Animal Health News & Notes for November 3, 2000

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Brakke Consulting’s
Animal Health News & Notes for November 3, 2000
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

> Novo Nordisk reported that operating profit for Novozymes (Enzyme Business) increased by 24% to DKK 585 million ($69 million) compared with DKK 472 million ($56 million) for the nine months of 1999.  Sales increased by 13% to DKK 3,738 million ($440 million) from DKK 3,313 million ($390 million) in the same period of 1999.  The animal feed enzyme sales continued to perform strongly with a 29% increase. Ronozyme P has been introduced on the US market at the beginning of the fourth quarter. (PRNewswire)
 
>  Pilgrim’s Pride Corporation announced net income of $11.3 million for the fourth fiscal quarter ended September 30, 2000, a decrease of 31.1%, compared to the prior year’s fourth quarter of $16.4 million.  The Company also announced net sales of $379.3 million for the fourth fiscal quarter, a 9.2% increase, compared to the $347.3 million for the same period last year. For fiscal 2000, the Company reported net income of $52.3 million, a decrease of 19.8%, compared to the prior fiscal year’s net income of $65.3 million.  Net sales for fiscal 2000 were a record high of $1.5 billion, a 10.5% increase, compared to $1.4 billion for the same period last year.  The Company’s accounting cycle resulted in 52 weeks of operations in fiscal 2000; when adjusting for this and the AmeriServe charge (during the second fiscal quarter, the Company wrote off some accounts receivable due to the January 31, 2000 bankruptcy filing of AmeriServe), the Company’s fiscal 2000 earnings would have decreased by 13.3% from the prior year’s earnings.  (PRNewswire)
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The US Flea Control and Heartworm Markets – November 2000

     – sales and marketing strategies for the leading flea and heartworm products

     – overview of the veterinary and OTC flea control markets

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     – new product introductions and developments

     – surveys of veterinarians, pet owners, and independent pet stores

The study will be available for shipping on November 6 for a price of $4,000.  For more information, please call the Dallas office at (972) 243-4033, or email mailto:lfondon@brakkeconsulting.com.

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Company News Releases

>  Microcide Pharmaceuticals, Inc. announced the signing of a research collaboration and license agreement with Schering-Plough Animal Health, for joint research to discover and develop improved veterinary antimicrobial drugs using Microcide’s state-of-the-art technology and knowledge of bacterial efflux pumps and other resistance mechanisms. Efflux pumps within bacterial cell membranes eject antibiotics and thereby limit the effectiveness of the drug.  Under terms of the agreement, Schering-Plough Animal Health will have worldwide rights to products resulting from the collaboration.  Microcide will receive an upfront payment and research support payments over a two-year period and milestone and royalty payments on products emerging from the collaboration. (PRNewswire)
>  Alpharma Inc. announced that its Animal Health Division has received approval for Reporcin (Porcine SomatoTropin — PST) in Mexico.  The product is a naturally occurring protein that is given by a daily administration to pigs during the finishing stage.  It allows the animal to convert nutrients into lean muscle rather than fat, producing meat lower in saturated fat and with fewer calories.  Alpharma acquired the exclusive global marketing rights to the porcine somatotropin technology, and the only manufacturing facility located in Australia, in the third quarter of 1999 from Nantinco, a European investment company.  In addition to the health benefits derived from this technology, there is a significant, positive environmental impact as well.  Each pig consumes less feed to produce the same amount of lean meat.  Less feed means less animal waste to be treated.  It also means less feed crops need to be grown, and that results in fewer crop chemical applications. (PRNewswire)
>  Alpharma disclosed that a group of employees in its Brazilian animal health operation collaborated to create false sales invoices.  The company said the situation affected all four earnings periods of 1999 and the first two quarters of 2000. Results for those quarters will be restated as soon as possible. The net reduction in earnings is 6 cents over the six-quarter period with a reduction in revenue of about $7 million, or about one half of 1%, Alpharma said. A full investigation was completed with assistance from Alpharma’s independent auditors and legal counsel. The company said the problem was isolated to its Animal Health operations in Brazil. The individuals involved have been removed and new management appointed to run the Animal Health operations in Brazil. (Reuters)

>  International Absorbents Inc. announced that it has added five major pet products customers over the past quarter.  International Absorbents will launch a new addition to its line of professional animal care products at the annual meeting of the American Association for Laboratory Animal Science.  This line extension will capitalize on the Company’s technology used in its ECOfresh recycled paper cat litter and position it for use in universities, government agencies and pharmaceutical companies as a non-contact bedding product.  The Company recently hired an industry leading sales professional to focus full-time sales efforts in this $60 million channel. (PRNewswire)
>  Dow AgroSciences and the Boyce Thompson Institute for Plant Research (BTI) have signed a multi-year research and collaboration agreement to evaluate and develop plant-derived veterinary biologics.  Under terms of the agreement, scientists from both organizations will work together in multi-faceted research programs to accelerate proof of concept, development and commercialization of plant-derived vaccines for the animal health industry.  (PRNewswire)

>  Just in time for the holiday season PETsMART.com, announced the launch of its Holiday Gift Center containing a wide selection of must-have pet gifts and accessories for the festive season. PETsMART.com’s Holiday Gift Center will also feature a joint promotion with Visa, for the November 17th release of Universal Pictures live-action holiday classic, Dr. Seuss’ How the Grinch Stole Christmas. (PRNewswire)

>  Allpets.com, a wholly owned subsidiary of PetQuarters, Inc. has become the first pet web site to form an alliance with the World Small Animal Veterinary Association (WSAVA).  The WSAVA, which represents over fifty thousand practicing veterinarians in forty-seven countries around the world, will now review and approve all veterinary healthcare and welfare information and advice and review the product list on Allpets.com’s web site.  Under the terms of the contract, the WSAVA will review the Allpets.com product list so that visitors can be confident that none of the products are cruel, injurious, or could cause actual harm.  Allpets Petsmarket will carry this statement and the WSAVA logo.  The WSAVA will also review and approve all pet care advice on the web site.  Approved content will carry the WSAVA logo on each page and encourage pet owners to seek regular veterinary advice. (PRNewswire)

>  Petopia.com announced a layoff of about 120 employees, or 60% of its staff. The layoffs will cut the company’s business development and corporate communications departments entirely, and leave a sharply reduced staff in its marketing, merchandising, order fulfillment, finance and Web teams. The site will fulfill existing orders and continue to take new ones. With its layoffs, Petopia joins growing ranks of dot-com businesses that have either closed or sharply reduced operations due to financing problems. (Reuters)
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  BRAKKE CONSULTING, INC.

