The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for May 4, 2001

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  American Home Products reported that its animal health subsidiary Fort Dodge Animal Health had revenues of $162 million in the first quarter of 2001, a decrease of 4% over the comparable period in 2000.  (company website)

>  Alpharma reported that Animal Pharmaceuticals revenues increased 97% to $83.5 million in the quarter ended March 31, 2001.  Operating income increased 87% to $12.7 million.  Excluding the Roche feed additives acquisition, revenues declined 20% or about $8 million. Unfavorable market conditions in the U.S. poultry and some international livestock markets, which based upon the Company’s view of the market are temporary, were the major cause of the decline. (PRNewswire)

>  Tyson Foods Inc. announced a second-quarter loss, citing lower chicken prices, a product recall, the impact of a tough winter and its decision to call off its purchase of IBP Inc. Tyson lost $6 million in its second fiscal quarter that ended March 31, compared to a profit of $35.7 million a year earlier. Sales rose 2% to $1.83 billion from $1.79 billion in the second quarter of 2000. (AP)

> Virbac SA reported turnover for the year 2000 of 325 million euros ($306 million), an increase of 18% over 1999.  The proforma consolidated sales growth was 9.4% at constant exchange rates. It is equally divided between the main two VIRBAC segments: companion animals and food animals. This increase was achieved in all parts of the world where VIRBAC is present, although it is higher outside of France.  Operating results increased 23% to 30.9 million euros ($29 million).  The American subsidiary, Virbac Corp., made a major turnaround and now contributes positively to operating results for the first time.  Virbac also reported that sales for the first 2001quarter reached 80.6 million euros ($71 million), increasing by 5.9% versus 2000 and by 4.3% proforma at constant exchange rates.  (company website)

>  Boehringer Ingelheim reported in year-end 2000 results that its Animal Health division moved ahead by 20% to EUR 300 million ($283 million).  (company website)

>  Virbac Corporation reported record results for the first quarter ended March 31, 2001. Net sales for the quarter rose 22% to $15.0 million, from $12.3 million for the quarter ended March 31, 2000. Gross profit was $6.0 million, or 40% of sales, compared with $5.1 million, or 42% of sales, in the prior-year quarter.  Net income for the 2001 quarter climbed to $0.6 million from breakeven in the comparable quarter in 2000.  (Business Wire)

>  Avigen, Inc. reported financial results for the third quarter and nine-months ending March 31, 2001. During the quarter ended March 31, 2001, Avigen completed the previously announced sale of stock to Bayer Corporation pursuant to a collaboration agreement entered into in November 2000.  Including the Bayer transaction, receipt of total new equity investments reached $15.3 million during the third quarter and $102 million since June 30, 2000.  Avigen reported a net loss of approximately $4.9 million for the three-months and $11.4 million for the nine-months ending March 31, 2001.  In the prior year, Avigen reported a net loss of approximately $7.2 million and $12.0 million, respectively, for the three- and nine-month periods ending March 31, 2000.  These prior-year results included the impact of approximately $5.0 million in cash and non-cash charges for in-license fees incurred in connection with the acquisition of Factor IX gene patents in March 2000. Excluding these one-time costs, Avigen would have reported a net loss of $2.2 million for the quarter and $7.0 million for the nine-month period ending March 31, 2000. (PRNewswire)

Company News Releases

>  Pfizer Inc. is teaming up with Galenica Pharmaceuticals to develop vaccines that prevent and treat diseases in pets and livestock by strengthening the animals’ immune systems.  The partnership will focus on developing vaccines from Galenica’s immune-booster product line, known as GPI-0100.  Any new products resulting from the alliance, which will continue for 18 years, will become part of the drug lineup in Pfizer’s Animal Health division.  Under the terms of the agreement, Pfizer will make an immediate up-front payment to Galenica. The agreement also requires Pfizer to make milestone and royalty payments on vaccine products developed under the partnership. In return, Galenica has granted Pfizer an exclusive worldwide license to use GPI-0100 in vaccines developed for the species of animals, including both pets and livestock, covered in the agreement. (AnimalNet – Knight Ridder Tribune)

