The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for August 24, 2001

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>   Boehringer Ingelheim reported that, in the first half of 2001, the Animal Health business also developed much better than expected, growing by 11% to EUR 152 million ($129 million). (company website)

>  PETsMART, Inc. announced results for its second fiscal quarter, which ended July 29, 2001. The company reported second quarter net income of $2.8 million. Net income included a non-recurring tax benefit of $10.3 million related to tax losses from, which was offset by a charge of $10 million to rationalize PETsMART Direct’s fixed asset structure and a charge of $6 million related to store closures. Without the non-recurring tax benefit and the one-time charges, PETsMART’s second quarter net income would have been $2.1 million. Sales for the second quarter were $582.4 million, up 8.1% over the same period last year, while sales in stores open at least a year were up 5.4% from the second quarter 2000. (Business Wire)

>  Biopure Corporation announced its financial results for the third fiscal quarter ended July 31, 2001. For the quarter, the company reported a net loss of $11.9 million compared with a net loss of $7.2 million for the corresponding period in 2000.  Total revenues were $946,000 for the third quarter of fiscal 2001, compared with $836,000 for the corresponding period in 2000. This 13% increase includes European sales and a 5% growth in U.S. sales of Oxyglobin, the company’s veterinary drug for the treatment of canine anemia. (PRNewswire)

>  Smithfield Foods, Inc. reported that net income for the first quarter of fiscal 2002 rose 28% to $56.9 million compared to $44.6 million a year ago. Results in the quarter included two unusual items, the net result of which added $1.2 million after-tax to net income.  Results for the quarter reflected improved profitability in the Meat Processing Group (MPG) and the Hog Processing Group (HPG) as a result of better margins in fresh pork and processed meats, as well as the favorable impact of higher live hog prices in the HPG.  Sales of newly acquired companies, combined with higher unit selling prices, contributed to a 15% increase in sales to $1.6 billion from $1.4 billion in the prior year. (company website)

Company News Releases

>  Novartis Animal Health U.S. introduced, an innovative web site that is poised to change the way clinics order their animal health products. Veterinarians will be able to enjoy the ease and convenience of ordering veterinary products directly from the manufacturer via the Internet, 24 hours a day, seven days a week.  Another feature of is the ability to track orders to view all the details of any open invoices. will be launched in the U.S. on August 31, 2001. (company press release)

>  Bayer AG faces growing pressure to sell its beleaguered drug division, with analysts saying its recall of an anti-cholesterol drug linked to patient deaths shows the unit is too small to compete with larger rivals. Bayer chief executive Manfred Schneider has hinted at a joint venture with a
bigger rival.  But with added uncertainty over Bayer’s liability in a number of lawsuits over its Baycol treatment, and its stock down 25%, experts say a more drastic solution seems increasingly likely.  Bayer withdrew its No. 3 selling drug everywhere but Japan on Aug. 8 after it
was linked to 52 deaths.  Bayer’s Animal Health Business Group is part of its Agriculture division.  (AP)

>  Biomune introduced a new live salmonella vaccine for the poultry industry that colonizes the
intestines to efficiently compete against harmful field strains of salmonella.  Salmune protects against salmonella serotypes groups B, C and D.  These serotypes include Salmonella heidelberg, typhimurium, hadar, kentucky and enteritidis, organisms that are commonly associated with salmonella contamination of poultry meat and eggs. (company press release)

>  A US Patent was issued to AgInfoLink Global Inc. for Cattle Card.  The product package consists of an electronic identification (EID) eartag and corresponding data collection card.  The producer puts the EID tag in the animal’s ear and fills out a data card with the animal’s information such as birth date, birth weight, color, sex, vaccinations and any additional information he chooses to record.  The data card is returned to AgInfoLink Global, Inc. where the information is electronically entered into the BeefLink software program and reports are generated.  This gives the producer the advantages of an electronic system without having a computer or technical expertise of their own. (Meating Place)

>  eMerge Interactive, Inc. announced the formation of a strategic technology alliance with Allflex Holdings Inc. and Farmexpress S.A. from Europe, setting in motion a global effort to create the industry standard in individual animal tracking solutions for the beef industry. By assimilating the companies’ advanced electronic identification, data collection and information management technologies, the alliance will allow cattle-industry participants worldwide to individually track cattle throughout the supply chain, providing source and process verification from birth to the retail store.  (PRNewswire)

>  ALR Technologies Inc announced that sales of their monthly ALRT Pet Reminder will fall short of the projected $10.5 million in sales that the company forecasted in January.  According to the President and Chief Operating Officer of ALR Tech, shortcomings in sales will be due primarily to lack of attention from distributor sales representatives in promoting the product and educating vet clinics on the level of pet owner noncompliance.  The company is also finalizing a national “Pet Owner Compliance Education Campaign” which will outline the potential health risks associated with veterinary pharmaceutical noncompliance.  Details about this national campaign will be released shortly. (Business Wire)

Brakke Consulting, Inc.
Due Diligence Seminar – Nearly Full!

Brakke Consulting announces an ANIMAL HEALTH INDUSTRY DUE DILIGENCE SEMINAR to be held in Chicago September 25-26, 2001. 