Serving the Worldwide Animal Health and Pet Care Industries

Providing a complete range of consulting services, including:
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Animal Health News

>  EPA has reached a comprehensive agreement with the United Egg Producers, a farmer cooperative representing egg producers nationwide, to improve water quality under the Clean Water Act by speeding up environmental protection permitting for nearly 350 egg-laying facilities nationwide. The agreement, reached under EPA’s Project XL program, calls for additional controls on odors, noise and other environmental problems that cannot be addressed under the
current law. The agreement was reached under EPA’s Project XL ( “eXcellence and Leadership”), a program that encourages cleaner, cheaper and smarter ways to attain environmental results superior to those achieved under current regulations and policies. As of October, 48 XL pilot projects are underway. (AnimalNet)

>  According to the UK government, a complete ban on eating lamb and the slaughter of thousands or even millions of sheep might be imposed if BSE is found to be widespread in the national flock.  The move is part of a MAFF contingency plan.  Another is that only sheep from breeds genetically immune to BSE and related diseases would be allowed on sale.  The plans emerged after a Food Standards Agency (FSA) working party said urgent action was needed to produce a test to find out if BSE had passed into sheep through infected feed. A report yesterday by the FSA team indicated that BSE in sheep could be masked by scrapie, a disease similar to BSE but which does not seem to infect humans.  Of the 40 million sheep in Britain, some 4,000 succumb annually to scrapie. It is possible, however, that some of these animals are actually suffering from BSE. (E-markets – The Independent)

>  Uruguayan agricultural authorities plan to slaughter 10,000 sheep, 5,000 cattle and 500 pigs this week as a preventive measure, following the outbreak of foot-and-mouth disease in the country’s northern pastures, close to the Brazilian border.  Uruguay’s herd of 10 million cattle has been completely clear of foot-and-mouth since 1995. (AnimalNet – Reuters)

>  Taiwan’s livestock industry, still reeling from a deadly foot-and-mouth disease (FMD) epidemic in 1997, reported a fresh outbreak of the contagious virus among pigs. The government destroyed 5 pigs infected with the disease in the northern county of Taoyuan.  Taiwan had ordered a vaccination of livestock following the 1997 outbreak, but isolated cases of infection have been reported. The outbreak 3 years ago forced the authorities to slaughter a quarter of the island’s 14 million pigs and decimated what had been a US$1.55 billion-a-year pork export industry. (AnimalNet – HealthAnsweres)

>  The American Pet Products Manufacturers Association (APPMA) will educate thousands of pet owners about potential holiday pet hazards this winter season with the launch of its national PROTECT YOUR PET awareness campaign. The campaign, which will launch November 1, 2000, includes a national radio public service announcement filled with suggestions to pet-proof the home and solutions to help pet owners avoid potential hazards.  Common holiday hazards for pets include toxic holiday plants, loose batteries, chocolate candy and wrappings.  This vital information will also be distributed in the form of a news release and a nationally syndicated news article for suburban and weekly newspapers across the country.  APPMA’s membership consists of more than 600 companies which include both small businesses as well as the nation’s leading pet product companies.  (PRNewswire)

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Agribusiness News

>  The FTC has signed off on the consent decree, clearing the way for Novartis and AstraZeneca to combine their ag businesses to create Syngenta. Part of the deal was that Novartis would divest itself of the Flint family of fungicides and AstraZeneca would spin off the acetochlor lines. Early in October, Novartis sold the Flint lines to Bayer and this week Dow AgroSciences LLC purchased the acetochlor line from AstraZeneca. Syngenta becomes the largest maker of ag crop protection products with $8 billion in sales.  Syngenta will be up and running in time for the 2001 crop season, as both Novartis and AstraZeneca originally planned. (DirectAg)

>  Mycogen Seeds, a wholly owned subsidiary of The Dow Chemical Company, announced that it has completed its acquisition of Cargill Hybrid Seeds from Cargill Incorporated. The newly acquired assets will be integrated into the Mycogen organization. The move will make Mycogen Seeds the third-largest producer in the U.S. seed corn market.  Financial terms of the sale were not disclosed.  Mycogen acquired all seed research, production and distribution assets of Cargill Hybrid Seeds in the U.S. and Canada, except Cargill’s InterMountain Canola, Goertzen Seed Research and the Western Canadian seed distribution business. (AgWeb)

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Brakke Consulting Viewpoint

During the past few weeks, there have been an abnormal number of senior management changes in the animal health industry.  These changes have occurred for a number of different reasons within each organization.  As Brakke Consulting has been saying for some time, the animal health area is a tough market in which to do business.  We have encouraged management to review and make changes in your business models to more closely reflect the realities of the marketplace.  We believe that the days of double-digit growth in companion animal are numbered, and the food animal sector may become even more difficult in 2001.  The basic economies of the animal industry should encourage firms to keep improving and changing their business models and company direction on a frequent basis.

 [Ron Brakke]
 
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