Animal Health News & Notes for January 4, 2002

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Brakke Consulting’s
Animal Health News & Notes for January 4, 2002
Copyright © Brakke Consulting, Inc.

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Company Earnings Releases

>  ConAgra Foods, Inc., reported results for the first half of fiscal 2002, with sales of $14.9 billion, compared with $14.3 billion last year. Operating profit reached $1.1 billion, also matching that in the first half of fiscal 2001. During the second quarter, sales for the Meat Processing segment were $2.6 billion, down from last year as the company’s beef business lost sales due to a plant fire in December 2000. Profits improved for fresh poultry, beef and pork. For the first half of fiscal 2002, Meat Processing operating profits reached $171 million, up substantially from $110 million last fiscal year. (Wattnet Poultry)

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The Alliance for Contraception in Cats and Dogs (ACCD) is sponsoring an “International Symposium on Nonsurgical Contraceptive Methods for Pet Population Control” on April 19-21, 2002 in Callaway Gardens, Pine Mountain, GA.

A full speaker program representing many facets of this subject has been put together. Abstracts from other interested parties are encouraged. This will be a great opportunity to get updated in the latest advances in this important commercial and technological area. For further details, please contact either Professor Henry Baker – bakerhj@vetmed.auburn.edu (Tel 334 844 5951)
John Short – jshort1942@aol.com (Tel 828 236 0585).

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Company News Releases

>  Schering-Plough Corporation announced that it is in negotiations with the FDA for a consent decree to resolve issues involving the company’s compliance with current Good Manufacturing Practices (GMPs) at manufacturing facilities in New Jersey and Puerto Rico. Terms of the consent decree under negotiation include a possible payment by Schering-Plough to the federal government that may be as high as $500 million, subject to resolution of other terms of the final agreement. Schering-Plough intends to work closely and cooperatively with the FDA to reach a negotiated agreement resolving outstanding issues.  However, the company notes that there are a number of issues being discussed and no assurances can be given that a negotiated agreement will be reached or as to what the terms of any such agreement would be.  Any agreement would be subject to approval by the U.S. District Court for the District of New Jersey. (PRNewswire)

>  Fire officials were investigating a blaze that burned through the executive floor of Nestle Purina PetCare’s headquarters.  No one was hurt in the New Year’s Day fire, and Nestle Purina said damage was limited to the upper floors of the 15-story landmark building, a prominent part of the St. Louis skyline. No damage estimate was released. Nestle Purina PetCare was formed from the takeover of 107-year-old pet food maker Ralston Purina by Swiss-based Nestle SA. The $10.3 billion merger was approved last month. (AP)

>  Petco Animal Supplies Inc. intends to raise $287.5 million in an initial public offering of common stock, becoming a publicly traded company again after an October 2000 recapitalization.
It plans to use the net proceeds to redeem outstanding shares of preferred stock. No underwriters were disclosed in the filing. The exact number of shares to be sold in the IPO and the price range were not disclosed in the preliminary prospectus. More details about the sale are expected in future filings. Petco completed a leveraged recapitalization on Oct. 2, 2000 with an entity controlled by merchant bank Leonard Green & Partners and private investment partnership Texas Pacific Group, in a deal valued at $600 million. The company is now seeking to be listed on Nasdaq where its stock traded before the recapitalization. It plans to apply for the ticker symbol “PETC”. (Reuters)

>  Smithfield Foods plans to buy into a European meat processors’ operation in China, the world’s largest consumer market.  Smithfield announced the agreement with Artal Holland B.V. for a joint venture in AFG Co. Ltd., in the Guangdong province of China. Terms were not disclosed.  Artal Holland is a unit of Artal Group, a Belgian venture capital firm. (AP)

>  A lawsuit by a group of cattlemen accusing IBP of cornering the beef market has been granted class-action status.  More than 30,000 cattlemen from across the country could join in the suit against IBP Inc. A Senior U.S. District Judge broadened the lawsuit to potentially include all U.S. cattle producers and owners who sold cattle to IBP on a cash basis since February 1994. The suit claims IBP illegally cornered the beef market and conspired to fix prices paid on the open market. The suit was originally filed by 10 cattlemen who claimed IBP was violating antitrust laws by buying mostly packer-owned cattle and cattle committed to packers under long-term contracts, rather than bidding on auction markets, to unfairly depress prices paid to producers. (AP)

>  SEGHERSgenetics USA and Newsham Hybrids USA have reached an agreement to merge the two companies.  The agreement will position the new company as the third largest swine genetics business in the US, behind PIC and DeKalb Choice Genetics.  Terms of the agreement were not released.  (Feedstuffs)

