The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for October 20, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Eli Lilly reported that worldwide sales for Elanco in the third quarter were $164.4 million, an increase of 10% when compared with the third quarter of 1999.  Excluding the effect of exchange rates, sales grew by 13% for the quarter. (PRNewswire)
>  IBP reported third quarter 2000 net earnings totaled $83.9 million compared to $96.6 million or before a $13.8 million nonrecurring reduction of income tax expense during the same period in 1999.  Third quarter sales grew 9% to $4.2 billion versus $3.8 billion in 1999.  Prior year results have been restated to reflect the acquisition of Corporate Brand Foods America, Inc. (CBFA), which was accounted for as a pooling of interests. Year-to-date earnings, before unusual and nonrecurring items, totaled $203 million in 2000 compared to $231 million during the first nine months of 1999. Net sales for the first three quarters totaled $12.2 billion, 15% higher than the $10.6 billion recorded last year. (company press release)

Company News Releases

>  Pharmacia & Upjohn announced the introduction of Neomix AG 325 Feed Medication, for treatment against E. coli in swine.  The product permits flexible feed inclusion to maintain an effective dose.  (DVM Newsmagazine)

>  Ralston Purina has donated more than 22 tons of Purina Dog Chow brand dog food to help Alaska’s Senator Ted Stevens in his efforts to save Alaskan sled dogs that are in danger of starving.  The donation is composed of 55-pound bags of Purina Dog Chow.  Sen. Stevens requested help from Ralston Purina after mushers in Yukon River villages reported their dogs were in danger of starvation because of a depressed chum salmon run in the river.  Salmon is the primary diet for the sled dogs, which help haul water and wood and provide transportation in rural Alaskan communities.  Sen. Stevens noted that for the second time in as many years, Ralston Purina and its Purina Dog Chow brand have stepped forward with a donation of more than 20 tons of dog food.  (PRNewswire)

>  Embrex and Neogen made the 2000 Forbes list of “200 best small companies”; Embrex at #62 and Neogen at #182.  Public companies with sales between $5 million and $350 million are eligible, subject to a variety of stringent financial criteria.  (Forbes)

>  DRAXIS Health Inc. announced that Anipryl has been cleared by the Brazilian Ministerio da Agricultura e de Abastecimento for the treatment of uncomplicated pituitary-dependent hyperadrenocorticism (PDH or Cushing’s disease) and age associated cognitive dysfunction (CDS) in dogs. Brazil represents the fifth jurisdiction to approve Anipryl(R) for these two indications. Anipryl is currently available in Canada and the U.S. only. In December 1997, DRAXIS entered into a worldwide comprehensive alliance with Pfizer Inc. with respect to Anipryl. (Business Wire)

>  Infigen, Inc., a privately held biotechnology company merging genomics and reproductive technologies to advance both human health and agriculture, announced that the company had been awarded a $1.8 million Advanced Technology Program grant from the National Institute of Science and Technology.  The grant will be used to develop Infigen’s new, genomics-based approach for increasing the speed, efficiency and success of cloning farm animals for possible medical and agricultural applications: the production of pharmaceutical proteins, food products and as a source of replacement organs for human transplantation.  (PRNewswire)

> announced an e-business partnership with Intervet. As one key element of this partnership, will develop and host Intervet’s Dairy Performance Partners online showcase, providing Internet access to value-added information about the science, benefits and services representative of Intervet’s broad based dairy product line. (company press release)


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Animal Health News

>  It will be the age of aquariums when the Dive In! Aquarium Fish national program is unveiled in Chicago as part of the American Pet Product Manufacturers Association (APPMA) national Take a Fish to Work Day event.  The aquatics industry has joined forces to provide a $400,000 plus consumer and retail recognition marketing program with APPMA, Florida Tropical Fish Farms Association, Florida Department of Agriculture and industry companies underwriting the campaign.  (PRNewswire)
> U.S. Agriculture Secretary Dan Glickman authorized $44 million in emergency funding to the bovine tuberculosis eradication program, responding to recent scientific tests indicating recurring threats of the disease in Michigan and Texas.  Recent scientific tests have identified a significant bovine TB threat from infected wildlife, especially free-ranging deer, which in turn, transmit the disease to nearby cattle. USDA officials point to cattle populations in Michigan and Texas as particularly vulnerable.  (AnimalNet – Reuters)

>  The European Commission proposed banning all animal materials except those fit for human consumption from use in livestock feed, drugs and other industrial products. The plans must be approved by EU governments and the European Parliament. The proposal is the latest stage in the Commission’s campaign to prevent further food scares such as the bovine spongiform encephalopathy (BSE) and last year’s dioxin contamination.  EU member states would have to implement the new law within 18 months of its adoption into EU law, although there was no indication when this would happen. (Reuters)

