The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for September 29, 2000
Copyright © Brakke Consulting, Inc.
Company Earnings Releases

>  Neogen Corporation announced that its revenues for the first quarter, which ended Aug. 31,
were 52% higher than the previous fiscal year’s first quarter.  Neogen reported revenues of $8.1 million for the first quarter of the 2001 fiscal year, compared with $5.3 million for the same period last year. Neogen’s first quarter revenues were bolstered by strong internal growth in addition to the acquisitions of Acumedia Manufacturers in February 2000 and AmVet Pharmaceuticals in June 2000.  Of the 52% increase in the quarter-to-quarter comparison with last year’s first quarter, 23% can be attributed to internal growth, and the balance to new revenue sources. Animal Safety Division sales were up 39% from the previous year. (PRNewswire)

>  PetQuarters, Inc. announced the financial results for the fiscal year ended June 30, 2000.  Net sales for the year were $13.7 million as compared to $262,470 from the prior year.  The Company’s gross profit margin was a positive $4.3 million or 31%.  The reported numbers include twelve months of Internet revenues and eleven months of catalog revenues because the Company closed on the acquisition of its catalog operation in August of 1999.  The loss for fiscal year 2000 of $14.7 million included a number of non-cash charges.  There were non-recurring expenses related to the completion of our acquisitions and their subsequent integration.  PetQuarters, Inc., distributes pet supplies to both an online and offline audience through its web site ( and catalog (Allpets, The Catalog). (PRNewswire)

Company News Releases

>  Monsanto Co., the agricultural products unit of Pharmacia Corp., has revised the maximum amount it expects to raise in an initial stock offering to $840 million from $875 million, according to a regulatory filing. Monsanto filed revised estimates with the SEC, saying it plans to offer 35 million common shares at $21 to $24 each. Last month, the company said in a filing it would offer the same number of shares for between $20 and $25 each. Monsanto first filed for the IPO on May 12. (Bloomberg News)

>  Pharmacia Corporation announced the appointment of George Gunn as President, Animal Health worldwide.  Gunn joins Pharmacia from Johnson & Johnson where he has served in leadership positions since 1986.  Gunn will replace the animal health company’s current president, Peter Croden.  Peter Croden’s distinguished career with Upjohn, Pharmacia & Upjohn and now Pharmacia spanned 31 years, including the past 6 years with the Animal Health Group. Under Peter’s leadership, the Animal Health business enjoyed growth that exceeded the industry average over the past five years.  In addition to the appointment of Gunn, Pharmacia also announced the appointment of Julia Stephanus as Vice President, Companion Animal Group. (PRNewswire)

>  Digital Inc., a subsidiary of Applied Digital Solutions, Inc., announced that it has received a follow-up order from Schering-Plough, distributor of Digital microchips for the U.S. companion animal market. As a result of Schering-Plough’s marketing efforts and a large
initial sale of Digital’s product in 1995, an extensive domestic market for the company’s products has been developed over the last five years. The company had previously announced the merger of Digital and Destron Fearing Corporation had closed September 8, 2000. (Business Wire)

>  Novartis Pharma AG and BioTransplant Inc. announced today that they are to join forces to further develop their already substantial individual technology bases in xenotransplantation.  While both companies have made significant scientific contributions to the field individually, Novartis Pharma AG and BioTransplant believe that they can achieve greater success in moving xenotransplantation to the clinic by combining their expertise, along with that of Imutran Ltd., a wholly owned subsidiary of Novartis Pharma AG, into one, independent company which is fully focused on the science and safety of xenotransplantation.  Xenotransplantation has the potential to provide a lifeline for the thousands of people waiting for an organ transplant, many of whom will die before an organ becomes available. (PRNewswire)

>  EDEN Bioscience Corporation announced the initial public offering. EDEN anticipates using the net proceeds from the offering to expand and enhance its manufacturing and research and development facilities, as well as for working capital and general corporate purposes, including increased research and development and sales and marketing activities.  EDEN is a plant technology company focused on developing, manufacturing and marketing innovative natural products for agriculture.  Its initial product, Messenger, which received EPA approval for full commercial use in April 2000, is based on naturally occurring proteins called harpins that trigger natural plant defense systems to protect against disease and pests, and simultaneously activate plant growth systems, improving crop yield and quality. (Business Wire)

>  Two litters of cloned pigs have been successfully produced using nuclear transfer (NT) and more litters are on the way, demonstrating the commercial feasibility of porcine cloning. The NT
technique described in the October 2000 issue of “Nature Biotechnology” greatly improves prospects for the genetic manipulation of pigs to provide organs and tissues for transplantation. The report is co-authored by scientists from Infigen, Inc., a privately held biotechnology company in DeForest, WI., and Imutran, Ltd., a UK-based subsidiary of Novartis Pharma AG. The Infigen/Imutran protocol has produced two litters, each of two male piglets, born in July and September. (AnimalNet)