>  PPL Therapeutics Plc has produced five “knockout” piglets; so-called because their genes have been modified to reduce to chance of their organs being rejected by human hosts, bringing the prospect of transplants from animals to humans a step nearer.  Other biotechnology companies working in the field include U.S.-based Immerge BioTherapeutics Inc., a joint venture between Swiss pharmaceutical giant Novartis AG and Nasdaq-listed BioTransplant Inc., which has been working on miniature pigs.  PPL Therapeutics hopes to start clinical trials on human subjects within four years.   The idea of using animal organs in human operations is also likely to trigger a fierce ethical debate.  (CBS News)

>  AgVet Associates, LLC is a new nationwide manufacturer representative firm serving the animal health industry dedicated to the sales and marketing of quality animal health care products.  Located in the Fort Worth area, AgVet will focus on products for production livestock operations and will offer the manufacturers complete nationwide representation with no product duplication.  Their purpose will be to concentrate on a select group of manufacturers and devote their entire sales and marketing resources to increasing their business. (company press release)

>  AgWeb.com has announced it has repurchased all its outstanding Series B Preferred Stock from Safeguard Scientifics (NYSE: SFE) and Madison Dearborn Partners. AgWeb will become a consolidated subsidiary of The Farm Journal Corporation, AgWeb’s other primary investor. (AgWeb)

>   BASF AG reported it will appeal a $260 million imposed by the European Commission last month for its part in a vitamin price-fixing cartel.  BASF noted that it had admitted responsibility for antitrust violations and said its appeal to the European Court of First Instance in Luxembourg was aimed solely at the “inappropriately high’’ level of the fine.  The fine against the firm was part of a record $752 million penalty levied against eight chemical and pharmaceutical companies for fixing vitamin prices.  BASF’s was the second-highest share, following the $406 million levied against Swiss-based Roche. (AP)

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Brakke Consulting’s 2002 Animal Health Industry Overview

We have been spending a great deal of time over the Holidays on our Annual Industry Overview  presentation.  The Overview this year will focus on the following areas:

–  review of the leading 12 companies 
–  new companies on the horizon
–  new technologies in development
–  hot industry topics for 2002
–  Int’l issues by region
  
Seating for these presentations is always limited and fills quickly.  We will be presenting the Overview twice at the North American Conference in Orlando and once at the Western Conference in Las Vegas.  Registration is $295.00 ($325.00 after 1/7/02) for the first attendee at the conference location from a company and $245.00 ($275.00 after 1/7/02) for
each additional attendee at the conference location from the same company.

– North American Veterinary Conference
    Monday, January 14, 2002
    9:30 am OR 1:30 pm
– Western Veterinary Conference
    Wednesday, February 13, 2002
    9:00 am

For additional information please contact Jane Morgan at 972-243-4033.

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Animal Health News

>  SWEDEN   The discovery of a suspected case of BSE in Sweden last month is now believed to have been a false alarm. The Swedish agriculture ministry said that initial tests showed that the suspicious case was not actually BSE.  However, the results of definitive tests have still not been received.  In the meantime, the farm at Sudermanie south west of Stockholm is still in quarantine until the final test results are released.  If the tests give the farm the all-clear, the Sweden will remain the only country in the European Union not to have had a case of BSE. (Wattnet Meatnews)

>  UK  The latest figures from the UK’s Meat and Livestock Commission show an increase in beef sales of 1.8%, with British consumers spending more than £1.3 billion on beef during 2001. Towards the end of the year sales seemed to have been increasing faster with sales up by 7% in the four weeks ending December 10. (Wattnet Meatnews)

>  EUROPE   Beginning Jan. 1, the European Union began mandating new compulsory labeling to give consumers more detailed information on the origins of the beef they are buying.  Beef products sold in EU member countries will now be required to list will the country where the animal was fattened, slaughtered and where fabrication and grinding took place, as well as precise information about where the animal was born and reared. After receiving permission from member state authorities, operators are free to decide to give further information, such as the indication of the meat categories. (Meating Place)

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Brakke Consulting Viewpoint

The industry news during the holidays was a bit on the light side.  We assume this means that you had a restful two weeks with family and friends.  Now you should be refreshed and prepared for a productive 2002.

We believe that 2002 will be another challenging year for the industry.  At the start of the year, there appears to be more gray clouds than sunshine, but with some creativity, R&D investment and strong marketing, it should prove to be a better year than 2001.

We encourage all of you to continue to review and change your business models.  What worked in 2001 may not be so successful in 2002.  A few days from now in Orlando, we will provide you with more detailed projections for 2002 in our Overview.

We wish each and every one of you the best of health and business success in 2002.

[Ron Brakke]

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