The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for May 11, 2001

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Aventis reported that for the first quarter of 2001, sales by the animal health business Merial rose 20.2% to € 434 million ($382 million), and an increase of +18% excluding currency effects, from the year-ago period.  Aventis also announced that it is in talks with potential new shareholders for Aventis Animal Nutrition. (company website)

>  Embrex announced that first-quarter revenues for 2001 were $10.8 million, an increase of 16% over revenues of $9.3 million for the same period in 2000. First-quarter net income was $2.1 million, an increase of 34% over net income of $1.5 million for the same period in 2000 or 12% before the previously announced restatement of earnings for the first quarter 2000, related to the misappropriation in Embrex’s European subsidiary. The company’s first-quarter revenue increase was primarily attributable to additional installations of Inovoject systems and increased injection activity in North America, Asia, Latin America and Europe, as well as Inovoject system sales in Japan and Europe. In addition, sales of Bursaplex in ovo bursal disease vaccine were up 87% over the first quarter of 2000, contributing to the revenue increase. (company website)

>  Central Garden & Pet Company announced financial results for the fiscal second quarter ended March 31, 2001. Net sales for the fiscal second quarter were $324.1 million, compared with $382.9 million in the comparable 2000 period. Net income for the fiscal second quarter was $2.7 million compared with net income of $12.1 million in the comparable 2000 quarter. Net sales for the first half of fiscal 2001 were $537.3 million, compared with $602.1 million in the comparable 2000 period. The net loss for the first half of fiscal 2001 was $1.8 million compared with net income of $5.6 million in the comparable 2000 period. (Business Wire)

Company News Releases

>  Merial celebrated the grand opening of its North American headquarters in Duluth, Georgia. 
With the relocation of its full operations, Merial opens a new business category in Georgia as the first research-based veterinary pharmaceutical and vaccine company. Merial will employ more than 400 professionals at its headquarters.  This move brings Merial’s employee count in Georgia to about 1,000.  Merial has two other Georgia locations, a vaccine manufacturing and distribution center in Athens and Merial’s avian business unit in Gainesville. (PRNewswire)

>  Schering-Plough Animal Health reported that Schering-Plough Corporation’s wholly owned subsidiary in Japan, Schering-Plough K.K., has reached an agreement with Fujisawa Pharmaceuticals to acquire Fujisawa’s animal health business in Japan, subject to regulatory review and normal closing conditions.  Terms of the agreement are not being disclosed. Fujisawa’s animal health business is engaged primarily in the areas of livestock and aquaculture. In July 2000 Schering-Plough strengthened its presence in Japan by forming Takeda Schering-Plough Animal Health Company Ltd., a joint venture with Takeda Pharmaceuticals Company Ltd. (PRNewswire)

>  Purina Mills Inc. announced the company has received a takeover proposal from an unidentified third party. The announcement followed a phenomenal week during which shares of Purina Mills, a St. Louis-based animal feed producer, more than doubled in heavy trading. Purina Mills said in a statement that the proposed buyout is subject to numerous conditions, including a review of the company’s finances and approval by both parties. The name of the suitor and possible terms were not disclosed. (E-markets – AP)

>  Smithfield Foods still has its eye on IBP, Inc. but only at a steep discount.  Smithfield’s chairman and chief executive officer told a group of financial analysts that if Smithfield does something, the offer would be substantially less than what it was a few months ago.  Smithfield had initially offered $25 a share for IBP.  In recent months, Smithfield has been busy with other acquisitions albeit much smaller ones and has been mum on its plans with IBP. (E-markets – Knight-Ridder Tribune)

>  NLS Animal Health announced that effective May 4, 2001 Samuel T. Woodside was elected President & Chief Operating Officer of NLS Animal Health.  Mr. Woodside was also elected to serve as a member of NLS’ Board of Directors. Mr. Woodside’s background includes 18 years experience as CEO, COO or general manager of diverse manufacturing, distribution, service and high tech engineering businesses.  For the past 16 years he has been President & CEO and the majority stockholder of E.I.L. Instruments, the nation’s largest distributor of electronic test equipment.  (company press release)

>  IVAX Corporation announced that its wholly owned veterinary products subsidiary, DVM Pharmaceuticals, Inc., will begin clinical trials for the asthma medicine beclomethasone in a special formulation utilizing IVAX’ proprietary Easi-Breathe device in conjunction with its patented delivery mask to treat equine heaves. Thoroughbreds and other horses frequently suffer from this condition. Asthma also occurs frequently in other companion animals, which are presently treated with human drugs such as albuterol, cromolyn and beclomethasone. (Business Wire)

    2001 US Animal Health DISTRIBUTORS Directories are now available

2001 U.S. Animal Health Distributors Directories are here!  If you have already ordered this directory, you should receive it in the mail early next week. 

If you have not ordered your new directories you can do so by contacting Jane Morgan in our Dallas office.   The directories are $250 each.  Additional copies of the same directory to the same shipping address are $75 each.   Orders maybe placed by contacting Jane Morgan in the Dallas office at or (972) 243-4033.  

