Animal Health News & Notes for March 2, 2001

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Brakke Consulting’s
Animal Health News & Notes for March 2, 2001
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

>  Aventis reported full year 2000 sales for Merial rose 10.5% (+1.1% excluding currency effects) to € 1.74 billion ($1.64 billion) from € 1.58 billion ($1.49 billion) in 1999. (company website)

>  Akzo Nobel reported that for the full year 2000, Intervet turned in an excellent performance with sales of EUR 1.02 billion ($960 million).  The year was dominated by the integration of the Hoechst Roussel Vet businesses acquired in 1999. The strong position of Intervet in the global animal healthcare market was further enhanced by recent acquisitions, including Bayer’s Biologicals in the United States. (company website)

>  Alpharma reported financial results for the fourth quarter and year ended December 31, 2000.  The Animal Pharmaceuticals division (composed of the Animal Health and Aquatic Animal Health divisions) reported revenues for the fourth quarter 2000 of $101.3 million, an increase of 84% over the fourth quarter.  Increases were primarily due to acquisition of Roche’s medicated feed additives business in 2000.  Operating income increased to $19.6 million for the quarter.  For the full year, revenues increased 82% to $319.6 million.  Operating income increased 64% to $58.3 million.  (PRNewswire) 
 
>  Aventis Animal Nutrition reported results for the year ended December 31, 2000.  Sales increased 4.7% to € 577 million ($544 million) compared with sales of € 551 million ($519 million) in 1999.  Positive currency and volume effects helped to offset the ongoing price pressure in the vitamins business, while methionine prices recovered. (company website)

>  PETsMART, Inc. announced results for its fourth fiscal quarter ended January 28, 2001, and for fiscal year 2000. The company reported a fourth quarter net loss of ($27.2) million which includes a $4.9 million non-cash equity loss resulting from PETsMART.com losses realized through the acquisition date of December 20, 2000. Those results compare with a net loss
of ($4.8) million for the same period last year. Net sales for the fourth quarter were $610 million, compared to $570 million for the same period last year. North American comparable store sales for the quarter grew 1.2%. The company’s acquisition of a controlling, 81% interest in PETsMART.com closed on December 20, 2000, and, as of that date, the company reports the e-commerce and catalog subsidiary’s results on a consolidated basis. Included in the company’s fourth quarter consolidated results is a PETsMART.com loss of ($2.7) million, including transaction and one-time charges, from December 20, 2000 to January 28, 2001. The operating portion of that post-holiday loss was ($1.9) million. (Business Wire)

>  Virbac Corporation reported results of operations for the fourth quarter and year ended December 31, 2000.  Net sales for the fourth quarter rose 40% to $12.3 million compared to the same quarter a year ago. Net income for the quarter rose to $0.7 million from a loss of $1.8 million in the quarter ended December 31, 1999. For the full year, net sales rose 8% to a record $53.0 million for the year ended December 31, 1999. Net income was $2.9 million compared to a loss of $0.6 million last year. (Business Wire)

>  Breeding company PIC International reported a turnover of UK£87.6 million ($127 million) for the 6 months to the end of December 2000, up from UK£77.6 million ($112 million) in the first half of its previous financial year. Profit before tax was UK£3.8 million ($5.5 million), compared with a loss previously of UK£1.7 million ($2.5 million). (Pig International e-newsletter)

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Company News Releases

> The law firm of Schiffrin & Barroway, LLP announced a class action lawsuit this week involving IBP Inc. The lawsuit was filed on behalf of all purchasers of the common stock of Iowa Beef Processors, Inc. (IBP) from Feb.7, 2000 through Jan.25, 2001, alleging that on Dec. 29, 2000 the SEC sent IBP’s lawyers a comment letter citing 45 instances of improper accounting during the Class Period. Schiffrin & Barroway say when IBP belatedly disclosed the SEC’s inquiry Jan. 25, 2001, its stock dropped approximately 15% in one day.  (DirectAg)

>  Tyson Foods Inc. will continue with its plan to purchase meatpacking giant IBP Inc., though the process became more complicated when Tyson announced that it would not meet a deadline for the cash portion of its $3.2 billion offer.  IBP and Tyson each said they want to continue to pursue the deal, which has already received Justice Department approval. While Tyson’s offer stands at $30 per share, the ultimate price could drop once IBP’s filings are complete. (Emarkets – AP)

