The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for July 21, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Elanco reported worldwide sales of animal health products in the second quarter were $151.3 million, an increase of 9% when compared with the second quarter of 1999.  Excluding the effect of exchange rates, sales grew by 12% for the quarter.  Paylean was launched in early July as a new swine feed ingredient that directs nutrients to increase the amount of quality meat in
high-value cuts and improves production efficiencies. (PRNewswire)

>  Colgate-Palmolive reported that sales at Hill’s Pet Nutrition for the second quarter 2000 increased 4% on unit volume increases of 6%.  Market shares have increased nationally in both the veterinary and specialty pet channels. Strong veterinarian endorsements, higher sales from Science Diet Feline Hairball Control and its lifestage variants, and effective national selling programs all benefited domestic growth and market shares in the quarter.  Hill’s-International grew strongly in all regions. (Business Wire)

>  IDEXX Laboratories, Inc. reported net income of $9.5 million for the quarter ended June 30, 2000, compared to net income of $8.0 million for the same period in the prior year. Revenues for the second quarter increased to $93.6 million from $91.5 million for the second quarter of 1999.  IDEXX also announced that Lou Pollock has been promoted to Senior Vice President. Mr. Pollock is President of the Company’s veterinary diagnostic products division and has served in a variety of senior management positions since joining IDEXX in 1987. (Business Wire)

>  Neogen Corporation reported fourth quarter revenues of $6.5 million, a jump of 23% from the previous year’s $5.3 million.  The record-breaking fourth quarter followed Neogen’s exceptional third quarter.  Neogen’s Triple Crown line of animal safety products saw an increase of 38%.  For its 2000 fiscal year, Neogen’s revenues were $23.5 million, a 6% increase from the previous fiscal year’s $22.2 million.  Net income rose in fiscal year 2000 to $3.1 million, compared to $2.3 million in the previous fiscal year. (PRNewswire)

> Jones Pharma reported that second quarter 2000 sales of its veterinary division, Daniels Pharmaceuticals, were  $2.8 million, an increase of 30% over the same period in the prior year.  For the six months ended June 30, 2000, veterinary sales were $ 5.0 million, an increase of 5% over the previous year. (Business Wire)

>  ImmuCell Corporation reported that for the three month period ended June 30, 2000, total revenues increased by 40% to $1.5 million compared to the same period in 1999. The net operating profit of $64,000 compares to a net operating profit of $79,000 for the three month period ended June 30, 1999.  ImmuCell is a biotechnology company commercializing proprietary technologies to help dairy and beef producers and their veterinarians manage disease and reproduction in their herds. (BW HealthWire)

Company News Releases

>  VetSmart, which owns and operates more than 250 full-service veterinary hospitals inside PETsMART stores, has changed its name to “Banfield, The Pet Hospital.”  The practice, under the name Banfield, The Pet Hospital, will continue to operate hospitals inside PETsMART superstores and will partner with PETsMART to grow the Practice to serve more clients in more regions. (Business Wire)

>  Luitpold Pharmaceuticals announced a partnership with The Butler Company as the first  distributor sales agent for Adequan Canine arthritis products.  The agreement marks a significant expansion in the sales reach for Adequan Canine.  (Pet Business)

>  Land O’Lakes and Farmland Industries announced an agreement to establish Land O’Lakes Farmland Feed LLC, a joint venture company that will consolidate all aspects of the feed businesses of Land O’Lakes and Farmland.  The joint venture will be North America’s largest feed company.  The joint venture company will combine Farmland and Land O’Lakes production, distribution and marketing of formula feed and feed ingredients, animal health products, and pet and specialty products.  This joint venture company is expected to begin operations late this summer.  Based on 1999 results, Land O’Lakes Farmland Feed will have initial sales of approximately $1.6 billion.  The joint venture will have an annual feed production capacity of approximately 9 million tons. (PRNewswire)

> announced that it has concluded the acquisition of certain strategic assets and partnerships of  As part of the all-stock transaction, will also receive a $3 million equity investment.  The acquisition adds two relationships partnering with and Safeway.  (Business Wire)

>  VetExchange announced a new relationship with Monument Pharmacy to bring specialty drugs and products online, allowing veterinarians to order compounded medications via the internet.  Prior to this agreement, veterinarians in need of such pharmaceuticals had to locate a compounding pharmacy, determine if that pharmacy carried veterinary products, and then proceed with the ordering process.  Monument Pharmacy is one the few compounding pharmacies specializing in veterinary products. (PRNewswire)

>  Thanks to IBM and a new Internet site called, pet owners now have a much better chance of recovering their lost pets. is a database and information website offering pet owners and businesses serving their needs information and solutions to problems such as lost pet recovery, pet adoption, and pet care.  Happy Paws is the sponsor of the International Saving Pets Lives Program that is currently being rolled-out to Animal Shelters across North America.  It is the first private program to be publicly endorsed by the National Animal Control Association.  To date over 86% of the shelters in America have agreed to participate in this program. (PRNewswire)


