The Experts in Animal Health

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Brakke Consulting’s
Animal Health News & Notes for July 30, 2010

Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon, DVM MBA
Brakke news
diagnostics report
Brakke speaking engagement
earnings news
Maple Leaf Foods
MWI Veterinary Supply
OurPet’s Company
Tractor Supply
other news
Boehringer Ingelheim Vetmedica
Lucky Litter
North American Compendiums
PurinaCare Insurance 

Increases in use of sophisticated diagnostic equipment and services represent a growth opportunity for veterinary clinics and the companies that supply them.  The products category appears to have weathered the recessionary storm better than one would have expected. 
Brakke Consulting’s report on Veterinary Diagnostic Equipment and Services will cover the competitive landscape, including:
–          Market share trends
–          Technology sources and alliances
–          Revenue and profitability of the category
–          Equipment placement trends
–          Company profiles
–          2010 survey of small animal veterinarians regarding use of in-house and reference laboratory diagnostic options and plans to add equipment this year
TRENDS IN DIAGNOSTIC EQUIPMENT AND SERVICES 2010 will be available within 90 days.  Questions about the study can be answered by project manager John Mannhaupt at 972-243-4033, or email
> Merck & Co., Inc. announced financial results for the second quarter of 2010. Sales for Animal Health segment Intervet/Schering-Plough totaled $731 million, an increase of 9% over the second quarter of 2009.  There was continued strong performance among cattle, poultry and swine products. (company website) 
> Sanofi-aventis reported results for the second quarter of 2010. Second-quarter net sales of Merial were $667 million, up 2.5%. This performance was driven by Avian sales (+16%) and Veterinary Public Health sales (+44%) which were boosted by sales of foot-and-mouth disease vaccines. (company website) 
> Bayer reported financial results for the second quarter of 2010. Animal Health sales were EUR 322 million ($393 million), an increase of 19% compared to the second quarter of 2009. After adjusting for currency effects, the increase came to 10%.  There was an improvement in sales of our Advantage line of flea, tick and worm control products (Fx adj. +21%), due particularly to initial stocking of a new distribution channel in the US. (company website) 
> Abaxis, Inc. reported financial results for the first fiscal quarter ended June 30, 2010. Veterinary market sales were $26.8 million, up 23% over last year’s comparable quarter. (PRNewswire)
> MWI Veterinary Supply, Inc. announced financial results for its third quarter ended June 30, 2010. Total revenues were $348 million for the quarter, 40% higher than revenues for the same period in the prior fiscal year. Of the 40% increase in total revenues, 17% was due to organic growth in the US and 23% was related to the acquisition of UK-based Centaur Services Limited on February 8, 2010. Net income increased 38% to $9.1 million, compared to the same period in the prior fiscal year. (company website)
> Ridley Inc. released preliminary unaudited financial information for the fiscal year ended June 30, 2010. For the twelve months of fiscal 2010, Ridley’s preliminary results indicate net income after taxes of $4.7 million compared to a net loss of $(1.3 million) last year. Revenue for the year was $548 million, down 9% compared to the prior year. (company website) 
> Colgate-Palmolive Company announced financial results for the second quarter 2010. Hill’s Pet Nutrition sales declined 7.5% during the quarter to $491 million on both volume and pricing declines. Hill’s sales and volume in the quarter were adversely impacted by the rollout of Hill’s comprehensive re-sizing and re-pricing initiative which took longer than anticipated to flow into the marketplace. (company press release) 
> Maple Leaf Foods posted lower second-quarter net earnings but said its hog production operations returned to profitability in the period. Overall sales fell 4% to C$1.27 billion (US$1.23 billion). (Meating Place)
> Tractor Supply Company announced financial results for its second fiscal quarter ended June 26, 2010. Net sales increased 13% to $1.07 billion from $947 million in the prior year’s second quarter. Same-store sales increased 6%. Net income for the quarter was $76.5 million, compared to $54.8 million in the prior year’s second quarter. (company press release) 
> OurPet’s Company reported record financial results for its second quarter ended June 30, 2010. Net revenue increased 24% to a record $4.5 million for the 2010 second quarter compared to the same period in 2009.  (MarketWire)
> Sanofi-aventis and Merck & Co., Inc. announced that Raul E. Kohan will be appointed Chief Executive Officer of their proposed Animal Health joint venture. The companies intend to combine Merial with Intervet/Schering-Plough, to create a new global leader in Animal Health to be called Merial-Intervet. Mr. Kohan is currently President of Intervet/Schering-Plough, Merck’s Animal Health business. The joint venture is expected to be completed in the first quarter of 2011. (company press release)
> Pfizer Animal Health announced it is voluntarily recalling eight production lots of Terramycin (oxytetracycline HCI) Scours Tablets. Working in cooperation with the FDA, Pfizer voluntarily initiated this recall when it was determined that certain lots manufactured by a third-party vendor contained an active pharmaceutical ingredient that was sourced from a facility prior to reapproval by the FDA. (High Plains Midwest Ag Journal) 
> Boehringer Ingelheim Vetmedica announced that Duramune Lyme from  Inc. has been approved by the USDA for prevention of disease caused by Borrelia burgdorferi in dogs. The vaccine is available in a stand-alone vaccine as Duramune Lyme and in combination with proven parvo and subunit lepto protection. (company website)
> Procter & Gamble, the maker of Iams brand products, announced it is recalling two lots of Iams Veterinary Formula Feline Renal diet in 5.5-pound bags because of possible salmonella contamination. No illnesses have been reported. (New York Times)
> PurinaCare Insurance Services Inc. announced the introduction of new, more affordable pet health insurance plans to cover accidents and illnesses involving your pet. PurinaCare now offers three co-insurance levels (20%, 30% and 40%) and adds an Accident Only Policy that is priced at $9 a month for cats and $12.50 a month for dogs. (company press release)
> Lucky Litter LLC, d/b/a Brilliant Pet, announced that the US Patent and Trademark Office has issued US Patent No. 7,762,213 titled “Self-Cleaning Litter Box.” The patent covers the disposable litter tray cartridges currently sold for use with SX-model ScoopFree Self-Cleaning Litter Boxes and the ScoopFree Slide Easy-Clean Litter Box. (Business Wire)
> North American Compendiums announced the release of the 12th edition of the Compendium of Veterinary Products. The edition features over 5,300 pharmaceutical, nutraceuticals, biological, diagnostic, feed additive and pesticide product monographs. (company press release)
AUGUST 31, 2010

