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November 1, 2019
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Brakke Consulting’s
Animal Health News & Notes for November 1, 2019
Copyright © Brakke Consulting

Editor: Lynn Fondon DVM MBA

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IN THE NEWS:

Brakke Consulting News
Flea, Tick and Heartworm Markets report – pre-order now
Ron Brakke honored by Augustana University

Earnings News
Bayer
IDEXX
Merck

Other News
Animal Nutritional Products
Biogal Galed Labs
Cargill
CloserStill Media
Destination Pet
Dyadic International
Foster Farms
International Vaccine Institute
Kinetic Vet
L1 Health
Mizner Bioscience
Modern Animal
Nanta
Nutreco
Phoenix Central Laboratory
Scratchpay
Trouw Nutrition (Guelph)
Trouw Nutrition (Cargill)
Vetstream
VIDO-InterVac
Volition Veterinary Diagnostics Development
Zacky Farms
Zoetis (Phoenix)
Zoetis (Texas A&M)

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BRAKKE CONSULTING
2019 US FLEA CONTROL AND HEARTWORM MARKETS REPORT
ORDER BY NOVEMBER 25 FOR EARLY-BIRD DISCOUNT

Are you on top of the trends in the largest market segment in companion animal health?  Brakke Consulting will soon be publishing our 2018 report on the US Flea Control and Heartworm Markets.

The report includes valuable information on the US market for small animal parasiticides including:

– Product descriptions, prices, and sales for the leading veterinary flea, tick and heartworm products
– an overview of the veterinary and OTC flea control markets
– discussion of new heartworm products, including CORAXIS, MILBEGUARD, and PROHEART 12
– 2019 survey of 300+ veterinarians
– 2019 survey of 500 pet owners

The report on the US Flea Control & Heartworm Markets will be available for a purchase price of $7,250 if ordered by MONDAY, NOVEMBER 25, and $7,750 after that date.

Please contact Dr. Lynn Fondon at 336-396-3916 or lfondon@brakkeconsulting.com to pre-order the report, or for more information visit our website.

www.BrakkeConsulting.com

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COMPANY EARNINGS RELEASES

  • Merck announced financial results for the third quarter of 2019. Animal Health sales totaled $1.122 billion, an increase of 10% compared with the third quarter of 2018 (+12% currency adjusted). (company press release)
  • Bayer reported results for the third quarter of 2019. Animal Health net sales were EUR 343 million ($375 million), an increase of 13% compared to the prior-year third quarter. (company website)

  • IDEXX Laboratories, Inc. reported results for the third quarter of 2019. Revenues were $605 million, an increase of 11% over the prior-year quarter. Net income for the quarter was $109 million, an increase of 17%. Companion Animal Group revenues were $533 million, a 12% increase. (company press release)

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BRAKKE CONSULTING
RON BRAKKE HONORED BY AUGUSTANA COLLEGE

Brakke Consulting is pleased to report that Ron Brakke received the Alumni Achievement Award from Augustana University in South Dakota.  Ron and the other awardees were celebrated during Augustana’s Viking Days for outstanding achievement in their fields and for exemplifying the core values of Augustana University: Christian Faith, Excellence, Liberal Arts, Community and Service. Congratulations Ron!

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COMPANY NEWS RELEASES

  • Zoetis announced the completion of the acquisition of Phoenix Central Laboratory for Veterinarians, Inc. (Phoenix Lab), a full service veterinary reference laboratory company. Financial terms of the transaction are not being disclosed. (company press release)
  • Zoetis announced it has signed an agreement with Texas A&M University’s Health Science Center for Innovation in Advanced Development & Manufacturing (CIADM) to establish a facility for accelerating the development of transboundary and emerging disease vaccines, including those for foot and mouth disease (FMD). As part of the agreement, Zoetis is setting up a 12,800 sq. ft. secure biocontainment lab off campus utilizing modular cleanroom technology. (Feedstuffs)

  • Biogal Galed Labs announced the commercialization of the RoboComb, a user friendly, add-on technology that when added to Biogal’s recently released CombCam, fully automates the development and interpretation of VacciCheck or ImmunoComb ELISA test kits. This new technology is available to all VacciCheck and ImmunoComb users, worldwide. (company announcement)

  • The FDA announced the approval of Mizner Bioscience LLC’s generic clomipramine hydrochloride tablets (generic form of Elanco’s Clomicalm) to be used as part of a comprehensive behavioral management program to treat separation anxiety in dogs greater than 6 months of age. (FDA)

