The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for January 28, 2000

Copyright © Brakke Consulting, Inc.
Company Earnings Releases
 Elanco reported that worldwide sales of animal health products in the fourth quarter 1999 were $192.4 million, an increase of 3% when compared with the fourth quarter of 1998.  For the full year of 1999, animal health sales increased 2%, to $627.8 million.  Sales growth was led by Micotil and Surmax.  In December, Paylean, a new swine feed ingredient, received approval from the FDA’s Center for Veterinary Medicine (CVM).  Paylean directs nutrients to increase the amount of quality meat in high-value cuts and improves production efficiencies. (PRNewswire)
 Ralston Purina Company announced first quarter earnings before unusual items of $189.9 million, compared to $131.9 million in the prior year.  First quarter sales were $1.4 billion, compared to $1.3 billion in the prior year first quarter, an increase of 9%. Sales for North American Pet Foods increased 7% in the quarter on higher volumes.  International Pet Foods’ sales increased 2% in the quarter.  Sales for Golden Products increased 20% in the quarter due to significant volume increases in scooping litter as well as increased conventional litter volumes, which resulted in market share improvements in both categories.  (PRNewswire)
 IDEXX Laboratories, Inc. reported revenues for 1999 increased 11% to $356 million from $320 million in 1998.  Net income for 1999 was $32.6 million, an increase of 48% from $21.9 million in 1998, excluding an October 1998 write-off of costs associated with the acquisition of Blue Ridge Pharmaceuticals, Inc.  Including the write-off, IDEXX had a net loss of $15.2 million in 1998.  (BW HealthWire)
 American Home Products reported 1999 year-end sales for its animal health division, Fort Dodge, were lower, due primarily to customers reducing consumption of livestock-related animal health products, in part, as a result of continuing commodity price declines in the livestock markets. (PRNewswire)

Company News Releases
 Procter & Gamble said it has abandoned negotiations to acquire Warner-Lambert and American Home Products.  Procter & Gamble, eager to increase its presence in the pharmaceutical market, had considered acquiring the companies to create one of the world’s biggest pharmaceutical businesses. However, P&G faced a powerful opponent in Pfizer, which has already made a hostile bid for Warner- Lambert. As of Monday, Procter & Gamble’s shares had fallen 17% since news of the talks leaked out last week. (AP)
 Destron Fearing Corporation announced that it has filed a patent application for a new generation implantable animal identification microchip that has a significantly increased read range, as much as 50%, but is the same size microchip (12 millimeter) that is currently used for implantable identification purposes.  The company expects to have microchips using its new extended range technology available for market within 12 months. (company press release)
 Monsanto Company and Pharmacia & Upjohn announced the selection of Pharmacia Corporation as the name of the new company to be created through their merger. The new name and corporate identity captures the strong pharmaceutical heritage of both companies, but also marks the creation of something entirely new.  The Searle, Upjohn and Pharmacia names will be used to designate sales divisions in the new company in order to maximize the strong, existing customer awareness and relationships associated with these businesses.  The combined company will have an autonomous agricultural subsidiary, which will retain the name Monsanto. (company press release)
 Boehringer Ingelheim Vetmedica, Inc. (BIVI) announced the construction of a new $13.3 million biological Research and Development facility in St. Joseph, Mo. The 38,000-square-foot facility will provide state-of-the-art laboratory and office space to meet the research needs as the company grows in accordance with business development over the long term. The new R&D building will replace the existing facilities at the Gene Field site. Construction of a first-class Biological Research and Development Laboratory is the second phase of the corporation’s long-term strategy to develop a global Center of Competence in veterinary biologicals in St. Joseph. The first phase, the $47 million Biological Manufacturing facility, was completed in 1999. (BW HealthWire)
 announced that it has entered into an integrated content, commerce and marketing agreement with Networks, Inc., a leading Internet destination for women. will be the exclusive provider of pet information and advice in the new Pets area of the Family channel of (PRNewswire)
 NBC and ValueVision International, Inc. announced that they have entered into a strategic alliance with  Under the terms of the agreements, NBC and ValueVision, which is minority owned by NBC, have agreed to make a minority investment in, which includes both cash and on-air promotion on the NBC network and across NBC’s 13 owned and operated stations. Financial details regarding the transaction were not disclosed.  As part of the agreement, ValueVision and will co-produce programming for a one-hour weekly show on ValueVision’s SnapTV home shopping television network and companion Web site. (Business Wire)
 announced that it has acquired In The Company of Dogs, a premium specialty catalog and e-commerce web site of high quality, distinctive products for dogs, dog lovers and their homes. Terms of the deal were not disclosed.  In the Company of Dogs, based in New York, launched its first paper catalog in 1994 and its e-commerce site in August 1999.  Among its product offerings are raised harvest table dog feeders, bedding, apparel for dogs and their owners, picture frames, jewelry and other accessories. (Business Wire)
 and have formed a comprehensive relationship.  As part of the agreement, an investment affiliate of will receive a significant equity stake in In addition, will receive a substantial advertising commitment from across various Web sites. will have access to the highly valuable customer traffic on’s family of Web sites (,,,,, and will receive marketing and promotional support on the ABC Inc. media properties. (Business Wire)

