The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for November 11, 2000
Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Aventis Animal Nutrition reported nine-month sales of 421 million euros ($370 million) compared with 411 million in the year-ago period, an increase of 2%, due to ongoing price pressure. (company press release)

> Virbac Corporation announced results of operations for the third quarter and nine months ended September 30, 2000. For the 2000 third quarter, net sales rose 11.5% to $14.3 million. Net income increased 25% $1.0 million. The results for this quarter are the best in the company’s history. For the nine months ended September 30, 2000, net sales rose 3% to $41.5 million. Net income climbed 128% to $2.8 million in the first nine months of 1999.  Results for the nine months ended September 30, 1999, are presented as if Virbac, Inc., and Agri-Nutrition Group Limited, which were merged on March 5, 1999, were combined for the entire first nine months of 1999.
Among the highlights of the third quarter, the company signed a licensing agreement for four pharmaceutical products currently under development for the pet and companion animal market.   The company also licensed two of its equine products to Pfizer, Inc., for significant initial and milestone payments, as well as royalties based on sales and gross profit. As part of this agreement, Virbac also received from Pfizer the over-the-counter marketing rights for Pet Tabs, a nutritional supplement for dogs and cats. Virbac expects that this agreement should increase its annual revenues by approximately $12 million and generate pre-tax income of more than $4.7 million. (Business Wire)

Company News Releases

>  The FDA approved a new animal drug application (NADA) filed by Bayer Corp. for veterinary prescription use of an enrofloxacin/silver sulfadiazine otic emulsion to treat otitis externa in dogs. The product will be sold under the name Baytril Otic.  (AnimalNet – FDA CFR)

> Pfizer announced that it will integrate its Exton, PA-based North American region of its animal health group with the group’s global headquarters in New York City.  The company expects to complete the integration of its North American and global organizations by the end of the year. (Feedstuffs)

>  In the hopes of detecting StarLink corn faster and cheaper, Neogen has released test kits that identify the genetically modified corn. One of the new test kits will detect StarLink corn, the brand not approved for human consumption but found in taco shells. The other will detect this variety, as well as other genetically modified varieties of corn. Neogen says its test can provide results in as little as 10 minutes.  The alternative to using an on-site rapid test to detect genetic modification is sending samples to an outside conventional laboratory. Neogen’s new tests are Agri-Screen for Cry9C, which detects the unique protein in StarLink corn, and Agri-Screen for Bacillus thuringiensis (Bt), which detects Cry9C and other proteins used in genetic modification, Neogen has had a contract with the USDA’s Federal Grain Inspection Service (FGIS) every year since 1994 for the exclusive use of the company’s test to monitor grain commodities, primarily corn for aflatoxin. (DirectAg)

>  J.W. Childs Associates L.P., a private investment firm, intends to acquire Hartz Mountain Corp. in a deal expected to close before the end of 2000.  Hartz Group owners the Stern family will retain an ownership stake, and senior management at Hartz Mountain will also take financial stakes in the company.  Current management will continue to run the company.  Financial terms were not disclosed.  (Veterinary Practice News)

>  Sales of Veterinary Pet Insurance (VPI) policies are increasing dramatically, thanks to a major redesign and technological advancements to the VPI Web site,  The enhanced site is more user-friendly, guiding visitors quickly and simply through the enrollment process.  VPI continues its commitment to excellence in customer service by accommodating Web site visitors’ needs with an online customer relation management program. (company press release)

>  A group of cattle feeders and producers who are suing IBP, Inc. over alleged discriminatory pricing have been denied class action status for the third time.  The plaintiffs must now decide to appeal the ruling, pursue the case without class action standing, or drop the case altogether.  (Feedstuffs)

> announced that it will begin the orderly wind down of its operations.  In addition, it announced the layoff of approximately 255 of its 320 employees. The company plans to sell the majority of its assets, including inventory, distribution center equipment, URLs, content and its Sock Puppet brand icon and other intellectual property. The announcement came after a lengthy and exhaustive effort to both raise capital, dating back to early summer, or more recently, to sell the company outright. (Business Wire)
>  The University of British Columbia, The Alberta Research Council, the Veterinary Infectious Disease Organization, and Bioniche Life Sciences announced the formation of a strategic alliance to complete the development and commercialization of a cattle vaccine able to reduce the threat of E. coli 0157:H7.  A preliminary study has confirmed that the vaccine is capable of dramatically reducing the levels of E. coli excreted into the environment.  Vetrepharm, Bioniche’s animal health division, will lead the development and commercialization of the vaccine.  (company press release)


