The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for September 3, 1999

 PETsMART, Inc. announced net sales for its fiscal 1999 second quarter ended August 1, 1999 were $564.5 million, an increase of 10.7% over the second quarter last year.  Net income from operations was $5.8 million excluding one-time charges, compared to net income from operations of $2.5 million for 1998.  As of August 1, 1999, the Company operated 476 stores in North America and 95 stores in the United Kingdom.
 Neogen announced that it has entered into an agreement to become the exclusive distributor of Biotrace rapid sanitation testing systems for the North American food and beverage market. Biotrace products are used by 19 of the world’s top 20 food and beverage companies. Industry estimates place the U.S. and Canadian sanitation testing market at approximately $50 million annually.
 Neogen has acquired the Fearing Equine Product Line from the Destron-Fearing Corporation, adding to its Gold Nugget Equine Product Line of grooming, insect repellent and hoof care products.  Products in the Fearing line include insecticides and shampoos.
 IDEXX Laboratories and Caprion Pharmaceuticals, Inc. announced that they will collaborate on the development of Caprion’s proprietary reagents for the diagnosis of Mad Cow Disease and other Transmissible Spongiform Encephalopathies (TSEs). The goal of the collaboration is development of a rapid diagnostic for detecting Bovine Spongiform Encephalopathy (BSE) in live cattle. IDEXX will receive exclusive global rights for veterinary applications in diagnostics and therapeutics, while Caprion retains all rights to human diagnostic and therapeutic applications.
 Heska Corporation announced that it is consolidating its diagnostic and monitoring equipment business, and expects that this will generate annualized savings of approximately $2.0 million and improve operating efficiency.  This move will result in the elimination of approximately 40 positions in Waukesha and the closing of the facility located there by December 31, 1999.
 Smithfield Foods announced net income of $6.9 million on sales of $1.14 billion for the first quarter of fiscal 2000 ended August 1.  This was a substantial improvement from a year ago, when the company incurred a net loss of $5 million.  The turnaround of the company’s Hog Production Group, with a $16.5 million quarterly profit, was largely responsible for the improvement.
 Smithfield Foods Inc., the world’s largest hog producer and processor, agreed to buy No. 2 producer Murphy Family Farms.  The combined pork giant would control about 15 percent of the hogs on US farms.
 Seghersgenetics, a Belgian-based swine breeding company, has applied for a US patent on a genetic marker linked to enhanced muscle mass and improved carcass uniformity with no negative effects on pork meat quality.
 ProdiGene Inc received a patent covering vaccines produced in genetically engineered plants for hepatitis in humans and TGE in swine.  The TGE vaccine is currently in clinical trials.
 An annual food safety survey has found that 83% of consumers questioned rated food safety as a very important public issue.  The survey also found that two-thirds of consumers who were aware of irradiation were somewhat likely to purchase irradiated meat, poultry or dairy products.  However, 60% also stated they would respond to negative media stories about irradiation.
 Kimeragen, Inc. announced that researchers at the University of Minnesota and Albert Einstein College of Medicine have utilized the Company’s gene repair technology, termed chimeraplasty, to permanently correct a gene defect in a rat model of a human genetic disease.  The results of this study are reported in the current issue of the Proceedings of the National Academy of Sciences.
 BioNet Technologies, Inc. announced that its division will significantly expand the offerings on its web site, with the grand opening of its Shopping Mall and “The Flea Market” on October 1, 1999. The Shopping Mall stores will feature products and services for pets, pet owners, pet lovers and veterinarians.

The Brakke Consulting Viewpoint

It is interesting to note that several of the stories we selected this week involve gene technology in one form or another.  We have suggested for some time that gene technology could have a major impact on the animal health industry in the early part of the 21st century.  In addition to the impact on diagnostics, gene therapy, and expressing therapeutic substances in milk for mass production, we believe the genetics in animals could reduce many of the major health problems associated with food production animals.  We’re not that far away from having designer animals that are fed designer grains to produce a more efficient and quality product for the consumer. 

This could have an impact on food safety issues with consumers.  Will consumers be prepared to purchase animal protein that comes from genetic engineering? Although there are already food products on the US market that are genetically modified (GM), the issue looms large as special-interest groups push for GM labeling in the US, and GM foods are meeting with resistance abroad.  As it relates to the animal health industry, will dairy cows with a reduced incidence rate of mastitis impact your business?  What about bovine respiratory disease?  If food animals can be bred for disease resistance, there could be a significant impact on multiple sectors of the industry.

Have a nice Labor Day Weekend.

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