Animal Health News

>  US   Emmpak Foods Inc. has voluntarily recalled about 471,000 pounds of ground beef that may be contaminated with E. coli bacteria. USDA’s Food Safety and Inspection Service (FSIS) said the recall involved ground beef products manufactured on March 6, 2001 and sold wholesale and retail in stores nationwide. FSIS said the problem was discovered through its own microbiological sampling, although the company said it had not received any reports of illnesses linked to the beef. (Reuters)

>  U.S. pork exports to Japan passed a milestone April 1. Shipments for the period April 1, 2000 to March 31, 2001 exceeded 200,000 tons for the first time ever, totaling 200,084 tons. That’s up 13% from the previous fiscal year.  U.S. exports broke the 100,000-ton barrier just five years.  In addition, the United States reassumed its position as the leading pork supplier to Japan, as Danish shipments slipped 6.7% to 195,279 tons. U.S. product finished strongly in the last quarter of the Japanese fiscal year due to higher European prices and concerns over the safety of European product. (DirectAg)

>  BRAZIL   Brazil’s southern ranching circuit will resume vaccinating livestock for foot-and-mouth disease (FMD) as a precaution against the outbreaks in nearby Argentina and Uruguay. Rio Grande do Sul Governor Olivio Dutra has been requesting vaccination against the disease’s potential spread into Brazil for a month, and the Paris-based animal health group, the  International Epizootic Organization (IEO), recently endorsed the action.  It is unclear still how the limited return to vaccination will interrupt the region’s schedule for IEO certification as disease-free without vaccination. (AnimalNet – AgWeb)

>  US   Mares in central Kentucky have lost foals and fetuses at more than six times the normal rate this spring.  From April 28 through May 7, the University of Kentucky Livestock Disease Diagnostic Center received 318 miscarried fetuses or stillborn foals for diagnostic testing. The center received 46 for the period a year ago. Some farms have not reported any unusual stillborn deaths or miscarriages, while others have reported miscarriage rates of 10 percent to 75 percent.
So far, most tests for toxins or viruses have come back negative, Harrison said. More than two dozen scientists, veterinarians and farm managers led by the University of Kentucky’s Gluck Equine Research Center, believe the incidents may be related. One theory is that Kentucky’s warm, dry spring followed by several hard freezes allowed a fungus or toxin to develop in grasses eaten by horses. Other possible theories involve bacterial or chemical agents. (AP)

>  US   The Pajaroello tick, or “California tick,” once thought to be exclusively a resident of the Golden State, is being found in increasing numbers in Oregon’s Lake and Klamath counties doing what it has done for so many years in California: causing calf abortions, especially in first-calf heifers.  In recent months veterinarians in both Oregon counties have confirmed the tick’s presence. (DirectAg)

>  US   New Jersey health officials have identified two crows infected with the West Nile virus in what is believed to be the first occurrence of the disease this season in the New York metropolitan region.  There have been no reported incidents of the virus in humans in the region this year. Since 1999, when the virus was detected for the first time in the Western Hemisphere, in New York, states in the region have increased their surveillance for the mosquitoes that pass the infection to birds and humans. (AnimalNet – New York Times)

Agribusiness News

>  Aventis has narrowed down the list of potential buyers for its agrochemicals business Aventis Cropscience, according to Sunday Business.  Indicative offers have been made by BASF AG and Bayer AG as well as Dow Chemical Co.  A sale now seems likely after the resignation of Alain Godard as chief executive of Aventis Cropscience.  (E-markets – AFX)

Brakke Consulting Viewpoint
We enjoyed the opportunity to visit with many of our friends and clients earlier this week at the AFIA meeting in Indianapolis.  The more than 4000 attendees from around the world had the opportunity to visit 250 suppliers in the exhibit area.  It appeared to us that those in attendance had more interest in the educational programs than they did in the exhibit area.  Those educational programs that we had an opportunity to attend were extremely useful.  Dave Bossman and his staff provided an excellent program for the membership.

This show demonstrated the changing faces supplying the food animal segment of animal health.  Some familiar medicinal feed additive faces were absent such as Pfizer, Merial, Intervet (HRAV), and Pharmacia.  These firms were replaced by consolidators such as Alpharma and Phibro, along with several firms that are gaining momentum in the direct-fed microbials area.  The educational program on the “Future of Microbials and Enzyme” was standing room only on Wednesday morning.  It clearly is a developing part of the business.   

Finally, this morning’s Agrus Leader Newspaper (Sioux Falls, SD) references a USDA report indicating that beef prices will average $74 to $78 per hundred pounds up from $69.65 last year.  Hogs will remain steady at $44 to $46 per hundred pounds for the year.  Corn and soybean futures and prices will remain low.  This should be very positive for those firms still focusing on the food animal segment.

Have a great weekend. 

[Ron Brakke]
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