The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for July 13, 2001

Copyright © Brakke Consulting, Inc.
Company News Releases

>  Mars Inc. has agreed to buy BNP Paribas’ 56.4% stake in Royal Canin for about $730 million and plans to take full control in 2003.  In a statement, Mars said it will extend the offer to minority shareholders and said it plans to take full control of Royal Canin in 2003. The deal will strengthen Mars’ holdings in dry pet foods, a market for which Royal Canin is known.  Mars said the offer represents an 18% premium over Royal Canin’s last trading price of 122.7 euros ($105.5), and a 29% premium over the average trading price last month.  Royal Canin posted profits of 30.6 million euros ($26.3 million) in 2000 – a 20% rise over 1999. (AP)

>  Patterson Dental Co., one of the largest distributors of dental supplies, announced it is purchasing the operating assets of J.A. Webster Inc. for $92.5 million. Webster, which will be operated as a wholly owned subsidiary under current management, is the nation’s third-largest distributor of veterinary supplies for household pets. The privately held Webster’s sales increased 12 percent to about $150 million in the year ended Dec. 31.  Webster serves more than 10,000 of the nearly 17,000 veterinary practices in the United States that treat household pets. (AP)

>  Microscience Limited, a British biotech company, has entered into two collaborative vaccine development programs with Merial.  The collaboration with Merial pivots on the use of the proprietary Signature Tagged Mutagenesis (STM) technology.  The first vaccine will be designed to improve food safety by eliminating Salmonella enterica in poultry. The second will be a vaccine to protect against Pasteurella multocida, a significant pathogen affecting avian species and in particular turkeys. (company website)

>  The FDA approved an abbreviated new animal drug application (ANADA) filed by Blue Ridge Pharmaceuticals, Inc. The ANADA provides for use of chewable tablets containing ivermectin and pyrantel pamoate for prevention of heartworm disease and for treatment and control of certain gastrointestinal parasites in dogs.  The new product is a generic copy of Merial’s Heartgard Plus. (AnimalNet – Federal Register)

>  Heska Corp. announced the issuance of a U.S. patent covering its feline diabetic diet.  The patent has been licensed to Ralston Purina and was integral in the development of Ralston’s new Purina Veterinary Diets brand DM-Formula cat food diet.  Under the license, Heska receives royalties on product sales.  Introduced in July 2000, this product is used for the dietary management of feline diabetes mellitus and is the first nutritional product to result from the Heska-Ralston alliance. (company press release)

>  Nestle USA and America Online announced an agreement to promote Friskies Petcare products across the AOL family of interactive brands. Nearly 70% of AOL’s members own pets. Under the agreement, Friskies will be featured in the “House and Home” channels of the AOL and CompuServe services and will also be promoted on Digital City, giving AOL members and visitors to other AOL interactive brands information on Friskies’ complete line of pet food products. (Business Wire)

>  Alltech was the recent recipient of two prestigious industry awards. The company earned the Environmental Award from the American Feed Industry Association (AFIA) for its waste reduction and recycling program.  Specifically, Alltech has developed a method that converts nutrient-rich byproducts from its yeast fermentation system into a product that helps crops grow better. This is the third consecutive year that Alltech has won the AFIA Environmental Award. The second honor that Alltech received was a World Trade Success Award for its achievements in increasing exports.  Between 1999 and 2000, Alltech doubled the amount of animal feed ingredients that it shipped from its US production facility to markets in more than 70 countries.  In receiving the Award, Alltech joins leading companies such as Papa John’s pizza, Fifth Third Bank, and Delta Airlines, which have also received the award. (company press release)

>  Veterinary Products Laboratories announced that Vétoquinol International’s North American subsidiary, Vétoquinol N.-A. Inc., is the official distributor of Feliway Pheromone Spray in Canada.  An environmental spray containing synthetic analogues of naturally occurring facial pheromones, Feliway is a unique product used to control cat urine marking.  (company press release)

>  The British antitrust authorities have approved the merger of the vitamins activities of BASF Aktiengesellschaft and Takeda Chemical Industries Ltd.  The approval procedure for the acquisition of Takeda’s vitamins business outside Japan is now completed worldwide.  In Japan, BASF and Takeda have a co-operation agreement that was also approved at the end of 2000.
This means that BASF operates a global vitamins business and holds a leading position with around 30% of the world market, providing customers from the animal feed, food and pharmaceuticals industries with the complete range of fat- and water-soluble vitamins. (Chemical Newsflash)

