The Experts in Animal Health

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Brakke Consulting’s
Animal Health News & Notes for May 8, 2015

Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon DVM MBA
Brakke Consulting news
Market research
Brakke consultant speaks at Petfood Forum
earnings news
Central Garden & Pet
Henry Schein
Ouro Fino 
PetMed Express
Pets at Home
Smithfield Foods
Spectrum Brands
other news
Animal Health International
Genoscoper Laboratories
Gour Medical
IDEXX (worms)
IDEXX (canine influenza)
Mars Veterinary
Traverse Biosciences
Tyson Foods
WG Critical Care
SEPTEMBER 24-27, 2015

SWVS, a partnership combining the efforts of the Arkansas, Louisiana, New Mexico, Oklahoma and Texas VMAs, will be held in September 2015 in Fort Worth, Texas. SWVS offers more than 375 hours of quality continuing education courses for veterinary professionals. Temple Grandin will be speaking on Sunday this year at the conference.

For more information or to register for the conference, go to
> Zoetis Inc. reported its financial results for the first quarter of 2015. The company reported revenue of $1.10 billion for the first quarter of 2015, which was flat compared to the first quarter of 2014; revenue reflected an operational increase of 6%, excluding the impact of foreign currency. Net income for the first quarter of 2015 was $165 million, an increase of 6% compared to the first quarter of 2014. (company website) 
> Colgate-Palmolive Company reported results for the first quarter 2015. Sales for Hill’s Pet Nutrition were $538 million, a decline of 3% compared to the comparable prior-year period. Unit volume increased 2% with 3.5% higher pricing, while foreign exchange was negative 8%. (company website)
> Heska reported results for the first quarter of 2015. Consolidated revenue increased 10% to $23 million; net income attributable to Heska was $598,000 compared to $192,000 in the first quarter of the prior year. (company press release)
> Ouro Fino Saúde Animal reported results for the first quarter of 2015. Sales totaled R$87 million ($28.7 million), an increase of 16%. Gross profit increased by 9.6% to R$51.3 million ($17 million). (Animal Pharm)
> Orion reported results for the first quarter of 2015. Animal health sales totaled EUR 21.6 million ($24.3 million), a 40% increase compared to the first quarter of 2014. Growth in its animal health division was driven by a boost in sales of its animal sedative product lines and a non-recurring milestone payment recorded on the sale of product rights. (Animal Pharm)
> Aratana Therapeutics, Inc. announced its first quarter 2015 financial results. Aratana had $156,000 in net revenue for the quarter ended March 31, 2015 related to its T-cell lymphoma product (AT-005). The company reported a net loss of $(8.8) million compared to a net loss of $(9.2) million for the quarter ended March 31, 2014. (PRNewswire) 
> Henry Schein reported financial results for the first quarter of 2015. The Animal Health segment recorded sales of $684 million, up 5% compared with the prior-year quarter consisting of 12% growth in local currencies and a 8% decline related to foreign currency exchange. North American Animal Health sales were $338 million, an increase of 10%. ( 
> Central Garden & Pet Company announced financial results for its fiscal second quarter ended March 28, 2015. Second quarter net sales for the Pet segment increased 2% from the same period a year ago to $222 million, due in large part to the sales of other manufacturers’ products and higher professional revenues. The Pet segment’s operating income was $27.1 million compared to $24.2 million in the second quarter of 2014. (company website)
> Spectrum Brands Holdings, Inc. reported fiscal 2015 second quarter results for the period ended March 29, 2015. The Global Pet Supplies segment reported net sales of $210 million, a 32% increase compared to the comparable quarter last year. The increase was driven by acquisition-related revenues of $63 million. Segment net income, as adjusted, was $12.6 million in the second quarter of fiscal 2015 versus $19.4 million in the second quarter of fiscal 2014. (company website)
> PetMed Express, Inc. announced its financial results for the fiscal year ended March 31, 2015. Net sales were $229 million, a decrease of 2% compared to the prior year. Excluding a one-time charge for an IT-related discontinued project, net income for the fiscal year was $18.5 million, an increase of 3% compared to the prior year. (company website)