>   BASF AG has deciphered the genetic code of a bacterium that should allow more efficient production of lysine, an amino acid used as protein in animal feed, and it has applied for patent protection for its findings, achieved in partnership with Integrated Genomics Inc.  BASF is the world’s third largest producer of lysine.  The company aims to protect the genes used to improve the lysine production. (AnimalNet – Reuters)

>   IGEN International, Inc. and D-Gen Ltd. announced commencement of a program aimed at the further development of a new test for bovine spongiform encephalopathy (BSE). This collaboration aims to develop a post-mortem assay for use in slaughterhouses to test cattle before they enter the food chain.  (PRNewswire)

>  MetaFarms, Inc., a provider of enterprise applications and business intelligence solutions to livestock producers worldwide, announced it has acquired the rights to the Insight production management software for hog producers from Dekalb Choice Genetics, Inc.  Insight is a sophisticated software application for managing operations in mid-size to large-scale live hog production companies. Terms of the acquisition were not disclosed. (AnimalNet)

>  CANADA: Premium Brands Inc. of Canada announced the sale of its Fresh Pork Division to Olymel, S.E.C., Canada’s largest fresh pork exporter and poultry processor. Olymel is also the second largest hog processor in Canada. The Fresh Pork Division generates approximately $240 million in sales annually. As part of the transaction, Premium Brands and Olymel will enter into a seven-year agreement for the supply of raw materials to Premium Brand’s processing operations. The sale is expected to generate total proceeds of about $90 million. (DirectAg)

>  AUSTRALIA: Three multinational vitamin firms were fined a total of A$26 million (US$13.5 million) by an Australian court for fixing the prices of animal vitamins and market sharing in Australia. Roche Vitamins was ordered to pay A$15 million, BASF A$7.5 million and Aventis Animal Nutrition (formerly Rhone-Poulenc Animal Nutrition) A$3.5 million.  Price fixing and market sharing arrangements were made for the supply of animal vitamins A and E, used in animal feeds in the poultry and pig industries. The three companies control about 90% of the supply of animal vitamin A and E in Australia. (Reuters)

>  NEW ZEALAND: The New Zealand Dairy Group and Kiwi Co-operative Dairies, New Zealand’s two largest dairy companies, announced that they have signed a merger agreement.  The dairy industry merger is worth at least NZ$310 million (US$135 million) a year according to the comprehensive business case prepared by the CEOs of New Zealand Dairy Group and Kiwi Co-operative Dairies. (NZ Dairies)

> SCANDANAVIA: Vital Petfood Group A/S, a leading supplier of pet foods in the Nordic countries, has acquired Jyfodan A/S of Denmark and Unipet AB and Doghouse AB of Sweden.  With the acquisitions, Vital is expected to achieve total revenues of $81 million in the next accounting year.  (Petfood Industry e-newsletter)

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  BRAKKE CONSULTING, INC.
 
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Animal Health News

>  A possible case of mad cow disease in Sweden was likely a false alarm as a second test showed the suspected cow did not have the brain-wasting illness.  Late last week, the Swedish Agriculture Ministry reported a possible case of BSE in Sweden, until now thought to have been free of the illness and therefore enjoying more a relaxed testing regime than other European Union countries. Despite its the negative result, authorities will continue to withdraw from shops beef from the farm where the suspect animal lived, and the farm itself would continue to be isolated with no animals entering or leaving it. (Reuters)

>  Officials in Northern Ireland said they have found foot and mouth disease in sheep imported from England on a farm that that straddles the border with the Irish Republic. The cases were found among 200 English sheep tested after they were slaughtered in the first Irish cull. At the same time, London confirmed another eight cases of the disease in England and Wales.  Britain has extended a ban on livestock movements for two more weeks, and the European Union  lengthened its ban on British exports of live animals, meat and dairy products. Authorities have also closed public footpaths and canceled horse races and various sporting events, in an attempt to minimize the possibility of humans spreading the virus.  (AP)

>  The first cases of foot-and-mouth disease in Scotland were confirmed at farms near Lockerbie and another in nearby Canonbie. Cattle from the farms will be slaughtered, according to the Scottish Executive. The cases were linked to shipments from Britain before it halted livestock movement. Also, Britain’s biggest dog show, Crufts, has been postponed because of the foot-and-mouth outbreak. The Forestry Commission said it was closing all forests. (AP)

