The Experts in Animal Health

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

>  Ralston Purina Company announced fourth quarter earnings before unusual items of $93.2 million compared to $79.8 million in the prior year quarter, an increase of 17%. Fourth quarter sales increased 12% to $790.7 million compared to $706.8 million in the prior year fourth quarter. For the current fiscal year ended September 30, 2001, sales and earnings before unusual items were $3.0 billion and $338.4 million, respectively, compared to sales and pro forma earnings from continuing operations before unusual items of $2.9 billion and $313.0 million in the prior year.  (PRNewswire)

>  Procter & Gamble reported that for the first quarter ended September 30, 2001, its Health Care division delivered double-digit growth behind the sustained development of initiative programs on leading brands.  Unit volume was up 19%, driven by excellent results in oral care, Iams pet health and nutrition, and pharmaceuticals.  Net sales grew 21% to $1.18 billion, excluding a 2% unfavorable exchange impact.  Iams continues to grow behind initiatives and channel expansion. (PRNewswire)

>  Embrex reported that third-quarter revenues for 2001 were $11.5 million, an increase of 18% over revenues of $9.7 million for the same period in 2000. Third-quarter net income was $2.1 million, an increase of 27% over net income of $1.7 million for the same period in 2000. For the nine months ended September 30, 2001, revenues were $33.0 million, a 15% increase over revenues of $28.7 million during the same period of 2000. Net income for the first nine months of 2001 rose 26% to $6.1 million from $4.8 million for the first nine months of 2000. (company press release)

>  The Clorox Company reported that sales for the first fiscal quarter ended September 30, 2001 in its specialty Products division were $290 million, an increase of 12% over the previous year.  Specialty Products includes charcoal, U.S. and European automotive-care businesses, cat litter, insecticides, food products and professional products.  Strong volume growth in this segment reflects healthy gains across all businesses, especially auto care and cat litter.  Supported by increased merchandising, advertising and promotional activity, Fresh Step and Scoop Away cat litter brands posted record double-digit volume gains, Fresh Step traditional clay and silica-gel crystals cat litters achieved all-time high market shares and Fresh Step scoopable litter achieved its highest market share in 18 months. (Business Wire)

>  Pilgrim’s Pride Corporation announced income before extraordinary charges of $13.8 million for the fourth fiscal quarter ended September 29, 2001, a $2.5 million increase compared to the prior year’s fourth quarter.  Net sales for the fourth fiscal quarter were $641.3 million, a 69.0% increase compared to the same period last year, with the increase resulting primarily from the acquisition of WLR Foods, Inc., which was effective January 27, 2001. For fiscal 2001, the Company reported income before extraordinary charges of $42.0 million a $10.3 million decrease when compared to the prior fiscal year. Net sales for fiscal 2001 were a record $2.2 billion, a 47.7% increase compared to the same period last year, with the increase resulting primarily from the acquisition of WLR Foods, Inc. (PRNewswire)

Company News Releases

>  VetCentric announced its partnership with Merial to provide home delivery of many of Merial’s leading companion animal products on behalf of recommending veterinarians.  VetCentric’s prescription management services will enable Merial to expand its reach to veterinarians and their clients. Additionally, VetCentric has agreed to exclusively promote Frontline flea and tick products for dogs and cats, and Heartgard brand products, Merial’s leading heartworm preventive. (company press release)

>  The Iams Company launched two new hairball control cat food formulas – Iams Active Maturity Hairball Care and Iams Weight Control Hairball Care.  Iams is giving away two Volkswagen Beetles to tell cat owners they no longer need to be “bugged” by hairballs. (PRNewswire)

>  Vigortone Ag Products announced plans to consolidate its manufacturing locations.  Three plants will be closed in an effort to reduce costs, increase efficiency and maximize the value of its assets.  The remaining plants will tale over manufacturing and distribution activities for the closed plants.  (Feedstuffs)

>  Land O’Lakes announced that it has completed the acquisition of Purina Mills at the cash price of $23 per share.  Purina Mills is now a part of the consolidated business operated by LOL Farmland Feed.  The total acquisition cost was an estimated $360 million, including the assumption of approximately $130 million in debt.  LOL Farmland Feed’s capacity is now nearly 16 million tons and has sales of around $2.5 billion.  (Feedstuffs)

>  Tyson Foods, Inc., has felt little sales impact from the Sept. 11 attacks on the U.S., although the Northeast and south Florida have had some weakness, according to Tyson’s CEO. Consumers may be eating out less since the attacks, particularly at more expensive restaurants, but as foodservice sales decline, retail sales to groceries increase, leaving little impact overall, Tyson said. (WattPoultry)

>  TW Medical Veterinary Supply, based in Austin, Texas, has been named one of America’s entrepreneurial growth leaders by Inc magazine, which this week released its annual ranking of the Inc 500, the nation’s fastest-growing private companies.  To be eligible for this year’s Inc 500, companies had to be independent and privately held through 2000, have at least $200,000 in sales in the base year of 1996, and their 2000 sales had to have exceeded 1999 sales.  TW Medical Veterinary Supply was ranked # 82 on the Inc 500 based on a 2,638% sales growth in the past five years with sales growing from $479,000 in 1996 to $13,115,000 in 2000.  TW Medical’s customer bases include over 2,300 customers serviced by both inside and outside sales representatives.  (company press release)