>  A collaboration to use nuclear transfer (NT) to develop genetically modified miniature swine  for the study of transplantation has been announced by Infigen, Inc. and Immerge ioTherapeutics, Inc., a joint venture of Novartis Pharma and BioTransplant.  Infigen will provide access to its porcine NT technology, and Immerge BioTheraeutics will  provide proprietary vectors for specific genes, as well as cells from miniature swine. The two companies will jointly develop the miniature swine, with Infigen receiving licensing fees and research funding for three years. The venture is co-funded by an award from the U.S. Department of Commerce National Institute for Science and Technology. (AnimalNet – Medinews)

>  Cattle Performance Enhancement Company (CPEC) has formed a business relationship for sales and marketing purposes with  CPEC owns the exclusive marketing rights to the patented software and technology using ultrasound technology to measure backfat thickness and determine marbling abilities of cattle for future prediction of carcass merit.  FarmVet Technologies, a division of, was introduced in response to a need for qualified ultrasound technicians in the ranch and feedlot industry.  Currently, FarmVet Technologies is offering ultrasound services to ranches and feedlots in Texas, Oklahoma, New Mexico, Arizona and a portion of Kansas.  (company press release)

Brakke announces new consultant in Practice Management Group

Karen E. Felsted, CPA, MS, DVM, CVPM has joined Brakke Consulting, Inc. (BCI) as a consultant with their Veterinary Practice Management Group. Dr. Felsted brings a wide range of accounting, veterinary practice and general business skills to the Veterinary Practice Management Group of BCI.  Joining Jim Guenther, DVM, MBA, MHA, CVPM, Dave Horn, DVM, and Roger Cummings, CVPM, the practice management consultants of Brakke Consulting, Inc. provide veterinarians with the extensive knowledge and experience needed to assist them in managing their practices more profitably and effectively. The Veterinary Practice Management Group offers a full range of finance, marketing, operations, human resource and valuation services to veterinarians across the United States and in Europe.

The practice management consultants of Brakke Consulting Inc. have gained recognition in recent years for their work with the Brakke Veterinary Management and Behavior Study, which identified business practices of small animal veterinarians that correlate with increased practitioner incomes.   They have spoken at major veterinary conferences and are routinely published in veterinary management journals.  Mr. Cummings and Dr. Felsted are both speaking at the currently running AVMA convention in Boston.

Further information about the services the practice management consultants provide can be obtained by visiting the Brakke Consulting, Inc. website at
calling the Dallas office at 972-243-4033 or you may email Dr. Felsted directly at

Animal Health News

>  EUROPE   The European Union, whose beef market collapsed in the wake of the recent
one-two punch of bovine spongiform encephalopathy and foot-and-mouth disease, is going to be spending about $10.3 million (12 million euros) promoting beef consumption. The European Commission will launch a 12 month promotion, beginning in September, in an effort to win back some of the estimated 1.5 million tons of consumption lost due to the collapse of public  confidence in the safety of beef and beef products. The main emphasis of the campaign will be to reassure consumers that beef is safe to eat.  The EU will be paying 60 percent of the cost of the promotion, with European trade organizations paying the rest. (AnimalNet – Meating Place)

>  EUROPE   EU Health and Consumer Protection Commissioner David Byrne stated that foot-and-mouth disease has been eradicated from the 15-nation European Union except for Britain.  The EU commissioner also said a new European food authority providing expertise and monitoring new forms of danger from foodstuffs was expected to become operational next year. The Brussels Commission will also carry out a reappraisal of the rules concerning vaccination to prevent food-and-mouth. (AnimalNet – Agence France Presse)

>  EUROPE   The European Court of Justice (ECJ) has ruled that the EU’s ban on vaccinations against foot-and-mouth disease is legal, even for animals in areas where the disease has not occurred.  The ECJ said the cost and disadvantages of preventive vaccination for all animals in the EU would greatly outweigh those of a non-vaccination policy.  The court said vaccination would also adversely affect EU livestock exports. The ECJ added that there is no proof that a vaccination policy would have reduced the need to slaughter livestock to control FMD. (AgWeb)

>  UK   Six new cases of foot and mouth disease have been confirmed North Yorkshire, and officials are concerned that FMD could spread to East Yorkshire, where three million pigs are produced.  Many of the hogs are kept outdoors, making them more susceptible to contracting FMD.  The total number of cases in the UK now stands at 1,836, according to Farmers Weekly Interactive.  (AnimalNet – AgWeb News)

>  SPAIN   Spain announced it was imposing a national ban on the transport and movement of pigs in a bid to stamp out a spreading outbreak of swine fever that started in the Catalonia region around Barcelona. The measure, which extends a ban already in place on the movement of pigs in eastern Spain, was to begin Wednesday. (AnimalNet – Agence France Presse)

>  HONG KONG   Hong Kong health officials have found the H5 avian flu virus in the feces of a dead chicken during a routine check at Cheung Sha Wan poultry market in the first such discovery since more than a million fowl were culled in May. The assistant director of Agriculture, Fisheries and Conservation stressed that not all strains of the H5 virus affect humans. (AnimalNet – Agence France Presse)