> Smithfield Foods Inc., released its first quarter financial results for 2015. Total sales increased 6% to $3.616 billion compared to the same period in 2014, which the company said was largely attributable to a particularly strong quarter for the packaged meat division. Operating profits were $188.2 million compared to last year’s $196.4 million. (Feedstuffs)
> British pet specialty retailer Pets at Home reported financial results for the fiscal year ended March 31, 2015. Total revenue rose 10% to GBP 729.1 million (US$1.12 billion) compared to the prior year. Merchandise like-for-like sales rose 4%, while like-for-like sales of services grew 12%. (PetFoodIndustry)
Brakke Consulting’s Joel Adamson was a speaker at Petfood Forum in Kansas City on Tuesday, April 28. Joel’s presentation, part of Petfood Forum’s marketing/new product development session, was entitled “Trends and News in the Pet Market: Considerations for Business Planning.” In his presentation he emphasized the importance of including a wide range of companion animal market trends and news in business strategic and tactical planning.
> Zoetis announced a comprehensive operational efficiency initiative to enhance its long-term competitive position and profitability, which includes slashing $300 million in annual costs by 2017 and cutting at least 20% of its workforce. The Company plans to close 10 manufacturing plants, eliminate layers of management and abandon 300 of its product lines that aren’t performing well. However, the company said it would not cut back on its sales force. (Watt Agnet) 
> Elanco announced plans to sell the former Novartis vaccine plant in Vacaville, California acquired last year as part of its deal to buy Novartis’ animal health assets. Elanco plans to close the 78,198-square-foot facility by Q2 2015. (Vet Advantage)
> Patterson Companies, Inc. announced a definitive agreement to acquire Animal Health International. This acquisition will more than double the size of Patterson’s veterinary business. Patterson Companies will acquire all of Animal Health International’s stock for approximately $1.1 billion in cash. Animal Health International generated sales and EBITDA of $1.5 billion and $68 million, respectively, during the 12 months ended March 2015. Patterson Companies is financing the acquisition through a combination of a $1 billion unsecured term loan and a $500 million unsecured cash flow revolving line of credit. (Vet-Advantage) 
> Perrigo Animal Health announced that it has launched PetArmor Joint Health Maximum. PetArmor Joint Health Maximum is a supplement for dogs that contains glucosamine, chondroitin, MSM and manganese, the same active ingredients found in Cosequin DS. (PRNewswire)
> The Animal Health Division of WG Critical Care, LLC, announced that Quartermaster Suspension (penicillin-dihydrostreptomycin in oil), FDA approved for intramammary use to reduce the frequency of existing infection and to prevent new infections with Staphylococcus aureus in dry cows, is now available from several major veterinary suppliers. (Vet Advantage) 
> IDEXX Laboratories, Inc. announced that hookworm and roundworm antigen tests will be added to all IDEXX Reference Laboratories fecal panels – which already include whipworm antigen – at no additional charge. (company website) 
> IDEXX Laboratories, Inc. announced that the company has developed, validated and made available a new test for the detection of H3N2 canine influenza virus. IDEXX has added the H3N2 Influenza Virus RealPCR Test to their existing IDEXX Comprehensive Canine Respiratory Disease RealPCR panels at no additional cost to customers. The H3N2 test is also available as a stand-alone test. (company website) 
> Jaguar Animal Health announced plans to raise $22 million in an IPO on Wednesday, May 13th. The company will issue 3,200,000 shares at a price of $7.00 per share. (
> Finland-based Genoscoper Laboratories and Mars Veterinary announced a partnership that will integrate aspects of the Genoscoper MyDogDNA testing platform into Mars’ existing DNA veterinary products. Genoscoper’s DNA test concept covers almost all known inherited canine disorders, conformational traits, and genetic diversity in one test. Results are reported via (Businesswire)  
> Aratana Therapeutics and Traverse Biosciences announced a $250,000 cooperative research and development agreement to advance the development of Traverse’s TRB-N0224 for the treatment and control of periodontal disease in companion animals. Traverse Biosciences also granted Aratana an exclusive option to sublicense TRB-N0224 for the treatment and control of periodontal disease in companion animals. (company website) 