>  Pfizer Animal Health will help 400,000 shelter animals — approximately the number of dogs and cats awaiting adoption in 693 participating shelters by providing a one-time donation of more than 700,000 free doses of Revolution (selamectin).  Pfizer Animal Health will also provide Revolution coupons to pet owners who adopt their dog or cat from shelters participating in The Homeless Homer Adoption Kit program. The coupons are redeemable through local veterinarians. (Business Wire)

>  Effective April 30, 2001, FDA’s Center for Veterinary Medicine (CVM) withdrew the approvals of two new animal drug applications (NADAs) sponsored by Abbott Laboratories. The NADAs provide for use of sarafloxacin antimicrobial drugs to treat poultry. Last year, CVM informed Abbott Laboratories that, on the basis of new data and information before it, there is a question of human food safety – the potential for the development of resistant organisms — due to the use of
fluoroquinolones such as sarafloxacin in poultry. After being informed by CVM of this human food safety question, Abbott Laboratories requested voluntary withdrawal of approval of NADAs 141-017 and 141-018. (AnimalNet – CVM release)

>  Vetoquinol announced plans to acquire the veterinary pharmaceutical business of Asklia Holding of Switzerland for an undisclosed sum.  Asklia is active in human and veterinary pharmaceuticals and dental medicine.  Asklia’s Veterinary sales in calendar 2000 were up 3% to CHF 63 million ($36 million).  (Animal Pharm)

>  Kemin Americas Inc and Diamond V Mills have formed a strategic alliance to integrate their technical knowledge and technological resources. Under the alliance, they intend to pursue complementary efforts in research, product development and sales.  (Pig Enews)

>  PETsMART, Inc. has signed a new, secured three-year credit facility agreement with Fleet Retail Finance, Inc., increasing the company’s available line of credit to $250 million. There are no substantive financial covenants associated with the agreement. PETsMART plans to utilize the new credit line to support the company’s growth strategies, strengthen its existing operations, and enhance shareholder value. The new facility upgrades and replaces PETsMART’s previous $110 million credit facility, which had no outstanding balance. (Business Wire)

>  Synbiotics Corporation announced that it received notification from the Nasdaq on April 19, 2001 that it is not in compliance with Nasdaq Marketplace Rules 4450(a)(2), 4450(a)(3), and 4455(b)(1) regarding the market value of the company’s public float, net tangible assets, market capitalization, total assets and total revenue requirements. These items will be addressed at an oral hearing set for May 24, 2001. (Business Wire)

>  Smithfield Foods, Inc. and The Smithfield Companies, Inc. signed a definitive merger agreement that calls for Smithfield Foods to acquire all of the outstanding common stock of Smithfield Companies for $8.50 per share in cash.  The value of the transaction is about $18.0 million. With annual sales of $20 million, Smithfield Companies is a producer of hams and other specialty food products.  Smithfield Foods said that the announced acquisition would provide new marketing resources and outlets for the sale of its products and additional plant capacity for pre-cooked barbecue meat products.  The acquisition would also allow Smithfield Foods to exert greater control over the Smithfield brand name. (PRNewswire)

>  Beaphar, a Netherlands-based pet products company, recently closed down its US subsidiary.  The company had been attempting to establish a US presence by focusing on its dogs treat line.  When the US enacted import restrictions to safeguard the domestic cattle industry and meat supply from BSE, Beaphar could no longer bring the treats into the country and decided to cease operations altogether.  (Pet Product News)

>  PetsVetsandYou, Inc. (PVY) announced that its Form SB-2 Registration Statement filed with the Securities and Exchange Commission became effective on April 13th, 2001. Concurrently, the offering becomes effective in twenty-seven of the forty-six states in which PVY has applied for registration. It is anticipated that at least fifteen additional states in various stages of review, will respond affirmatively to PVY’s applications over the next several months. The Company plans to raise a maximum of $35 million by offering its shares to most of the approximately 55,000 veterinarians, including the 24,000 veterinarian clinic owners throughout the country in states where registration has become effective.  Registered offerings have been made available exclusively to veterinarians for the purpose of establishing “buying groups” organized along
shareholder-restricted co-operatives for the single purpose of amassing group purchasing power. (Business Wire)