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Animal Health News

>   The USDA ordered 376 imported sheep to be destroyed after tests showed they might be infected with a sheep equivalent of mad cow disease. Tests of four slaughtered sheep found evidence of a version of bovine spongiform encephalopathy.  The sheep, which have been quarantined since 1998, came from an area of Belgium where mad cow disease was found. They are the only such flock in the United States. Officials said sheep have not gotten mad cow disease anywhere in the world, but acknowledged that scientists have been able to infect sheep with the disease in laboratories.  (AP)

>  Two Danish companies, FDB and Danpo A/S, have collaborated to produce chicken that is free from both Campylobacter and Salmonella.  The product is initially being sold as frozen chicken, as the amount of time required for testing is too great to allow them to be delivered fresh.  Birds that are disease-free during the critical growth period are produced through the use of strict hygiene and dry. sealed henhouses.  (World Poultry)

>   For the underactive person with a hyperactive dog, there is GoDogGo, the world’s first automatic “fetch” machine.  Working on the same principle as pitching machines or mechanical tennis servers, the contraption adjusts so it can launch balls from 15 to 30 feet, and has a delivery setting that ranges from a toss every seven to 15 seconds. GoDogGo runs both on AC power and batteries. GoDogGo is available exclusively at PETsMART stores, or ordered direct from the inventor.  (The Detroit News)
>  Urban Pet will open its doors to the company’s flagship store in Seattle on July 22.  Urban Pet offers a unique retail experience for pets and their owners, including upscale retail products, do-it-yourself and professional grooming, training, walking, pet sitting, and veterinary services.  Urban Pet is a full service pet care enterprise, offering products and services that focus on the health, safety and enjoyment of cats, dogs and their owners.  And soon-to-be added to Urban Pet’s website will be e-commerce with an option of free home delivery. (PRNewswire)

Agribusiness News

>  The European Commission is reportedly set to clear plans by drug groups Novartis AG and AstraZeneca Plc to merger their agribusinesses.  The Commission, the European Union’s antitrust watchdog, must decide before August 4 whether to clear the $15 billion deal to create a new firm Syngenta, which will be the world’s largest crop protection company and third largest in seeds.  A spokesman for AstraZeneca said last week he was unaware of the company making any additional concessions to the Commission beyond its offer last month to sell its acetochlor corn herbicide arm. Switzerland’s Novartis said in June it would divest its Flint line of fungicides, including all intellectual property rights and the production facility in Muttenz in Switzerland. (Reuters)

>  A team of experts assembled by the National Research Council concluded that chemical pesticides will continue to play a role in pest management in the United States for at least the next 10 years. The group based its conclusions on the fact that recently developed pesticides are more compatible with the environment, and viable, affordable alternatives are not yet widely available. In its report, “The Future Role of Pesticides in U.S. Agriculture,” the team recommends “maintaining a diversity of tools for maximizing flexibility, precision and stability of pest management.” Sponsored by the FDA’s Agricultural Research Service and the EPA, the committee began its research in 1998, gathering information through workshops, expert testimony and a review of literature about the topic. (Environmental News Network)

News from Brakke Consulting – Australia

* As of July 2000, milk prices across Australia have been deregulated.  After deregulation, the average overall price of milk is likely to drop approximately 6 cents per litre.  To sustain financial viability post-deregulation, dairy farmers will need to produce a minimum of between 800,000 and 1 million litres of milk a year.  Many of the smaller milk producers will therefore need to reduce production costs or expand their herd to reach the required critical mass.  Consequently, deregulation of the Dairy Industry will undoubtedly significantly reduce the number of milk producers in Australia, as the price of market milk drops, from the current 14,000 milk producers to 10,000 or 11,000 over the next five years.

*  Further rationalization among Australia’s major rural services players is in the wind.  Earlier this year, merger talks between IAMA and Ruralco (who own CRT rural services), failed.  Now IAMA  has confirmed that it is holding merger discussions with Wesfarmers Dalgety, the rural services arm of Wesfarmers.  Consolidation in the ‘over-serviced’ rural services area has been considered inevitable for some time.  IAMA has been showing low profits, and recently sold its Animal Health manufacturer, Vetsearch, to Virbac, presumably to have more funds available.  Announcements of a Wesfarmers proposal to IAMA shareholders are anxiously awaited.

For further information about the Australian animal health market, contact Dick Miles at Miles/Brakke Consulting in Sydney Australia, at


Brakke Consulting Viewpoint

Some of the sales and earnings reports for the second quarter have begun appearing.  Thus far, everyone is reporting increases over the prior year.  As we have been indicating for some time, we believe that 2000 will be a good year for animal health.

There still remains a lot of activity in the dotcom arena.  The impact the Internet will have on your business in the next 24 months could be very dramatic.  We’ve started to see some business models emerge that are based on building a solid business over time, and not just hype for a quick equity return in an IPO.  Select your partner carefully, and you will be rewarded as your Internet presence enhances your bricks and mortar business.

 [Ron Brakke]
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