>  A joint venture between Cargill and Degussa-Huls Corp. dedicated its new $100 million lysine plant in Nebraska. The joint venture, called Midwest Lysine, manufactures Biolys 60, Degussa-Huls’ lysine amino acid, which is used in livestock feeds. The production facility is near a Cargill corn wet milling complex, which provides the dextrose that Midwest Lysine relies on as the primary ingredient for its lysine-production process. The lysine plant has an annual production capacity of 75,000 metric tons. Production began in late June. (DirectAg)

> McAllister Software Systems (AVImark), announced that it has entered into a working relationship with  Some of’s current services include after-hours appointment requests, electronic newsletters, customized websites, pre and post visit messages to clients, and e-mail reminders.  Both companies foresee much closer integration between veterinary practice management software and the Internet in coming years. (company press release)

>  AEI Environmental, Inc., a chief technology provider of environmental control products and services for the livestock industry, announced today that it has acquired, the leading Internet-based livestock marketing service.  AEI offers a new approach to environmental management systems by providing the agriculture industry with an integrated technology platform to address existing and emerging operational and environmental issues including farm management, waste management, animal health, barn temperature control, odor control and chemical dispersion. is an Internet-based livestock marketing service, offering a daily interactive marketplace for stocker and feeder cattle, breeding stock and dairy cattle. AEI and were both founded in 1998, and have approximate combined 2000 gross revenues of $65 million through the third quarter. (Business Wire) 


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Animal Health News

>  South African vets will begin shortly the slaughter of more than 3,500 cattle, pigs and other cloven-hoofed animals to curb an outbreak of foot and mouth disease. The animals on about 18 farms in a three-kilometer radius around two farms where the disease has broken out would be killed and burned over the next few days. Officials believe the outbreak at a piggery near Camperdown was caused by pig feed imported from India, Thailand or the Middle East. Last week, the European Commission said it would propose a ban on the import of all meat products from the infected area. More than 650 pigs and cattle have already been destroyed since the outbreak was discovered more than a week ago. (AnimalNet – Reuters World Report)

>  The European Commission is reducing the frequency of checks on imported US beef after 16 months of testing showed the US is abiding by EU restrictions on growth hormones.  Checks on 100% of US imports is being reduced to the normal level of checks – 20% – on imports from non-EU countries. (E-markets – Agence France Presse)

> A USDA quarterly report states that hog farmers intend to increase farrowing by 1% in the September through November quarter compared with a year ago, and by 3% in the December through February quarter.  According to an Iowa State University economist, the larger supply of hogs starting in the second quarter of 2001 threatens to send hog prices lower than the previous year. (E-markets – The Des Moines Register)

>  Researchers in the United States and at the International Livestock Research Institute of Kenya have joined forces to decode the DNA of one of Africa’s most destructive cattle parasites.  The availability of detailed genetic information about the parasite that causes East Coast fever–a leading cause of death in African cattle–should speed the development of a cost-effective vaccine.  East Coast fever kills about one million cows annually.  Decoding the parasite’s genetic structure could cut 10 years off the time needed to produce a cost-effective vaccine. (AnimalNet – Future Harvest)

>  Supreme Beef Processors and Packers filed Tuesday for bankruptcy after flunking four federal bacterial inspections.  During the last year, Supreme Beef has fought efforts by the government to halt its production. The USDA tried to close the meat plant by withdrawing inspectors on Nov. 30, 1999 after the company failed three tests for salmonella contamination over eight months, but a U.S. District Judge ruled in May that the government could not arbitrarily close the plant.  Supreme Beef failed a fourth test in June, and the USDA’s Food Safety and Inspection Service asked Supreme Beef to voluntarily suspend its ground beef operations and to determine what further corrective actions should be taken to bring the plant into compliance. The USDA also filed an appeal of the district court’s decision allowing Supreme Beef to continue production. (Dallas Morning News)

Agribusiness News

>  The genetically engineered corn suspected in Taco Bell taco shells, that led to the voluntary recall of the product, will not be sold for the 2001 growing season. Aventis CropScience said it has instructed its seed distributors to stop sales of StarLink corn hybrids. The company said sales will not resume until the company receives a food clearance from the EPA.  StarLink corn, approved for use only in domestic animal feed and non-food industrial uses, became the target of suspicion when lab tests indicated it had entered the food chain. (AgWeb)

Brakke Consulting Viewpoint

This week’s news could be summarized as some good news and some bad news.  The good news appeared mainly in the financial area of earnings and increased sales.  The less positive news centered around the continued problems of animal diseases and food safety.  Just when we thought that the consumer reaction to GMO issues was starting to moderate, we get taco shells that are “not safe” to eat.  At least the beef being served in the tacos was free of toxins.

For the second week in a row, we’ve reported on senior management changes in a top-tier animal health company.  We welcome George Gunn to the industry, and we wish Peter Croden the best in the future.

 [Ron Brakke]
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