>  World trade in pigmeat looks likely to grow by some 38.5% between 2000 and 2010, according to a report from FAPRI, the food/agriculture policy research institute based at Missouri and Iowa State universities. The report says the demand for imports of pork will be driven by economic and population growth in Asia, the territories of the former Soviet Union, South America and the countries of central/east Europe. The greatest growth in import demand will occur in Russia (up 59.5%), Mexico (up 300%), Japan (up 14%) and the Philippines (up 833%). (Pig International e-newsletter)

>  According to the USDA’s February hogs and pigs report, the January pig crop was up 6.1% compared to January 2000.  Both farrowings and pigs per litter are rising rapidly. This implies that July 2001 hog slaughter will be up a little over 6% compared to July 2000.  Accordingly, live hog prices may be in the mid- to low-$40s by July 2001. (DirectAg)

>  A UK biotechnology company has developed genetically altered chickens carrying a gene coding for insulin. The chickens carry the added gene in all their cells, making them “germline’’ transgenic chickens that may someday generate flocks of hens capable of producing eggs that carry the therapeutic protein. TranXenoGen said it should know in about four months, when the chickens begin laying eggs, whether any of the animals express sufficient protein in their eggs to found a flock of feathered drug producers. (E-markets – NYT)

>  A process to make ground meat more tender may also make it safer to eat, according to the USDA.  Using a technique referred to as hydrodynamic pressure process (HDP), ARS scientists place meat in a container of water, then detonate a small amount of explosives that creates a shock wave in the water. The shock wave tenderizes the meat by severing the stringy striations that can make meats like beef tough. Although initially used to tenderize meats, new studies have found that it also reduces foodborne pathogens.  Additional studies have been conducted to determine the effect HDP has on E. coli 0157:H7 in fresh ground beef, again with encouraging results. Ground beef that had been seeded with E. coli 0157:H7 had no detectable levels of the dangerous organism after HDP treatment. Additional studies are necessary to determine if HDP can be put to practical use in a commercial setting. (DirectAg)

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Agribusiness News

>  After nearly a decade of research in Europe, the much-acclaimed “golden rice” has finally arrived in Asia, its intended destination. The first research samples of golden rice were brought to the Philippine-based International Rice Research Institute (IRRI) in January from Switzerland, where the strain was invented. Golden rice has attracted much attention because it contains building blocks for vitamin A. Deficiency in the vitamin causes blindness and other diseases.
Ninety percent of the world’s rice is grown and consumed in Asia, the world’s most populous continent. It will take at least three years to send golden rice for field testing in Asia and another two years before they are available to farmers. Once the research is completed, golden rice will be distributed free of charge to poor farmers in the developing world. (Emarkets – Agence France-Presse)

>  Some corn seed headed for sale to farmers has been contaminated by small amounts of StarLink corn. Seed companies detected the genetically engineered grain while testing their stocks. It was unclear how many seed companies found the genetic material in their products. None of the contaminated corn seed has been planted, but farmers and grain exporters fear the discovery could alarm European and Asian companies who have said they will not buy any corn suspected of being tainted by StarLink.  (Emarkets – AP)

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Brakke Consulting Viewpoint
 
The fourth quarter reports of several manufacturing companies showed the positive growth that comes from being aggressive in the acquisition area.  These firms posted some nice gains as a result of their taking some risks in order to grow their business.  On the other hand, PETsMART again demonstrated that the pet retail business is not that profitable when coupled with a dotcom
business.  It appears that even firms with bricks and mortar plus some of the lowest purchasing costs in the industry have difficulty making a go of it in Internet retailing. 

The foot and mouth outbreaks that are now being reported across the British Isles need to be viewed with great concern by the industry. This type of negative press for the industry and the pictures of thousands of animal being burned do not provide a positive image to the public.  The sooner it is under control the better for everyone. It appears to us that the current outbreaks of various animal diseases in several parts of the world will put more regulatory focus on health programs and management practices of producers.  How will the animal health industry participate?  A few weeks ago we mentioned the new program developed by several of the leading veterinary colleges related to a food safety education program for International veterinary students. We’re looking for corporate support.  If you are interested in ensuring that future veterinarians are equipped to manage the global ramifications of food safety issues, please contact me at rbrakke@brakkeconsulting.com (mailto:rbrakke@brakkeconsulting.com), or call our Dallas office at 972-243-4033.
 

[Ron Brakke]
 
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