>  Digital Video Multimedia / DVM received two Telly Awards in the 2001 competition, for the quarterly video series “Veterinary Staff Meeting” (excellence in corporate training and education) and “Canine Genome Research” (non-profit fund raising).  Telly Awards are given to recognize excellence in video, film, cable television programming and commercial work. The 2001 competition drew over 10,000 entries from the nation’s leading video producers. (company press release)

>  BELGIUM   Nutri-Ad International nv and Inve Group have agreed a collaboration to create a global technical, commercial and logistic infrastructure in the feed sector. Nutri-Ad International produces nutritional and non-nutritional additives, including natural growth promoters, toxin inactivators and acidifiers. Inve specializes in the production of premixes, starter diets and specialty feeds.  (Pig Enews)

>  Watt Publishing and Vance Publishing’s Food Systems Group are sponsoring the Summit on FMD at the Hyatt Regency O’Hare Hotel in Chicago on June 4th.  The purpose of this event is to bring together an international panel of experts to advise top producers, veterinarians, animal industry suppliers and other professionals involved in the pork, beef and dairy production segments.  The Summit will spotlight:
    *   Critical information on FMD
    *   Lessons to be learned from other countries
    *   Prevention and control in the USA
    *   FMD’s economic impacts, including export trade
For additional information, contact Marcia Riddle at +1.815.734.4171 or

    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   The U.S. government’s top veterinarian said Thursday the risk of a U.S. outbreak of foot-and-mouth disease has been sharply reduced because of stepped-up airport inspections and measures taken by Britain to end its epidemic. “Today we’re at a much lower risk than we were a month ago,’’ said Alfonso Torres of the USDA’s Animal and Plant Health Inspection Service. The United States has been free of foot-in-mouth since 1929. (AP)

>  US   Brain tissue samples from 16 German-imported cattle in Texas showed no evidence of bovine spongiform encephalopathy (BSE).  The animals had not shown signs of the disease but were euthanized and tested as a safety precaution, according to the Texas Animal Health Commission.   The cattle were imported to Texas from Germany in 1996, before BSE was diagnosed in that country.  (AgWeb)

>  US   A team of veterinary epidemiologists at Colorado State University has developed a unique survey to assess veterinary professionals’ use of antibiotics.  The survey has been sent to 14,000 practicing veterinarians nationwide, and results will provide information that could help guide national, regional and local policy issues on antibiotic use. Food animal, equine and companion animal veterinarians are being asked to provide specific information regarding how, when, and which drugs are being used in animals. Results should be compiled and released by the end of the year. (AgWeb)

>  US  The beef carcass contains a wealth of meat cuts, but a small number are the big winners for restaurants. In an effort to better utilize the many cuts that are there, which in turn could boost demand for more of the meat, the National Cattlemen’s Beef Association is using a CD ROM  containing an interactive computer program developed with the help of checkoff dollars. The disk helps beef processors, retailers, restaurant operators and others see how using individual muscles within the chuck and round can improve the value of the entire beef carcass.  (DirectAg)

>  US  Using gene therapy, scientists have restored vision in dogs with a version of a rare disease that blinds human infants.  The work may lead to treatments for several genetic forms of blindness. The dogs had a version of Leber congenital amaurosis, an untreatable condition that causes near total blindness in infancy.  If the gene therapy works in Leber patients, it may pave the way for treating a variety of diseases that strike the retina, known collectively as retinitis pigmentosa, which affects 100,000 to 200,000 Americans.  (AnimalNet – New York Times)

