The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for February 9, 2001

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  2000 was a record-setting year for Veterinary Pet Insurance.  Policy sales soared during the year marking the new millennium.  In 2000, VPI issued more than 157,000 policies, an increase of 36% over 1999.  Premiums for 2000 increased by 49.5% over 1999 proving that pet owners are opting for the most comprehensive insurance packages available.  VPI processed 40.3% more claims in 2000 than in 1999.  VPI expects to generate $50 million in revenue this year. (company press release)

> Central Garden & Pet Company announced its financial results for the fiscal first quarter of 2001, ended December 30, 2000. Net sales for the first quarter were $213.3 million compared with $219.1 million in the comparable fiscal 2000 period. The Company recorded a net loss for the quarter of $4.5 million compared with a net loss of $6.5 million in the comparable year-ago period. Central typically shows a loss in the three-month period ending in December, which is the slowest time of the year for the garden industry. (Business Wire)

>  Draxis reported Companion Animal Health revenues for the fourth quarter of 2000 derived from the Company’s collaboration agreement with Pfizer with respect to Anipryl were $C 3.9 million ($US 2.6 million)  in the fourth quarter of 2000.  The revenues included $C 2.1 million ($US 1.4 million) accrued in respect of minimum royalties relating to the three-year period ending December 2000. Excluding this amount, fourth quarter revenues increased 15.2% over the prior year. Segment EBITDA for the fourth quarter of $C 3.5 million ($US 2.3 million) compares with $C 1.5 million ($US 1.0 million) for 1999. The Company believes there are future entitlements for additional minimum royalties under the Anipryl agreement. The amounts of such future entitlements, however, are not yet determinable. (Business Wire)

>  IVAX Corporation reported record financial results for the fourth quarter and year ended December 31, 2000. Income from continuing operations for the fourth quarter of 2000 was $49.7 million, an increase of 66% over fourth quarter 1999’s income from continuing operations. Net revenues for the fourth quarter of 2000 were $242 million, an increase of 27%, compared to net revenues in the fourth quarter last year. For the year ended December 31, 2000, income from continuing operations increased by 101% to $140million, compared to fiscal 1999. Net revenues for 2000 increased by 21% to $793 million from $656 million in the prior year. (Business Wire)

>  Church & Dwight reported fourth quarter 2000 sales of consumer products increased 7.5% led by growth in laundry and cat litter.  Sales of consumer products were up 8% for the full year.  Sales of specialty animal nutrition products were $16.9 million, up from $16.7 million in the comparable quarter in 1999.  Sales of specialty animal nutrition products for the full year were $67.9 million, up from $64.4 million in 1999. (Business Wire)

Company News Releases

>  Heska Corporation announced that it has entered into an exclusive agreement with the Torrey Mesa Research Institute to evaluate a collection of Heska’s proprietary genes in TMRI’s novel expression and delivery platforms for the ability to alleviate and prevent clinical symptoms of allergic disease.  The Torrey Mesa Research Institute, formerly NADII (Novartis Agricultural Discovery Institute, Inc.), is an affiliate of Syngenta AG. Heska currently sells allergen extracts to veterinarians for therapy of allergic cats and dogs, requiring regular injections.  Alternative means of delivery, such as TMRI’s plant expression and non-parenteral protein therapy technologies, are extremely promising.  (company press release)

>  Heska Corporation announced that it has completed a private placement of approximately 4.57 million shares of common stock for aggregate proceeds of approximately $5.7 million with a group of institutional investors, including existing stockholders of Heska.  Wells Fargo Van Kasper acted as a financial advisor with respect to the transaction.  Heska intends to use the proceeds for working capital. (PRNewswire)

>  Synbiotics sold its W34Commerce marketing services subsidiary to the unit’s management.  Synbiotics will retain a 16% stake in the company, and continue as a client.  Last summer, Synbiotics had announced that it was planning to sell off its animal health business after acquiring W3 in January 2000, a move that would have changed the company into an ecommerce-focused business.  With the sale of W3, Synbiotics will focus in its animal health business. (Veterinary Practice News)
>  Tyson Foods, Inc. extended its cash offer for IBP stock until the South Dakota meat-packing company resolves issues with the Securities and Exchange Commission.  John Tyson, chairman, president and chief executive officer, said on Tuesday that Tyson is extending until Feb. 20 the expiration date of its offer to purchase up to 50.1% of the outstanding shares of IBP stock. (AP)

>  Veterinary Pet Insurance announced three new, comprehensive insurance plans for dogs, cats and birds:  VPI Standard Plan, VPI Superior Plan and VPI Avian & Exotic Pet Plan. Highlights of the VPI Standard and VPI Superior Plans include a lower premium rates for cats; new, simplified benefits reimbursement; increased surgical benefits; enhanced benefits for specialized diagnostics; and a lower per incident deductible.  (PRNewswire)

>  BIOLASE Technology, Inc. announced it has expanded its market potential for its Twilite diode laser by selling through a distributor to the veterinarian market.  BIOLASE has appointed Veterinarians Management Services, dba Summit Hill Laboratories, as its North American distributor for veterinarian sales of the Twilite laser. Summit Hill Laboratories, a privately held company, has been selling pharmaceuticals, dental, surgical and anesthesia equipment to the veterinarian market for 35 years.  Summit Hill sells its products through 25 veterinarian distributors who have over 800 field sales people and 800 telemarketers. (PRNewswire)

