Animal Health News & Notes for October 5, 2001

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Brakke Consulting’s
Animal Health News & Notes for October 5, 2001
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

>  International Absorbents Inc. announced record financials results for its quarter ended July 31, 2001.  Second quarter revenues increased by 55% to $3.2 million over the same quarter a year ago.  Pre-tax income grew by 99% to $598,000 versus $301,000 last year.   The company also reported that it recently bought back 55,046 shares of its common stock.  The repurchased shares will be retired.  (PRNewswire)

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Company News Releases

>  Virbac Corporation announced that the FDA has approved Virbac’s new anthelmintic (dewormer) for cattle. The product, released commercially under two trade names, Virbamec Pour-On and Bovimec Pour-On, is topically applied and contains the active ingredient ivermectin to treat and control internal and external parasites in cattle. The product will be manufactured at Virbac’s FDA-approved manufacturing facility near St. Louis, Mo. Once the product is fully launched in the market, Virbac expects to capture a minimum of 5% market share within the next three years. (Business Wire)

>  Shareholders of IBP inc. voted to approve the purchase of the company by Tyson Foods. This vote, along with the subsequent filing of merger documents, means Tyson’s acquisition of IBP is now officially completed. More than 98% of the shareholders approved the merger acquisition.  The new Tyson Foods controls about 28% of the United States beef market, 23% of the chicken market and 18% of the pork market. Revenues for fiscal 2002 are projected to be in excess of $25 billion. (Meating Place)

>  Church & Dwight Co., Inc. said that it has completed the previously announced acquisition of Carter-Wallace’s consumer products business in a partnership with the private equity group, Kelso & Company, for a total purchase price of $739 million. As part of this transaction, Church & Dwight purchased Carter-Wallace’s antiperspirant and Lambert Kay pet care businesses outright for $128.5 million.  (Business Wire)

>  Farnam Companies acquired T Dickson LLC, a designer and manufacturer of ergonomic products for pet groomers.  Farnam established the T Dickson Professional Products Division to further expand the company’s presence into the grooming products market. (Pet Product News)

>  PetsVetsandYou Inc. recently voted to pursue online sales of prescription drugs and diets. PetsVetsandYou will work closely with prescription drug and pet food manufacturers to comply with their sales policies and ensure valid doctor-client relationships.  When the program is launched next year, pet owners can order prescription drugs and diets online through individual veterinarians’ web sites hosted by PetsVetsandYou or the company’s corporate site. All prescriptions will be verified to ensure accuracy and compliance with legal issues. (company press release)

>  GERMANY  The CEO of Gimborn confirmed that the company is for sale. The owners, Süd Chemie AG, are looking for a buyer. However, the sale is not expected before early next year. Possible buyers could be Vitakraft and Nestlé. For the cat litter department Sepiolsa and Tolsa would be interested. (Petsinfo.net)

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Brakke Consulting, Inc. announces new PAIN MANAGEMENT STUDY

Pain management has emerged as one of the leading topics in veterinary medicine today.  The new Brakke Consulting report, Pain Management Products for Dogs and Cats, is an overview of the market for these products.  The report covers existing pain management products, both those approved for veterinary use and human drugs used off-label in small animals.  It also provides valuable insight into the products for which veterinarians are still hoping.

The study includes information such as:
 – overview of acute and chronic pain in small animals
 – review of products currently used to treat pain in dogs and cats
 – estimates of US sales of pain management products
 – pain management products in development or awaiting FDA approval
 – review of nutritional supplements used for chronic pain
 – overview of alternative medicine therapies used to treat pain
 – survey of small animal veterinarians regarding use of pain management products

The study is available for a price of $2,750.  Reports can be shipped immediately upon receiving an order.

For more information on our survey services, please contact Dr. Lynn Fondon at mailto:lfondon@brakkeconsulting.com or call 972-243-4033.

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Animal Health News

>  JAPAN   Japan banned the domestic distribution of cattle feed made of recycled
cow parts, having already banned imported meat-and-bone meal. The new move also bars the use of domestic and imported meat-and-bone meal in fertilizers.  (AP)

>  SLOVAKIA  Tests from a German laboratory confirmed Slovakia’s first case of BSE, proving true fears that the disease has spread further into Eastern Europe. The results verified local tests carried out last week showing a cow from a central Slovak farm had contracted BSE.  Slovakia is now the second east European state to be hit by the disease after two cases appeared in the Czech Republic this summer. (Reuters)

>  US   The USDA has authorized $2.6 million from Commodity Credit Corp. funds to implement a surveillance and indemnity program for chronic wasting disease (CWD).  While considered rare, CWD is endemic to free-ranging deer and elk in a limited area of Wyoming, Colorado and Nebraska and has been found in captive elk herds in those states and in Montana, Oklahoma and South Dakota.  The emergency funds will be used to reduce the spread of CWD among captive elk.  CWD is a progressive disease that affects deer and elk. It is part of a group of diseases known as transmissible spongiform encephalopathies, a group that includes scrapie and bovine spongiform encephalopathy. (Meating Place)

