press release)

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BRAKKE CONSULTING, INC.
       Mergers, Acquisitions & Divestitures

  >  Are you interested in growing your business by purchasing another company, product line or technology?

  >  Have you been thinking about selling your company, product line or technology?

  >  Have you considered merging your company with another firm to improve shareholder value?

Brakke Consulting has handled dozens of projects related to acquisitions or divestitures.  In addition to acting as agent of record for some acquisition targets, we have identified acquisition targets and assisted in closing the subsequent purchases for the acquiring companies.  We have assisted with valuations and due diligence and provided executive counsel on a number of potential transactions.

Brakke Consulting has the experience, insight, abilities, and contacts that provide our clients with the highest quality services in the animal health, pet, veterinary, and specialty chemicals markets.  Please contact any of our offices for a confidential consultation on our range of services.  Contact information for all offices are available on our website at www.brakkeconsulting.com  by clicking on a starred location on the world map.

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Animal Health News

>  UK   The cost to the British economy of foot-and-mouth disease, which led to the slaughter of almost 10% of the country’s livestock, turns out to be much smaller than feared at the outset nearly a year ago. Last year the English Tourism Council said 250,000 jobs could be lost in
rural tourism and some analysts predicted the disease could cost the economy 10 billion pounds ($14.46 billion). But, now the epidemic is officially over, economists estimate its cost has probably totaled around 2-3 billion pounds or 0.2% of gross domestic product. (Reuters)

>  US   The number of Iowa pseudorabies (PRV) cases has dropped to zero, according to Iowa Secretary of Agriculture.  Even though this is an extraordinary accomplishment, PRV will not be considered eradicated from Iowa for at least one year at zero infection status. Eradication efforts in Iowa began in 1989 in the known infected counties, and grew into a statewide effort by 1993 with over 4,000 infected herds. In 1998, after taking office, Secretary Judge stepped up the Department’s efforts in eliminating the disease. Iowa has over 19,000 pork producers and ranks number one in the nation in pork production, raising and processing over one quarter of the nation’s pork supply. (DirectAg)

>  CHINA   China has recently commissioned its biggest and most technically advanced pig slaughtering and processing factory, under the Tianjin City Shunli Industrial Development Inc.
The new plant has an intelligent slaughtering line and two automatic storage areas as well as auxiliary equipment and facilities. The new plant is designed to kill 1.8-2 million pigs per year and much of the design work has been carried out by overseas specialists using the major EU and USDA standards.  (AnimalNet – MeatNews)

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Brakke Consulting Viewpoint

It was nice to see many of you at the North American Veterinary Conference in Orlando this past week.  What a great way to kick off 2002!  The record attendance included veterinarians, companies, and service providers.  We believe that this turnout demonstrates confidence in the future of animal health.  We particularly want to thank the 60+ individuals who took 2 hours out of their busy schedules to attend our 2002 overview.  During the NAVC, we visited with many of you related to the implications of several leading products becoming generic this year.  While we encourage competition and understand the realities of the marketplace, it is not in the best interests of the manufacturers, distributors, or veterinarians to have significant price erosion in the market.  As the Megastudy and the Brakke Study pointed out, we have a fragile and challenging situation in the economic condition of veterinarians and veterinary practices.  Additional erosion in veterinary income via reduced product revenues would be beneficial in the current environment.  Think about increased revenues and gross profits in 2002.

[Ron Brakke]

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