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Animal Health News

>  The United Kingdom pig industry has been shocked by a new outbreak of CSF, the 16th in the current series of outbreaks, which began on August 8th. The new case is the first outbreak in 30 days. (AnimalNet – Pig Disease Information Centre)

>  South Africa’s efforts to curb a foot-and-mouth disease eruption have failed with yet another outbreak, this time outside the closely monitored 15-km quarantine zone.  Officials state that there will be an immediate vaccination of all cloven-hoofed animals nearby and the culling of infected herds. (AnimalNet – Reuters)

> USDA has announced that $56 million this fiscal year will be made available for the eradication of pseudorabies. Most of the funds will be used in Iowa, where 98% of infected swine herds are located. USDA’s eradication effort is part of a multi-year program, which began in 1998, to accelerate eradication of pseudorabies in the United States.  Pseudorabies costs U.S. pork producers about $40 million a year, not including indirect costs associated with lost international markets. (AnimalNet – AgWeb)
>  Switzerland’s Federal Veterinary Office is recommending that a ban be put on the use of animal meal in all livestock feed, hoping to wipe out “mad cow” disease in the country. The proposed ban also applies to certain animal fats used in feeds.  The veterinary office’s recommendation, which goes to the Federal Office, means a ban is almost certain to be imposed. (Reuters)

>  China and Denmark have formed a consortium to sequence the pig genome. The partners hope that information from the project will benefit pig-breeding industries in both countries as well as basic science and medicine. The story adds that the two sides have agreed to split the $15 million cost of the first phase of the project, a 3-year effort to identify valuable genes, develop markers for physical and genetic mapping, and provide research tools for xenotransplantation. A second phase, taking several more years and costing up to $60 million, would aim for a working draft covering 90% of the sequence and 95% of the genes. (AnimalNet – Science)

>  According to a story on the AP wire, advances in veterinary medicine and pet owners increasingly willing to spend large sums on the family dog or cat have caused a nationwide shortage of blood for critically ill animals. The U.S.’s four national animal blood banks all have back orders, with a two-month waiting list for hard-to-come-by cat plasma and up to a six-week wait for dog plasma. The blood banks ship blood and blood products to clinics around the country.  The Animal Blood Bank in Dixon, Calif., the country’s largest animal blood supplier, ships between 1,600 and 2,000 units a month to 3,000 clinics throughout the United States and Canada. (AnimalNet – AP)

Agribusiness News

> Shares in agrochemicals and seeds giant Syngenta AG were indicated in the lower half of a proposed 85 to 105 Swiss franc issue price range as investors remained lukewarm in the run-up to its bourse debut on Monday. Novartis AG and AstraZeneca Plc are creating Syngenta by spinning off to existing shareholders and merging their agribusinesses so that the parents can focus on healthcare. Syngenta faces an uphill struggle in winning over the hearts of investors, particularly as many healthcare-focused Novartis and AstraZeneca shareholders are unwilling to hold the shares. (Reuters)

>  Dr Lorne Hepworth, President of the Canadian Crop Protection Institute and speaker at Avcare’s Summit 2000, has told the Institute’s Annual General Meeting that the farm income crunch has hurt crop input sales and that pesticide sales grew 53% in the 1990s.  But in 1999, industry sales dropped 5%, the first significant decline in 8 years.

>  According to a recent ABS survey, 49% of Australia’s farmers owned or used a computer, 27% more than last year.  Cotton growing and plant nurseries had the largest proportion of computer users, at 76% and 71% respectively. (Avcare)

Brakke Consulting Viewpoint

In February of this year, when’s IPO hit the markets, we cautioned that the stock’s immediate plunge from its offering price might bode ill for e-commerce companies, especially those whose business plan did not have realistic near-term expectations of turning a profit.  With this week’s announcement of the downsizing of, it appears our prediction has come true.

As many of you wrestle with your Internet/e-commerce strategies, we encourage you to select your partners cautiously.  We continue to believe that the Internet will provide value to all segments of the industry as it evolves.  Business practices and rules change more slowly than everyone believes.  Therefore, we see the steady “evolution” of Internet usage rather than the “revolution” that so many Internet companies promoted in their business plans.

We’re all doing portions of our business differently than we were just twelve months ago.  This newsletter, which is now read by several thousand individuals around the world, is a perfect example.  If you consider your options carefully before making Internet decisions, your company avoid the pitfalls and instead reap the benefits of this new technology.

 [Ron Brakke]
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