>  AUSTRALIA   Australian scientists have claimed a commercial breakthrough after breeding 25 lambs whose sex was successfully selected before conception.  The healthy lambs, now nine and 10 weeks old, are the first offspring of any species in Australia from sperm sorted into male or female chromosomes and thawed after being frozen. Researchers from the University of Sydney, together with U.S. biotechnology firm XY, Inc, achieved an overall accuracy rate of 96% in producing the correct gender lambs. (AnimalNet – Reuters)

>  US   Emissions from cow manure are the latest targets of government anti-air
pollution crusaders in Southern California.  The 450,000 dairy cows in Southern California create
air pollution that combines with smog and soot from Los Angeles to produce some of the nation’s worst air.  According to the South Coast Air Quality Maintenance District, the areas downwind of the dairies have some of the highest particulate pollution in the country. With the federal act mandating clearer skies by 2006, the district is considering tighter emissions regulations for livestock waste. The EPA and the state Legislature are also considering requiring farms to
obtain air pollution permits to make them subject to greater regulatory scrutiny. (AP)

>  Viragen, Inc. and Roslin Institute (Scotland) jointly announced the successful production
of the world’s first humanized antibody using chicken cells. The humanized antibody, GD3, is designed for the treatment of melanoma and certain other cancers. The successful experiment is considered a very important milestone in Viragen’s Avian Transgenic Project. The project is designed to produce protein-based drugs, including monoclonal antibodies, to fight cancer, inside the eggs of transgenic chickens. (PRNewswire)

>  US   Nabi, a biopharmaceutical company, announced that it was issued a US patent entitled “Staphylococcus aureus antigen-containing whole cell vaccine.’’ This patent covers the composition of a S. aureus vaccine, the method of vaccine preparation, and its use as a therapeutic or prophylactic agent to protect animals against infection.  S. aureus is the most frequent cause of mastitis in cattle.  In a preliminary study, Nabi has demonstrated the ability of the trivalent vaccine to clear chronic Staphylococcus aureus intramammary infections in dairy cows. (AnimalNet)

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Agribusiness News

>  Aventis and Schering AG have signed an agreement with Bayer AG on the acquisition of Aventis CropScience. Aventis holds a 76% interest in this business, while Schering AG, Berlin, holds 24%.  Under the terms of the agreement, which is subject to the approval of the relevant authorities, the enterprise value of Aventis CropScience will be set at around 7.25 billion euros including debt. The transaction is expected to close during the first quarter of 2002. With 4 billion euros sales in 2000, Aventis CropScience employs about 15,300 people in more than 120 countries worldwide. (company press release)

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Brakke Consulting Due Diligence Seminar Feedback

The Brakke Consulting Due Diligence Seminar recently conducted in Chicago was well received by the participants.  Brakke consultants reviewed a process to assist in either buying or selling a business or in-licensing technology, a communication program to implement during the process and then the integration process after the deal is completed. Kevin Clarke, Senior Managing Director, Bear Stearns & Company reviewed recent animal health M&A activity and outlined how deals are being structured to minimize taxes and maximize value creation.

Following are several comments from the participants’ evaluation forms:
 – “The presentations offered excellent insight into the process and provided practical information based on experience”
 – “I did not realize how big and important the due diligence process was until taking this course”  – “The process you presented was well organized and it will be very valuable the next time I am asked to lead a due diligence review”
 – “The due diligence checklist will be a big help to me”
 – “The presentation by Kevin Clarke was informative and helped me better understand and appreciate how acquisitions are financed and the complexity of deal structures”.

Since several people had to canceled due the flying restrictions imposed by their companies following the September 11 terrorists attack, and several others have expressed interest, we are tentatively planning to conduct a second due diligence seminar on November 28 and 29 at the Princeton Club in New York City.  The registration fee is $1,000 if received by October 15, and $1,250 if received after October 15.  If you want to attend this seminar, please let us know ASAP so we can make final plans and confirm these dates.  You can contact us at info@brakkeconsulting.com, or call 972-243-4033.

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Brakke Consulting Viewpoint

The news this week reported more of the normal activities of the industry.  Several stories cover the continued consolidation of companies, which has been occurring for years.  There was little news related to new business growth and new products other than generics entering the market.  In a few weeks we will be getting the third quarter reports for most companies.  We predict a fair number of comments on the slowdown in business. 

We would encourage companies that are planning to be part of the ongoing industry consolidation to sign up for our second Due Diligence Seminar.  The program provides a step-by-step process of the do’s and don’ts of successful transactions.

 [Ron Brakke]

 
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