Whether your company is licensing in or out, buying, or selling, this seminar will help you design an efficient, effective due diligence process that will help you test strategic assumptions, determine fair market value, uncover potential problems, and avoid costly mistakes or surprises.  The speakers at the seminar will be Brakke Consultants Eli Thommsen, Ron Brakke, John Volk and John Short, and senior investment bankers from Bear Stearns, NYC. All of the speakers have extensive experience in product and compound licensing, divestitures, and acquisitions.  We encourage you to visit our web site to register for this seminar or to learn more about it.

Animal Health News

>  DENMARK   A new case of BSE has been detected in the brain of a cow from a farm on the Danish island of Zealand, bringing to five the total number of cases in the country. The remaining 225 animals on the farm in the central region of Ringstead, where the infected animal originated from, will be slaughtered over the next few days. (AnimalNet – Agence France Presse)

>  GERMANY   Two more cases of BSE were discovered in Germany, bringing to 101 the number of animals affected.  In Bavaria, a total of 49 cases have been detected since compulsory testing was put in place in November 2000 on all cows aged over 30 months. (AnimalNet – Agence France Presse)

>   US   The University of Idaho Sheep Research and Teaching Center has discovered a scrapie-infected sheep in its flock on the Moscow campus. The flock is under quarantine as the university works with state and federal veterinarians to identify other infected sheep or sheep at high risk of the disease. Officials also intend to develop a program to eradicate scrapie from the flock of 250 breeding ewes. The UI flock was enrolled in 1999 in the Voluntary Scrapie Flock Certification Program, a national U.S. Department of Agriculture effort to eradicate the disease.  The UI flock primarily supplies research and teaching animals for UI, WSU and the University of Washington. (AnimalNet – Agweb)

>  US   Ten more horses are suspected of dying from equine encephalitis in northern Wisconsin, and the state veterinarian warned that more cases are likely to show up.  A total of 28 horses have likely died of the mosquito-borne disease, and three others have recovered. Final confirmation of the diagnoses was announced Friday by the National Veterinary Services Laboratory in Ames, Iowa. Tests there confirmed the presence of the virus that causes eastern equine encephalitis in horse brain tissue samples sent from Wisconsin. (AnimalNet – Knight-Ridder Tribune)

>  US   A new program has been launched that will verify that beef came from cattle that were born in raised in the US.  The program, called “Born & Raised in the USA,” relies on a certificate that accompanies cattle of US origin from birth to processing.  (Feedstuffs)

>  AUSTRALIA   Australian scientists have discovered new ways to produce better beef and more tender, juicier steaks following a breakthrough in gene technology.  The scientists have identified a particular gene associated with beef tenderness, and have also found that slower-moving cattle taste better than their quicker cousins. Both breakthroughs use advances in molecular genetics to identify cattle that have genes, which produce tender steaks. This is the first time that a direct gene marker has been identified for tenderness in cattle, and only the second genetic test in the world for meat quality (the first was for inter-muscular fat, or marbling). (AnimalNet – Reuters)

>  AUSTRALIA   Ehrlichia platys been detected for the first time in Australia.  A University of Newcastle postgraduate student and veterinarian isolated Ehrlichia platys during research on the biology of free-roaming dogs living in an Aboriginal community in the Northern Territory.  Dogs in northern Australia are susceptible to tick bite fever caused by the bite of the brown dog tick.
For many years, veterinarians have suspected that tick bite fever was due only to Babesiosis and have often found their treatments to be unsuccessful. Tests of blood samples from dogs in the Aboriginal community, however, indicated that these dogs were carrying Ehrlichia platys. The organisms were also found in the ticks themselves. (AnimalNet – The Age)

>  US   The National Meat Association is introducing “American Lamb: Taste the Freshness,” a USDA-funded promotion to generate interest in the often-overlooked meat. Both broadcast and print media will be used.  NMA’s lamb campaign targets people who love to cook, read recipes and watch cooking shows. Advertisements will run on the West Coast in Washington, Oregon and California and on the East Coast in New York, Massachusetts, New Jersey and Pennsylvania. Lamb’s profile is low for several reasons: Lack of preparation knowledge, perception of cost and number of consumers who have eaten lamb, according to the marketing director for Superior Farms and coordinator of the NMA ad campaign. (Meating Place)

Agribusiness News


Brakke Consulting Viewpoint

During this past nine months, we have shown our animal health industry overview in one form or another to over 1,000 individuals in the industry.  The overview is updated monthly to reflect the latest information, trends and issues.

Many companies have found that Brakke Consulting’s view of 2002 and beyond is useful in their planning and budgeting process.  We would highly recommend that your management team be exposed to the latest version of our overview before you put your 2002 budgets to bed.

Finally, I’ve had several conversations this past week and hope to have several more over the next two weeks on two of our major projects.  The first project is our Sales Force Effectiveness Study.  Believe me, many of your companies could use this benchmarking information.  The second project is the Global Veterinary Leadership Program.  The animal health, feed, and animal protein companies should be supporting the training of veterinarians in the area of global food safety, and this is a great way to do it.  What is the long-term cost if you don’t?

Have a great weekend, and look for our Brakke Consultants if you are attending the Central Veterinary Conference in Kansas City this weekend.

 [Ron Brakke]
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