The Experts in Animal Health

Brakke Consulting’s
Animal Health News & Notes for October 15, 1999

 According to Feedstuffs magazine, both Pfizer and Hoffmann-La Roche are reportedly considering divesting at least part of their respective medicated feed additives businesses.  Profits for medicated feed additives have suffered recently, and the European stance on in-feed antibiotics is impacting the business as well.
 IDEXX Laboratories reported that third quarter net income increased 41% to $8.4 million, up from $6.0 million for the same period last year. Revenue for the three months ended September 30, 1999 increased 10% to $86.4 million from $78.5 million for the same period in 1998. IDEXX also announced that Ralph K. Carlton would step down as Chief Financial Officer to head the Company’s veterinary information business, which includes its VetConnect Internet venture and its IDEXX Informatics subsidiary.
 Heska announced it has recently received four new patents.  Two patents are for the use of the high affinity IgE receptor alpha chain to detect IgE, and two patents cover novel flea antigens associated with flea bite allergy.  Heska now holds 40 patents and 93 pending patent appliations.
 PetMedExpress and the Florida Board of Pharmacy have agreed to a settlement regarding charges filed against the former.  The settlement includes a $40,000 fine, continuing education, and monitoring by the Board for 30 months. 
 Planet Polymer Technologies Inc. announced that Agway Inc. has begun sales of the first product developed by Agway using Planet’s patent pending technology. The product is a controlled release nitrogen supplement for animal feed use. Agway currently owns 1,000,000 shares (15.7%) of Planet’s Common Stock.
 Church & Dwight Co., Inc announced that it has begun shipment of ARM & HAMMER(R) SUPER STOP, its first entry into the traditional clay segment of the cat litter market. SUPER STOP is a companion product to ARM & HAMMER SUPER SCOOP(TM) Clumping Litter. The product will be positioned at the premium end of the market. The Company expects the product to be broadly available in Supermarket, Mass and Specialty Pet outlets by the end of January 2000. SUPER SCOOP gained approximately a 13% dollar share of the clumping litter business in the two years since its introduction.
 Vice President Al Gore announced that $40 million in additional funds are being made available for hog farmers for the voluntary destruction of swine herds infected with pseudorabies. An eradication program, begun in 1989, is in place to help stop the spread of the disease. The disease that costs hog producers more than $30 million annually. In January, $80 million in funds from were pledged to accelerate USDA’s voluntary pseudorabies eradication program.
 The British beef industry has suffered another blow after Germany followed in the footsteps of France and delayed its decision to begin accepting imports of British beef again. German ministers say they want to examine scientific evidence which France produced about the safety of British livestock.  Earlier this month, France refused to lift its ban, in defiance of a European Union agreement, claiming there may still be a risk from BSE.  The French report flies in the face of the all-clear given by the Commission after exhaustive and continuing checks on the safety of British beef, and EU officials say they have found nothing in it which raises new worries about BSE in British cattle
 According to NPD Online Research, a recent survey of over 2,000 internet users showed that toys were the most popular of Internet pet store purchases. Forty percent of owners polled had bought toys for their pets online. Edibles were also popular, as 31% confirmed buying food and 30% treats. Almost half of all buyers reported spending up to $25 during an average visit, while 37% spent between $25 and $50. was the most frequently visited online pet store, according to NPD. Fifty-two percent of survey participants visited, while 36% frequented
 Researchers at the Catholic University in Leuven in Belgium have developed software that can detect the wheezing and coughing of sick animals. When tested in pigs, the program successfully diagnosed 92% of coughs by comparing them to a database of prerecorded coughs. The program issues a warning only when the number and frequency of coughs exceeds a certain limit.
 Rising horse populations and recent research advances are producing an upsurge in use of A.I. for hunting, riding and performance horses. A.I. is spreading the use of superior stallions and can now give a 10 per cent higher conception rate than natural mating – 30 per cent higher for “problem” mares.
 Fibre-chewing enzymes that work in the rumen of dairy and beef cows can improve milk production and rate of gain because the animal is getting more out of the feed, according to an Agriculture Canada researcher. The technology developed at the research centre in Lethbridge, Alta., is now available commercially. Agribrands International, the worldwide distributor of the new product, has conducted field trials to ensure the technology works. In dairy cows, milk yield increased by 5 – 10%, while growing beef cattle showed a better rate of gain by 8 – 15%.

The Brakke Consulting Viewpoint

It appears to be another quiet week in the animal health and pet industry.  No one announced a merger or addition consolidation which would in the end result in additional headcount reductions.  The Pfizer and Roche moves in the medicinal feed additives business leaves one wondering who will be selling these products in the next 3 to 5 years.  If these businesses end up selling for fairly high prices we might see others taking a look a business rationalization.  Who will be the purchaser?

Over the past week we’ve had contact either in person or by phone with several of the CEO running animal health companies.  It sounds like most everyone will report a slight increase over prior year for the 3rd quarter.  However, our impression is that many of these gains will be rather small when reported.  We believe most companies would like to get 1999 behind them and move into the new millenium with some new plans and budgets that are more representative of the market place.

Have a good weekend.
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