> Tyson Foods announced it is working toward ending the use of human antibiotics from its domestic broiler chickens by September 2017. Tyson has already taken steps toward cutting out antibiotics, including nixing antibiotic use in its broiler hatcheries and trimming human antibiotic use on broiler chickens by more than 80% since 2011. (Vet Advantage) 
> SWITZERLAND  Gour Medical SA announced that it has entered into a definitive worldwide license agreement with Actelion Pharmaceuticals Ltd for the veterinary development of one of Actelion’s early-stage clinical dual orexin receptor antagonists. Gour plans to develop the compound and eventually bring to the market a new treatment to reduce anxiety, hypervigilance and restlessness in dogs during stress situations related to transport, loud noises and separation. The company also announced the signing of a research partnership with CNRS for the development of recombinant monoclonal antibody for therapeutic use on dogs and cats. The first product under development will be for the treatment of atopic dermatitis for dogs. (company press release)
MAY 6-7, 2015
The Animal Agriculture Alliance held its Stakeholders Summit in Kansas City this week and marked two milestones. This was the first summit held outside the Washington, D.C. area. And the 200 paid registrants was an all-time high. The program covered a mix of issues affecting the industry and current marketing communication phenomena. The themes most often mentioned were sustainability and transparency.
> US – AVIAN INFLUENZA  Iowa’s Governor has declared a state of emergency to aid in the response to the outbreak of H5N2 avian influenza that has affected 21 sites spanning ten Iowa counties. The leading egg-producing district in the country has already lost 15 million birds as a result of the outbreak. (Feedstuffs)
> US – AVIAN INFLUENZA  The US government approved the use of an additional $330 million in emergency funds to help contain the worst avian influenza outbreak in US history. The funds became available after the federal Office of Management and Budget granted the US Agriculture Secretary’s request for additional emergency funds. Initially, USDA had set aside $84.5 million to compensate farmers and for other outbreak-related costs. (Reuters)
> US – PHARMACIST TRAINING  The American Veterinary Medical Association board of directors is recommending that the House of Delegates approve a resolution calling for veterinary pharmacology courses in pharmacy school and related continuing education classes for professional druggists. The idea aims to reduce pet medication errors and improve communication between pharmacists and veterinarians. A 2012 survey conducted by the Oregon Veterinary Medical Association found many instances of pharmacists changing prescribed doses of pet medications or substituting a different product without the veterinarian’s authorization. (Vet Advantage)
Look Before You Leap

Depend on Brakke Consulting to build a market study to meet your company’s needs, whether it is:
• Assessing the feasibility of a new product or technology
• Identifying the opinions and trends of veterinarians, pet owners or producers
• Determining the current market for products

With our in-house database of veterinarians and the ability to custom-tailor surveys of a wide variety of target audiences, we provide reliable insights into this unique industry. We also produce multiclient reports in a number of high-interest animal health market areas. For more information, see our website or call Dr. Lynn Fondon in our Dallas office at 972-243-4033.
Some very interesting news this week. The revenue and earnings reports were generally positive for those firms reporting.
There were a couple of announcements related to reorganizations and divestitures from two of the leading firms. These will probably be just the first moves as both of these firms rationalize their operations in a changing and competitive marketplace. We expect to see other firms making similar moves to maintain their competitive edge and efficiency.
On the distribution front, the announcement by Patterson Companies that they are purchasing Animal Health International creates two very large distribution companies in the US that are involved in both companion and food animal distribution. The need for critical mass and efficiencies is even more prominent in distribution and will continue to drive additional consolidations in this area. Sometime in the not too distant future we believe there will be two or three distribution companies with worldwide capabilities.

Have a great weekend!
Ron Brakke

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