>  SemBioSys Genetics Inc. announced that it has been granted a U.S. Patent covering the use of its oil body-based plant expression technology for the production of somatotropins. The patent broadly covers the production of any somatotropin including human, bovine or fish forms of the
protein.  SemBioSys is using a variety of genetic engineering technologies to express proteins in the seeds of safflower.  The technology is amenable for oral and topical delivery of bioactive peptides and proteins. (AnimalNet)

>  SPAIN   Animal nutrition companies Norel S.A. and Nature S.A. in Spain have merged to form Norel&Nature Nutricion. The new enterprise has a consolidated turnover of over 45 million Euros and 6 production centers, including a new site dedicated to the production of physiological growth promoters. (Pig Enews)

Brakke Consulting, Inc. announces second

New York City, Wednesday, November 28th and Thursday, November 29th, Brakke Consulting, Inc. will repeat its successful Due Diligence Seminar recently held in Chicago in September.  Registration is $1,250. Registration is limited.  Please contact Roger Cummings or Jane Morgan at the Dallas office 972-243-4033 or by email at or for further information.


Animal Health News

>  US   A fecal detection system capable of scanning a beef carcass to detect contamination too small for visual inspection is nearing commercial introduction.  Scientists from USDA’s Agricultural Research Service and Iowa State University have developed and patented the new technology, which is exclusively licensed to eMerge Interactive Inc., which is providing optical and electronic engineering support. In a recent trial of a prototype, the detection system revealed trace levels of fecal contamination that was invisible to the human inspectors. The prototype was also successful in evaluating fecal decontamination of carcasses treated with high-temperature steam. (Meating Place)

>  US   Wisconsin’s senators have introduced Johne’s disease legislation for a program that would provide incentives to dairy producers to voluntarily test for Johne’s disease and remove infected and exposed animals from their herds. The primary goal of this legislation is to encourage dairy herd owners to be practically free of Johne’s disease in 7 years.  (AgWeb)

>  US   Researchers at Kansas State University are testing a new foam product that can kill anthrax spores to see if it can also destroy foodborne pathogens such as E. coli 0157:H7, Salmonella, Listeria, Staphylococcus and Pseudomonas that may persist on food processing equipment.  The product, which is non-toxic, non-corrosive and looks like shaving cream, may have potential for sanitizing meat cutters’ protective equipment, or to sanitize feedlot pens or poultry houses. Sandia Labs initially developed the foam to decontaminate tanks or other military equipment that might be exposed to various biological warfare agents. Sandia Labs has licensed the product through a private company, which is promoting its use against anthrax.  (AgWeb)

>  US   The University of Wisconsin, Madison has created what is being described by the Milwaukee Journal Sentinel as the world’s first lines of bird stem cells.  UW researchers working with chickens and quail describe this feat as a breakthrough with several potential benefits, including new methods of producing expensive pharmaceuticals using chicken eggs and helping to preserve endangered species of birds such as the whooping crane.  The potential drugs that could be produced by transgenic chickens are numerous, including antibodies, clotting factor drugs, growth hormones, improved flu vaccines and interferon. (Meating Place)

>  KOREA   Korean scientists have bred 33 “super pigs” which may provide hope to humans with anemia by expressing erythropoeitin (EPO) in their milk.  Erythropoetin (EPO) is a natural human hormone secreted by the kidneys that acts on the bone marrow to stimulate production of red blood cells.  The scientists extracted EPO from a healthy human and injected cells into a sow’s fertilized egg. She then gave birth to a boar in 1998 that carried the human gene. The boar was mated with several sows, eventually producing 32 piglets having the ability to produce EPO in their milk. One cubic centimeter of milk from the pigs can produce enough medicine to treat up to 20 anemic humans.  (DirectAg)

>  US   The Chicago City Council is considering an ordinance in which dogs deemed dangerous would have to be spayed or neutered and fitted with a surgically implanted microchip for identification. Under the measure approved by a council committee Monday, the owners also would be required to obtain $100,000 in liability insurance. The measure was prompted by the dog-attack deaths of two young children and the mauling of a third in the past three months.  Some 50 dogs a year are labeled dangerous by the Chicago Commission on Animal Care and Control after investigations that include signed statements from witnesses and a review of hospital reports. Under the old law, their owners were required only to post signs and keep their animals in enclosed pens. (AP)

Agribusiness News

Brakke Consulting Viewpoint

It has been a good third quarter for many of the companies serving the companion animal market.  The results from the pet food companies would indicate that the dogs and cats are eating well.

We’ve been involved in several surveys and focus groups of veterinarians in the past few weeks that would indicate that the events of September 11 are having a more negative impact on sales of veterinary products and services than was previously thought.  However, it is hard to separate out the impact of the terrorist attacks and that of an economy moving into recession.  We would encourage you to watch this closely.  We’ll be expanding our surveys over the next several weeks.

Also, next week is the kick-off of our Sales Force Effectiveness Study focus groups.  Thanks to those companies who are participating.  There is still time for those of you on the fence to join in this undertaking.

Finally, we still have space available for our New York Due Diligence Seminar on November 28 and 29.  We have another good group of participants already registered, and very positive feedback from the participants in the September seminar in Chicago.

Have a great weekend.

 [Ron Brakke]
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