>  BELGIUM   Two new cases of mad cow disease have been found in Belgium, bringing to 36 the total number reported since the first case was uncovered four years ago.  Both new cases were found at dairy farms in Flanders, where the entire herds (a total of 202 animals) were slaughtered and incinerated as a precautionary measure. (AnimalNet – Agence France Presse)

>  US   A traditional Holstein auction during the National Holstein Convention in  Cedar Rapids July 27-30 took an untraditional turn when an unborn, cloned Holstein cow sold for $100,000. Regancrest Farms of Waukee sold an exact genetic duplicate of its 2000 Iowa State Fair Grand Champion Holstein to Hilltop Dairy of Elkton, South Dakota.  A veterinarian with Monsanto predicted that, 15 to 20 years from now,  transgenics and nuclear transfer (cloning) will be considered traditional breeding practices. (AnimalNet – IATP Listserv Archives)

>  US   Scientists are convinced that cyanide naturally present in cherry tree leaves was responsible for the mysterious illness that killed hundreds of foals and fetuses in Kentucky thoroughbred country this spring.  Researchers still have not figured out exactly how the cyanide got into the horses’ systems. One theory is that Eastern tent caterpillars, which infested the state in large numbers this spring, ate the leaves and deposited the poison in grazing areas or drinking water.  To test that theory, researchers are feeding the leaves to the caterpillars in the lab and studying the creatures and their excrement. (AnimalNet – AP)

>  CLA (conjugated linoleic acid) occurs naturally in cows’ milk, and medical research has shown that it may help fight several types of cancer.   According to researchers, farmers can dramatically raise CLA levels in milk by grazing, feeding vegetable oil, or feeding fish oil, at a cost of about $1.18/cwt more than conventional milk, or about 10 cents a gallon.  Taste testers did not identify any particular off flavors in dairy products made from high-CLA milk.  When surveyed, consumers said they were willing to pay an average of 41 cents per gallon more for high-CLA milk, 38 cents per pound more for high-CLA butter, and 15 cents per cup more for high-CLA yogurt.  Full Circle Farm in Seymour, Wis., is already marketing high-CLA cheddar cheese online for $5.50-$6.00 per pound. (AgWeb)

>   A recent study published in the July/August 2001 issue of the Journal of the American
Animal Hospital Association shows that a dog’s breed and previous experiences may affect whether he’s afraid of thunderstorms. Researchers found that herding dogs, such as collies and German shepherds, and hounds, such as beagles and basset hounds, seem to be more likely to develop a storm phobia than other dogs.  The phobia is also common in sporting and working breeds.  The study suggests that this tendency may be explained in terms of the dogs’ genetics. 
For example, herding dogs have been bred to react quickly to stimuli, such as a calf wandering away from the herd, but not to be aggressive.  It could be that herding dogs have a strong reaction to the startling noises and flashes of a storm, but they repress any aggressive response to it, causing anxiety. (PRNewswire)

Agribusiness News

>  Aventis and Schering AG agreed and announced that for the weeks to come the negotiation process concerning the potential divestment of Aventis CropScience will be continued exclusively with Bayer AG. Aventis holds a 76% interest in the crop protection and production business, while Schering AG, Berlin, holds 24%.  The decision to continue the negotiations exclusively with Bayer AG does not constitute any legally binding agreement between the involved companies.  The implementation of any disposition of CropScience by Aventis is subject to negotiation and execution of a definitive agreement and receipt of all applicable regulatory approvals. (Aventis press release)


Brakke Consulting Viewpoint

The big news for the week was the continuing consolidation in the pet food industry with the international pet food giant Mars purchasing Royal Canin for about 2X sales.  This purchase gives Mars one of the leading European superpremium brands.  According to our estimates, with the acquisition of Royal Canin by Mars and the purchase of Ralston Purina by Nestle, we now project that the five leading pet food companies hold about 75% of the worldwide pet food market estimated at around $25 billion.  Previously, the five leading pet food companies in 1999 had 62% of the market.

Remember in 1999 and 2000 we predicted the “Procter & Gamble factor” would influence the entire pet food industry.  It looks to us like Procter & Gamble is certainly having some influence on the industry.

The other major acquisition announcement this week was Patterson Dental’s acquisition of J.A. Webster.  Once again, someone from outside the industry finds value in a well-managed animal health distribution company.  The Webster purchase price should bring a smile to the faces of shareholders of other animal health distribution companies when it comes to value.  It should also bring an awareness that this is a new competitor in the marketplace.  We congratulate Webster and family on the sale of the business.  An example of a job well done – enjoy it.

Have a great weekend.

[Ron Brakke]
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