>  CHINA   Scientists at Shanghai-based Fudan University, the Shanghai Agricultural Science Academy and several other Chinese research institutes have jointly developed a new vaccine that prevents foot-and-mouth disease in pigs. The vaccine, which took 18 years to develop, is based on proteins extracted from a bacterium that has strong immunity to the disease. A course of 2 doses can keep a pig free from foot-and-mouth disease for up to 5 months. The developers of the vaccine have received a state patent and an official license for its mass production. (Pig Enews)

Perspective: An American in London

Last week I had the honor of speaking to the London Veterinary Forum about how the small animal veterinary practice and profession is changing in the U.S.  The hospitality of the U.K. people and veterinarians was wonderful.  While in the U.K. it was interesting to learn that less than 1% of their entire national herd of cattle have been affected and are being destroyed from the Foot and Mouth disease. However, this does not decrease the significant impact this disease has had on the entire U.K. economy.  Because of the disease, the U.K. is unable to export cattle or many of their cattle products.  

Interestingly, the disease is also having an impact on their pet adoption agency’s ability to place (re-home) abandoned and unwanted pets.   They do not know where the pets have been or their potential exposure to the disease.  While dogs, cats and other pets cannot contract the disease, just as people can’t, they can be carriers.   All of the agencies in the U.K. are at or above 100% capacity and now having to turn abandoned pets away.  The disease is also having a significant affect on tourism to the U.K. and that portion of the veterinary profession that is dependent upon the cattle population as their patient base is economically devastated in some areas.

[Roger Cummings]

Agribusiness News

>   Farmland Industries and Archer Daniels Midland Co. announce they have reached an agreement in principle to enter into a grain marketing relationship.  Under the agreement
a new company, ADM/Farmland Inc., will lease and operate Farmland’s grain assets throughout the United States.  Farmland and ADM will share profits equally. (PRNewswire)

>  Mitsui & Co. Ltd. of Japan entered the U.S. crop protection market and expanded its global Agri-Science operation by completing the purchase of Thermo Trilogy Corporation assets from Thermo Electron Corporation. The new company, called Certis USA, is a leading manufacturer of environmentally friendly crop protection products.  Annual sales of the new Certis operation are approximately $30 million.  Japan’s largest trading company, Mitsui has worldwide annual sales of $130 billion and operates diversified businesses in more than 90 countries. Global crop protection sales now approach $400 million annually. Mitsui markets and distributes an array of crop protection  products and services directly and through its European, Japanese, African and now U.S. marketing subsidiaries. (company press release)

>  The Missouri Attorney General is suing Aventis, saying the company did not tell farmers that the genetically engineered corn was not meant for human consumption. The suit seeks to have Aventis pay Missouri farmers, grain elevators and others for their losses, and to fine the company up to $1,000 for each violation. In January, attorneys general from 17 other states — including Illinois — signed an agreement with Aventis that requires the company to pay farmers for damages. Missouri did not sign the agreement and is the only state to file a lawsuit against the company. (AgWeb – St. Louis Post-Dispatch)

Brakke Consulting Viewpoint
In a recent conversation with one of our clients, I was asked the question, “What could we do to improve our firm’s role as suppliers to the industry?”  I responded by indicating that I thought that being consistent and reliable was probably one of the biggest improvements this firm could make for their customers.

As we consult with many companies on various management issues, we often find that change dominates the sales and promotional programs.  “This new program is going great” (or not so well), is often the leading comment.  What was wrong with the prior program?  The answer is usually something along the lines of “well, you know, it was getting stale and we always have to have a new spring/summer/winter/holiday program in order to give the sales force something to motivate them and to talk about with the customers.”  What about the customer?  Is all this change in policy, strategy, etc. good for them?

While new marketing and sales activities are often necessary, we believe that many of your customers really care very little about the latest “promotion” and would prefer some consistency in their suppliers.  How much would consistency and reliability add to everyone’s bottom line?

These opinions are my own and not necessarily shared by all the consultants here at Brakke Consulting, or in the firms of our clients. 

Have a great weekend, and give consistency a little consideration.

[Ron Brakke]
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