Animal Health News & Notes for April 20, 2000

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Brakke Consulting’s
Animal Health News & Notes for April 20, 2000
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

>  Eli Lilly reported that worldwide sales of animal health products for Elanco in the first quarter of 2000 were $155.4 million, an increase of 6% when compared with the first quarter of 1999.  Excluding the effect of exchange rates, sales grew by 8% for the quarter. (PRNewswire)

>  Pfizer reported that first quarter 2000 sales of companion-animal products rose by 31%, driven by sales of Revolution and Rimadyl. However, sales of the Animal Health Group as a whole were down 6% to $268 million for the quarter due to a weak livestock market in the U.S. and Europe, as well as by the decision of the European Commission to ban certain antibiotic feed additives, including virginiamycin, in the European Union after June 30, 1999. (PRNewswire)

>  Schering-Plough reported that worldwide sales of animal health products in the first quarter of 2000 totaled $158 million, up 3% over the previous year (6% when foreign exchange is excluded). (PRNewswire)

>  Colgate reported that unit volume and sales both grew 9% at Hill’s for the first quarter 2000. New products and enriched marketing programs produced excellent growth throughout North America and internationally. Strong sales of Science Diet Hairball Control formula for cats, and its two new life-stage variants, helped drive strong U.S. growth, as did significant increases in veterinarian endorsements, and targeted marketing programs for veterinary clinics and pet stores.     Hill’s-International grew strongly in all world regions. (Business Wire)

>  Virbac Corporation, the American subsidiary of Virbac SA, announced an unaudited net loss of $544,000 for the year ended December 31, 1999, an improvement of $1.3 million compared with the prior year net loss of $1.9 million on an equivalent basis. Net sales for the year increased 4% to $43.8 million. Results are presented on an equivalent 1999 basis as if Virbac, Inc. and Agri-Nutrition Group Limited, which were merged on March 5, 1999, were combined for the same periods in 1998.  (BW HealthWire)

> Jones Pharma reported that first quarter 2000 sales of its veterinary products division, Daniels Pharmaceuticals, were $2.2 million, down 15% from the same period in 1998. (Business Wire)

>  International Absorbents Inc., a developer and producer of environmentally-friendly animal and pet-care products, reported record financial results for the year ended January 31, 2000.  Net profits were $1.3 million, a 257% increase over the same period last year. Revenues rose by 30% to $7.8 million versus $6.0 million for the previous year. (PRNewswire)

>  Hoffmann-La Roche’s feed additive sales remained stable in 1999 at CHF 2.0 billion ($1.2 billion) in 1999.  Sales volumes exceeded expectations, but pricing pressure had a negative result.  New products launched during the year included Lycopene and Lutine, both carotenoids.  New projects in the feed additives division included developing non-antibiotic approaches to fighting coccidiosis in poultry, and enzyme additives development. (annual report, Animal Pharm)

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Company News Releases

>  Pfizer has claimed in a lawsuit filed in federal court that the effectiveness of Revolution, its new parasite-killing medication, effectiveness is misrepresented in deceptive television advertising by rival Merial Ltd.   According to the complaint, Revolution competes with Frontline, a Merial product that kills external parasites but not internal ones, such as heartworm. The complaint alleges that Merial television spots claiming that Frontline works better rely on a nonexistent study reported in a fictional publication. A spokeswoman for Merial defended the ads, saying the promotional claims are based on sound science. Pfizer seeks to enjoin Merial from airing the commercials and distributing promotional materials to veterinarians that Pfizer says are also deceptive. (Bloomberg News)

>  Intervet’s Chinese operations have signed a 50:50 joint venture agreement with Shanghai Songjiang Biological Medicines Factory to establish a GMP-certified animal vaccine facility in Shanghai. The plant will initially focus on poultry vaccines.  The new joint venture is the basis for Intervet’s accelerated growth in China, the largest potential animal health market in Asia.  (Animal Pharm)

>  Calgon Carbon Corporation announced the start of a test market for Purrfectly Fresh, a litter extender and deodorizer.  When added to litter, Purrfectly Fresh not only removes litter odors from the air rather than simply masking them with chemicals, but also doubles the life of the litter.  Purrfectly Fresh(TM) utilizes proven odor removal technology that Calgon Carbon has successfully applied to a variety of industrial odor control problems for more than 50 years. (PRNewswire)

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Animal Health News

>  The Animal Health Institute held its 60th annual meeting April 15-17 in Amelia Island, Florida.  Top US executives of most of the leading animal health companies gathered to hear from government agencies and outside experts about a broad range of topics affecting the industry.

Companies registered included:  Alpharma, Bayer Corp., Boehringer Ingelheim Vetmedica, Inc., Colorado Serum Co., Covington & Burling, Dow AgroSciences, Elanco Animal Health, Fort Dodge Animal Health, Heska, ICON Clinical Research, Innovex, Ivy Animal Health, Merial Ltd., MetaMorphix, Inc., Monsanto Company, MVP Laboratories, Novartis Animal Health, Pfizer Animal
Health, Pharmacia & Upjohn Animal Health, Roche Vitamins, Schering-Plough Animal Health and Texas Vet Lab.  Several representatives of related organizations and trade media attended as well.

