The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for May 12, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Novartis announced that animal health sales increased 19% to CHF 251 million ($151 million) in the first quarter of 2000.  Animal health sales were greater than that of the company as a whole, and the company expects further sales increases this year.  The sales increase was attributed to an increase in the European and Latin American farm animal sectors, as well as the contribution of Vericore, acquired in 1999. (Animal Pharm)

Company News Releases

>  Pfizer Animal Health has created the Revolution Mobile, a 25-foot-long, seven-ton vehicle displaying a larger-than-life dog and cat that will roam the country as part of Revolution Pet Trek 2000, a cross-country tour designed to educate pet owners about the importance of protecting their pets against parasites.  Between May and November 2000, the Revolution Mobile will visit more than 20 dog- and cat-related events across the United States, including dog and cat shows, Humane Society events, community celebrations, veterinary gatherings and more. (PRNewswire)

>  Novartis announced its intent to acquire the remaining interest in Cobequid Life Sciences.  An affiliate of Novartis Animal Health already owns approximately 40% of the outstanding common shares of Cobequid.  The offer will be made at C$4 per share, a significant premium over the 20-day average closing price.  The total consideration will be approximately C$33 million (US$22 million). (company press release)

>  Trading of Novartis shares on the NYSE is expected to commence on May 11, as American Depositary Shares (ADSs). Swiss-based Novartis has begun its program of meetings to attract U.S. investors. The company, which currently trades on the Swiss Stock Exchange, will trade on the NYSE under the symbol of NVS. Novartis’ current ADSs will be split two for one on the listing date, changing the present ratio from 20:1 to 40:1. Under the new ratio, 40 ADSs will equal one registered share. (AgWeb)

>  Alpharma announced that it has entered into an agreement to sell approximately 5 million shares of its Class A common stock to Donaldson, Lufkin and Jenrette Securities Corporation.  Subject to normal closing conditions, the Company will receive approximately $186 million net of fees and expenses, which it intends to use for the repayment of a substantial portion of the debt incurred in connection with the recent acquisition of the Medicated Feed Additive business of Roche.  The closing is expected to occur on May 12, 2000. (PRNewswire)

>  Neogen Corporation has entered into a letter of intent to acquire AmVet Pharmaceuticals.  The purchase is subject to due diligence and approval of Neogen’s Board of Directors, and is expected to be completed in less than 60 days.  AmVet owns the formulas for 25 different products under approximately 40 labels, the majority of which are sold under the AmVet label.  AmVet sales have made solid advances in each year since its 1996 founding.  Total annual sales are currently in excess of $3.6 million. (PRNewswire)

>  Doane Pet Care Company announced that it has completed the acquisition of all the outstanding capital stock of A/S Arovit Petfood, whose headquarters are located in Esbjerg, Denmark, under substantially the same terms announced on March 24, 2000 when it entered into the Share Purchase Agreement.  Under these terms, Doane paid approximately DKK 1.2 billion (or approximately $149 million, net of foreign currency hedges) and assumed indebtedness, net of cash, of approximately DKK 97 million.  As a result of the transaction, Arovit became a wholly owned subsidiary of Doane. (PRNewswire)

>  Vetstream, Inc., developer of electronic informational tools for the veterinary profession, announced its European division, Vetstream plc, has been acquired by Premium Petcare Ltd, Europe’s largest home-shopping company for pet owners.  Under this agreement, Vetstream will assume responsibility for providing all content across Premium Petcare’s professional and consumer channels.  Premium Petcare sells pet care products in Europe via direct mail, phone, its core European pet portal and localized web sites in the UK, France and Germany. (company press release)

Animal Health News

>  The South Korean government has said that it will reopen most of its livestock markets this week, having halted the spread of foot and mouth disease.  No new outbreaks have been reported in over a month.  Livestock markets in the previously affected areas will remain closed at least until the end of May. (AP)

>  Hours after authorities in southern Japan declared the outbreak of foot-and-mouth cattle disease over,  the government said that hundreds of possibly sick  cows in the north would be slaughtered. Agriculture Ministry official Yoshio Morinaga was cited as saying that two calves at a farm in Hokkaido, Japan’s northernmost island, were confirmed as carrying the highly contagious virus. Morinaga was cited as saying that the slaughtering of more than 700 cows at the farm in the town of Hombetsu, 700 kilometers north of Tokyo, all suspected of carrying the disease, will begin Friday. (AP)

>  FlyCracker, a new fly control product, has been successfully tested and Biospherics is marketing the new pesticide that kills fly larvae, but is completely safe to humans. FlyCracker is a dry, granular substance that is sprinkled over areas prone to infestation.  FlyCracker does not need to be registered with the Federal Environmental Protection Agency and is “Generally Recognized As Safe” (GRAS) by the Food and Drug Administration.  The product relies on a physical, rather than a chemical, process that does not allow the fly larvae to develop into adult flies. Hence, no resistance can be developed to the new pesticide. Biospherics is marketing FlyCracker both on the Internet and via a toll-free telephone number.  (PRNewswire)

>  The American Pet Products Manufacturers Association (APPMA) issued a report “Healthy Pets, Healthy People” indicating a strong correlation between improved physical and mental health among people who have pets.  The report reveals that our personal well-being may be directly related to this strong human-animal bond. According to the director of communications for APPMA, it has been known for some time that pets help people relax and lower their blood pressure.  The study probes some areas which might explain why.  APPMA’s “Healthy Pets, Healthy People” survey was conducted in April 2000, surveying over 500 people across the United States who own at least one pet. (PRNewswire)

Agribusiness News

>  The FDA announced plans to refine its regulatory approach regarding foods derived through the use of modern biotechnology.  FDA will publish a proposed rule mandating that developers of bioengineered foods and animal feeds notify the agency when they intend to market such products. In a related step, the agency will augment its food and veterinary medicine advisory committees by adding scientists with agricultural biotechnology expertise. FDA will use these committees to address over- arching scientific questions pertaining to bioengineered foods and animal feed.  FDA also announced today plans to draft labeling guidance to assist manufacturers who wish to voluntarily label their foods being made with or without the use of bioengineered ingredients. (U.S. Department of Health and Human Services)

Brakke Consulting Viewpoint

The news for the week continues to reflect the consolidation in the animal health industry.  While there were not large mergers or acquisitions, there were several small ones which make a few companies a bit larger and others no longer independent.  We see no change in this trend that has been happening for several years.   The INTERZOO Pet Show in Germany that we attended last week was one of the most impressive meetings we’ve been at in some time.  The Europeans have certain customs in their trade shows that make for a more interesting venue.  There is not any question about the purpose of the trade show.  It is to sell product.  We observed some interesting new marketing strategies and trends in the flea and tick market in Europe that will probably make their way to the US.  Stay tuned!!

[Ron Brakke]
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