The 2010 Animal Health Investment Forum will feature presentations from 21 early stage animal health companies from around the world.

This forum is being presented by The KC Animal Health Corridor and will take place on August 31, 2010, in Kansas City, Missouri.  It offers the only opportunity in the world for companies exclusively in the animal health sector to present their vision and business plan to potential investors and industry stakeholders.  This annual forum also provides an unprecedented opportunity for venture capital, investment firms and animal health companies to hear from emerging companies with the newest technology.
Registration for the event is $500 for presenting companies and $350 for other attendees.  To register, go to .
> US – POULTRY FLOCK  Broiler-type pullets hatched in June and intended for future domestic hatchery supply flocks were up 6% over June 2009. It was the third straight month of increases exceeding 4%. (Meating Place)
> US – CATTLE HERD  All cattle and calves in the US as of July 1 totaled 100.8 million head, 1% below the 102.0 million on July 1, 2009 in this week’s mid-year Cattle report from USDA. (Drover’s)
> US – RABIES   Oklahoma heath officials are urging residents to be cautious, after 42 rabies cases have been reported across the state this year. Bradley said most of the rabies cases in Oklahoma occur in skunks, but there have been four reported cases in bats, and a few cases in horses and cattle. (AVMA SmartBrief)
> US – DIABETES MONITORING   Researchers at the Missouri University College of Veterinary Medicine have reported that a continuous glucose monitoring device, commonly used in humans with diabetes, is being used to help treat dogs and other animals, as well. The device provides a detailed glucose picture over several days help pets as well as people manage diabetes. The device, produced by Medtronic, sits under the skin between the shoulder blades in an animal and records blood glucose data every 5 minutes. (
Summit on Animal Health Marketing Strategies
August 30, 2010
Kansas City

Brakke Consultant Joel Adamson will be a featured speaker at CBI’s 2nd Summit on Animal Health Marketing Strategies.  Joel will speak on “Trends, Opportunities and Challenges of OTC Pet Healthcare Market Channels.” The presentation provides the vet-channel marketer a comprehensive look at these alternative distribution channels.
For more information or to register for the event, visit the CBI website at or call: 339-298-2100.
Most of the companies reporting quarterly results this week continued the trend of revenue growth in the second quarter compared to prior year.  We continue to believe that this trend will continue for the full year 2010.  While there are some indications that the general economy will reflect the concern of consumers, it does not appear to be carrying over to pet products. The recent increased prices in the food animal area should hold and provide a favorable climate the second half of the year. So, we see 2010 ending up with some growth in revenue, fueled in part by inflation (pricing) and not unit volume.
Earlier in the newsletter, we again mentioned the KC Animal Health Investment Forum.  We believe that the final 21 companies selected for presentations offer some excellent opportunities for investment.  Also, don’t forget that the night before, on August 30th, KCAHC will be hosting its annual Homecoming Event.  It’s going to be a great evening!! Don’t miss it. 
Have a good weekend!!
Ron Brakke

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Brakke Consulting, Inc.
2735 Villa Creek, Suite 140
Dallas, TX  75234    USA

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