> withdrew its plans to go public, saying it has sold nearly all of its assets to Petco and no longer conducts business. Petopia, which is based in San Francisco, announced in a filing with the Securities and Exchange Commission that it is withdrawing a $100 million initial public offering. It was planning to use the net proceeds to repay $2 million in debt as well as for general corporate purposes, including marketing expansion and brand-building efforts. (Reuters)

> announced a two-year agreement with VetConnect Systems, Inc., which makes the preferred e-commerce provider for offers one-stop, online shopping with significant price discounts for veterinarians via an e-commerce website.’s online services include the delivery of diagnostic lab test results, and access to consulting services and business and reference information. (company press release)

  New Consulting Services Offered

With the addition of Ken Berkholtz to our consulting team, we look forward to providing our clients with these New Services immediately.  We believe providing searches in these specialty areas is a natural extension of our current EXECUTIVE SEARCH BUSINESS.  Please contact any of our offices to discuss this new service.

Brakke Consulting has the experience, insight, abilities, and contacts that provide our clients with the highest quality services in the animal health, pet, veterinary, and specialty chemicals markets.  Please contact any of our offices for a confidential consultation on our range of services.  Contact information for all offices are available on our website at and click on a starred location on the world map.

Animal Health News

>  Year-end US beef demand for 2000 is expected to be 3.6% higher than 1999 levels. According to Cattle-Fax, a private market research firm, consumer expenditures for beef will likely top $52 billion in 2000 — the first time ever annual spending will exceed $50 billion. Yearly per capita consumption of beef is projected to reach 66.2 pounds.  (AnimalNet – NCBA press release)

>  According to a team of researchers from the United States and the United Kingdom, triclosan, a common antiseptic used in household products such as toothpaste, skin creams, and deodorants, kills the parasites responsible for malaria and toxoplasmosis, even at very low concentrations.  The studies were reported in the International Journal for Parasitology. Triclosan has been used as an antiseptic since the 1960s. It blocks an enzyme, known as “FabI,” that bacteria need to manufacture the fatty acids used in cell membranes. Because animals possess a very different set of enzymes, triclosan does not interfere with this process in humans. (AnimalNet – U of Chicago Medical Center)

>  Both Canada and U.S. governments announced a temporary suspension on the import of processed beef and associated products from Brazil.  Following close consultations with Brazilian government officials, the USDA says this decision is a temporary action pending the release of requested data to complete a BSE risk assessment.  Jerry Redding, USDA communications coordinator says the suspension is more of a regulatory issue than a safety issue since there is no evidence of BSE in Brazil.   (Farm Progress)

>  Agriculture Secretary Ann Veneman said there was no need to pull Brazilian beef products from U.S. stores while her department reviews Brazil’s controls for mad cow disease. There is no evidence of the brain-wasting disease in Brazil, but the United States joined Canada and Mexico in suspending imports of Brazilian beef products until the review was completed. So far, the disease is believed to be confined to Europe. (AP)

>  The European Union moved closer to banning some of the most popular cuts of beef as part of a package of measures to quell public fear over mad cow disease. The European Commission approved a ban on meat attached to the back bones of cows that are more than a year old, which would rule out the sales of T-bone steaks and cuts such as Italy’s bisteca fiorentina and Spain’s chuleta de buey. If approved, the measures could become effective March 31. The proposals exempt countries where no cases of bovine spongiform encephalopathy have been discovered or that have clearly demonstrated effective control measures.  (AP)

>  Researchers at the University of Wisconsin have decoded the genome of E. coli 0157:H7, a breakthrough that may lead to a vaccine against the bacteria.  The researchers found more than 1,300 new genes not present in the nonvirulent strain of E. coli.  (Feedstuffs)

Brakke Consulting Viewpoint
The National Cattlemen’s Beef Association meeting in San Antonio, Texas last weekend was an excellent meeting.  The beef industry did a most professional job on handling the hot BSE issue.  Beef people were being interviewed by a number of different press groups.

The present BSE flap seem to over for the time being. I did make a few other observations at the meeting that merit mentioning.  First, I was struck by the number of company booths at the meeting.  It reminded me of the 2000 NAVC meeting last year.  As in the pet and veterinary area, we’re not sure the market opportunity is big enough to support all the players currently jockeying in the market.  Watch for another shakeout in this segment of the market.

Second, electronic animal identification is now the rage.  There were at least five separate companies with displays discussing their technology and integrating it into the production process. 

Third, the number of endectocide SKU’s available for the beef producer to select from appears to be expanding rapidly.  It appears that lower pricing and gross margins will continue to be under attack here.

Finally, we look forward to seeing many of you at the Western Veterinary Conference in Las Vegas beginning this weekend.  Please bring plenty of extra money along, and don’t gamble it all away – save some to invest wisely in consulting services to help your company succeed in the coming year.
[Ron Brakke]
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