Animal Health News
 PR Pharmaceuticals announced the acquisition of worldwide exclusive rights from Alaco Inc. to manufacture and market Bapten, (betaaminoproprionitrile fumearate) an FDA-approved scar remodeling agent for the treatment of bowed tendons in horses.  The rights to the product were previously held by Boehringer Ingelheim Vetmedica, which introduced the product two years ago.  (Veterinary Practice News)
 An Edmonton biopharmaceutical company has developed a new line of holistic medicines for the dogs touted as a natural pick-me-up for pets. The story says that CV Technologies has developed a range of mixtures made from ginseng, shark cartilage and ginko biloba that offer health benefits to humans. Its ginseng formulation for colds and influenza is now in a phase-two clinical trial in Virginia approved by the U.S. Federal Drug Administration. (The Calgary Herald)
 For anyone who needs to book a last-minute doctor appointment or get quick advice on a sick pet, a new website service is connecting pet owners and veterinarians online. eVET, recently introduced by pdqVET, Inc., allows veterinarians to easily and affordably establish a Web page and communicate with their patients via the Internet, 24-hours a day. With more veterinary hospitals online, pet owners can take advantage of instantaneous communication with their doctor to conveniently book appointments, inquire about illnesses, get prescription refills and order recommended pet-care products. Additionally, pet owners will have access to a host of resources including kennels, grooming facilities and lost and found networks. Beta sites at several veterinary offices are installed and running. The general site,, is expected to launch in February. (PRNewswire)
 California has approved the use of CNS’s FLAIR equine nasal strip as equipment for racehorses, joining Arizona, Arkansas, Delaware, Florida, Illinois, Kentucky, Louisiana, Maryland, Michigan, New Mexico, Oklahoma, Pennsylvania, Texas, and West Virginia in allowing the FLAIR strip to be worn during races.  The New York State Racing and Wagering Board has also approved use of the strip, although its use in racing has not yet been allowed by the New York Racing Association. The FLAIR strip helps horses breathe easier and can reduce internal bleeding associated with exercise-induced pulmonary hemorrhage (EIPH).  CNS also manufactures the Breathe Right(R) nasal strip.  (PRNewswire)

Agribusiness News
 SemBioSys Genetics, a Calgary-based biotechnology company, announced that it has executed a multi-year product development agreement with Novartis Agricultural Discovery Institute, Inc. (NADII). Under terms of the agreement, NADII will fund the development of a proprietary product addressing nutraceutical, cosmeceutical, and pharmaceutical markets, to be developed using SemBioSys’ proprietary oleosin system. SemBioSys’ proprietary oleosin technology is based on genetically engineering oilseeds to produce value-added proteins.  SemBioSys will supply the product to NADII, who will have exclusive rights to the product.  Financial terms were not disclosed.  (Business Wire)

Brakke Consulting Viewpoint

The 1999 sales and earning reports of the companies participating in the animal health business are now being reported.  There appears to be nothing surprising from what was anticipated and projected.  We believe only one company in the top 20 will report growth in excess of 5% over 1998 without acquisitions or currency translations.  The majority will have declines or no meaningful growth. 

The industry is full of rumors related to who will be next victim in the consolidation race.  All of this is driven by the consolidations taking place in the human pharmaceutical and agricultural chemical companies.  We are very encouraged over the prospects for the year 2000.  The animal protein markets continue to show strength in the early part of the year and this should help sales in 2000.  The companion animal market will continue to grow as long as the major participants don’t panic with the shift of a few share points and discount their products below what is reasonable.  Most of these discounts never get passed on to the consumer.   

 [Ron Brakke]
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