Speakers from government agencies included Dr. Richard Hill, Center for Veterinary Biologics, USDA; Patricia Sheikh, International Trade Policy, USDA; and Dr. Stephen Sundlof, Center for Veterinary Medicine, FDA.  Each gave an update on activities or changes in the regulatory or trade environment that could impact the animal health industry.

Other speakers included Dr. Robert Hill, Vice President, AgWeb.com; Dr. Bruce Scherr, Sparks Companies, Inc.; and Sally Schuff, Feedstuffs.

Hill discussed the growth in Internet usage and e-commerce by farmers, livestock producers, and agricultural companies.  He indicated that the animal health industry was not as advanced as crop chemical companies in the use of e-commerce.

Scherr traced changes in the livestock and dairy markets for the past 40 years.  Trade liberalization and information technology will have the most impact on the meat industry in the near future, according to Scherr.  “Understanding the consumer is the key to prosperity,” he said.  “Over the next few years, the entire value chain will be restructured.”

Schuff provided insights on three major topics that she has covered in recent months.  These include the failed WTO talks in Seattle; the National Academy of Science’s report on Genetically Modified Organisms, and the livestock revolution taking place in developing countries.  “The anti-trade, anti-GMO forces are extremely well organized and confusing the issues with junk science.  Fight junk science with good science.  Don’t let junk science ruin your business,” Schuff advised the group. (BCI consultant report)

>  A new outbreak of foot-and-mouth disease has been discovered in western South Korea despite efforts to contain the deadly epidemic, officials said Friday. Three of the 21 cattle on one farm were found to be infected Thursday and authorities quarantined the area surrounding the farm in Hongsong, 60 miles south of Seoul, the Agriculture and Forestry Ministry said. All 21 cattle were slaughtered and buried, it said.  The latest discovery brought the number of infected areas to 14 farms in two western and one central province since symptoms of the disease were first reported in Paju, 30 miles north of Seoul, around March 20. (AP)

>  Many hog farmers last week received $51 or more per 100 pounds for hogs, nearly twice the going rate of a year ago and several times what producers were paid in December 1998. At that rate, most farmers can make a nice profit for every hog sold, compared to an average loss of $26.88 in 1998 and $17.08 in 1999. The higher prices are almost totally driven by the demand for meat among American consumers, according to economists.  As for beef, producers are selling at a profitable level of nearly $70 per hundred pounds, even though the amount of beef on the market is up 2.5 percent from year-ago levels.  Economists anticipate even higher hog prices by mid-summer, perhaps approaching $60 per hundred pounds, a price last seen in December 1996. (World-Herald Bureau)

>  The European Commission welcomed a decision by EU agriculture ministers to establish new beef labeling rules in an effort to restore consumer confidence following the scare over mad cow disease.  The EU ministers agreed that all beef sold in the EU must be labeled by country of origin.  If the decision is approved by European Parliament, all beef sold in the EU beginning in September will carry a label stating where the animal was slaughtered and butchered.  Beginning Jan 1, 2002, the labels will also say in which country the animal was born and raised. (AP)

>  Skinvisible, Inc. announced that its wholly owned subsidiary Skinvisible Pharmaceuticals (Canada) Inc. has signed an agreement with Alberta-based Western Drug Distribution Center Limited whereby Skinvisible will sell its Medical Formula antimicrobial skin care lotion to WDDC, who in turn will retail the product to over 900 member and non-member veterinarian clinics.  Skinvisible’s Medical Formula forms a protective skin barrier that provides persistent activity against a broad spectrum of pathogens and aids in reducing nosocomial infection and cross-contamination without wash-off, requiring reapplication only every four hours. (PRNewswire)

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Agribusiness News

>  Aventis CropScience and Novartis Seeds have reached a settlement of three lawsuits under which terms the companies will work cooperatively to promote the use of Aventis’ Liberty herbicide on Novartis NK brand insect resistant corn seed hybrids. The agreement resolves lawsuits, filed by a subsidiary of Aventis, to enforce patents that cover the insect protection technology in NK Bt corn hybrids, and a lawsuit, filed by Novartis Seeds, alleging breach of an agreement relating to that technology.  The Novartis corn products that were the subject of the lawsuits also contain a gene that makes the corn tolerant to Liberty herbicide. (PRNewswire)

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Brakke Consulting Viewpoint

AHI meeting
Although 1999 was not a banner year for the animal health industry, most executives attending the AHI meeting this week were upbeat.  For many, first quarter results were showing significant improvement over last year’s.  Plus, cattle and hog prices are improving, and the companion animal market is continuing its robust growth.

The topics addressed by speakers – e-commerce, biotechnology regulation and foreign trade – will dramatically impact the industry in the months and years ahead.  It will take strong individual leadership and strategic, cohesive efforts by the entire industry for animal health companies to maintain control of their own destiny.

[John Volk, Brakke Consulting – Chicago]
 
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