>  Oncolytics Biotech Inc. presented results of their canine studies at the Veterinary Cancer Society’s 20th Annual Conference. The presentation – “Evaluation of Reovirus Therapy for Spontaneously Occurring Canine Tumors” – includes the results of the previously reported canine pilot study in addition to canine tumor biopsy studies that examine the range of applicability of the virus against a range of indications. (Business Wire)

>  More table egg producers are routinely testing for Salmonella than 5 years ago, according to a study by the USDA’s National Animal Health Monitoring System (NAHMS). Salmonella enterica serotype Enteritidis, commonly known as SE, is a key topic of interest for the United States table egg layer industry.  Results showed that while just under 16% of farm sites routinely tested for SE in 1994, this percentage had risen to 58% in 1999. In fact, in 1994, 84% of farm sites in Alabama, Florida, Georgia, and North Carolina had SE testing programs.  (AnimalNet – USDA)

Agribusiness News

>  Trading began this week for stock in Monsanto following the initial public offering (IPO) of shares in the St. Louis-based chemical and biotech firm. Monsanto’s offering of 35 million shares was priced at $20 per share.  The IPO of Monsanto was a key part of Pharmacia’s strategy during the merger of Pharmacia & Upjohn and Monsanto earlier this year. After all the available shares are released to the market, Pharmacia will retain 84% ownership in the company. (DirectAg, AgWeb)

>  GM ingredients could be in products on supermarket shelves undetected, or products may be falsely identified as including GM ingredients, because of flaws in a UK product testing system.  The first performance check of commercial testing methods has revealed that nearly 20% of laboratories failed to recognize the presence of GMO’s in their analyses.  The investigation, by the UK Government Food Analysis Performance Assessment Scheme (FAPAS) found that another 60% of laboratories claimed to have found positive signs of GMO’s when there were none.  The labs checked by FAPAS are commissioned by retailers to test their products before they go on sale. (Avcare)

>  Taiwan’s Health Department stated that it would respond to consumer pressure and require all products made from GMO’s to be labeled by 2001.  Taiwan will first enforce the labeling on corn and soybean products, then gradually on other agricultural products.  The Government said that according to their information, there was no safety concern on genetically altered foods, the labeling is to allow consumers the right to choose. (Avcare)

>  Working with teosinte, a wild cousin of maize, a University of Wisconsin-Madison scientist found a trait that can be traditionally bred into modern hybrid corn to assure genetic integrity of their corn, making it easier to export to countries wary of biotech crops.  Corn varieties of all kinds are prolific traffickers in genes. Cross-fertilization between strains occurs as gene-laden pollen is carried by bees or blown with the wind from one field to another. The resulting contamination, especially from genetically modified corn, can ruin organic crops or make traditional hybrid corn worthless for export to countries where consumers are wary of the new technology. Scientists found that the teosinte has a built-in barrier, governed by a single gene cluster, that keeps foreign maize genes out. That allows the plant to maintain its own identity in an environment thick with gene-laden pollen.  Commercial quantities for planting by farmers could be available as early as 2003. Licensing terms for the new technology will include a provision that biotechnology be kept out of corn lines enhanced with this teosinte barrier (DirectAg)

Brakke Consulting Viewpoint

We offer our congratulations to Embrex and Neogen on making the Forbes 200 Best Small Companies list, and wish them continued success.

It is a most interesting time in our economy.  The stock market does not appear to want to give up many of the gains of the past two years.  However, there are signs that the next 18 months may not be as strong as previously predicted.  We believe a lot of people are a bit confused over the new and old economy.  I guess that if you were on the front end of the technology sector you made a bundle and believe the new economy is great.  That assumes that you sold a reasonable amount of your holdings and reinvested in the old economy stocks or you just spent the money to help keep the strong economy perking.

We believe some of the air will clear and policy direction should become a bit more stable once we get the current elections behind us. It looks like a close one for presidency at this point and the market does not like uncertainty. 

I’m not sure how all this relates to the animal health industry, but it is obvious that there will be some impact.  I keep reading reports about the low futures prices for feed cattle for the next 12 months and the oversupply of pork and poultry.  That does not sound good to us for 2001 and if the general economy softens there could also be some weakness in the companion animal area as well.  So, to get the answers you’re looking for from BCI, I’m spending some time in the upper Midwest chasing the wily ringnecked pheasant for the next few days.  The farmer and rancher friends I hunt with provide me with some interesting insights and a dose of reality that we all need now and then.

 [Ron Brakke]
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