  • Kinetic Vet announced the launch of EquiShield SC (Skin & Coat) Granules, a non-GMO and soy-free granular with highly concentrated levels of Omega 3, 6 and 9 fatty acids. (company press release)
  • Animal Nutritional Products announced the launch of PhytoMAXX Plus, a liquid Hemp Extract available exclusively through veterinarians. (Pet Age)

  • Texas A&M University announced it has secured a 12.5% equity stake in Volition Veterinary Diagnostics Development. The two partners plan to develop veterinary diagnostics for the early detection of cancer and other diseases using Volition’s Nu.QTM platform and assays. (Animal Pharm)

  • Modern Animal, a startup that wants to revamp veterinary clinics for the digital age, announced Oct. 24 it raised $13.5 million in seed funding. The company will use the funds to open its first location in Beverly Grove, California early next year. It will offer feline and canine owners telemedicine, online medical records, free consultations and access to routine health care for a $100 annual membership. (LABusinessJournal.com)

  • Canada’s VIDO-InterVac has entered a collaboration with South Korea-based International Vaccine Institute (IVI) to share expertise and practices in vaccine development. The agreement is focused on improving human and animal health globally. (Animal Pharm)

  • Dyadic International, Inc. announced that it has entered into a fully funded collaboration with one of the leading animal health companies to evaluate their proprietary and patented C1 gene expression platform to express three different types of therapeutic proteins for treatment of companion and farm animal health diseases. (Streetinsider.com)

  • CloserStill Media (organizer of nine veterinary exhibitions around the world) announced a partnership with Vetstream to provide the recorded presentations and multiple choice questions from the global portfolio of Vet Shows to create eLearning modules and host them on Vet Show Academy, a version of Vetacademy, Vetstream’s eLearning platform. (company press release)

  • Scratchpay announced that it has secured $65 million of debt and equity through a Series B funding round. (finance.yahoo.com)

  • L1 Health announced an agreement to acquire Destination Pet, LLC. Destination Pet offers pet owners veterinary services combined with other pet health and wellness services including daycare, grooming, and boarding. L1 will commit up to $450 million of capital to acquire and scale Destination Pet. (PRNewswire)

  • Foster Farms has acquired 19 California poultry ranches from the former Zacky Farms after placing a $31 million bid in the bankruptcy settlement. The acquisition will allow Foster Farms to expand further in California, specifically in antibiotic-free, cage-free and organic production. (Feedstuffs)

  • CANADA Trouw Nutrition has formalized a collaboration with the University of Guelph in Canada to accelerate R&D activities. As part of the deal, the two parties have over 40 researcher matches in place to share exclusive and confidential knowledge. Trouw and Guelph will also share their facilities. The agreement will build on the long-standing relationship between the organizations. (Animal Pharm)

  • PORTUGAL Nutreco announced an agreement to acquire Cargill’s compound feed business in Portugal. The business will become part of Nanta, Nutreco’s Iberian animal feed business within its Trouw Nutrition animal nutrition division. Financial terms were not disclosed. (Feedstuffs)

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ANIMAL HEALTH STOCK PRICE TRACKER

 

*Thursday market closing prices

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ANIMAL HEALTH NEWS

  • US – ANIMAL ID USDA’s Animal Plant Health Inspection Service (APHIS) announced that it has suspended its plan to phase-in the use of electronic ID (RFID) tags for cattle and bison, in response to executive orders from President Trump that have highlighted the need for transparency and communication of issues “before placing any new requirements on American farmers and ranchers.” Despite the executive orders withdrawing the plan, APHIS acknowledged the continuing need for a national animal ID plan. (Drovers)

  • WORLD – AFRICAN SWINE FEVER According to the World Organization for Animal Health, around a quarter of the world’s pigs are expected to die from African swine fever as authorities grapple with a complex disease spreading rapidly in the globalization era. Progress had been made toward a vaccine; an announcement was made last week that scientists had unraveled the 3D structure of the virus. (time.com)

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BRAKKE CONSULTING VIEWPOINT

Earnings report season for the third quarter of 2019 is upon us.  These reports represent the last peek we will have at animal health company financial performance until the Q4 and full-year results are reported in early 2020.  They also raise a few questions, in my mind at least, about where growth will come from Q4 2019 and most importantly in 2020 and beyond.

So far, we’ve seen Q3 results from Merck, Bayer, and Idexx.   All three recorded double-digit sales growth, 10%, 13%, and 11% respectively, in the quarter. Additionally, the Q3 results represent the best financial performance of 2019 so far for all three companies. In the case of Merck and Bayer the strong Q3 results have reversed the disappointing growth trends seen in the first half of 2019, resulting in positive growth, Merck at 4% and Bayer at 1%, for the first 9 months of 2019.  The 11% growth in the third quarter by Idexx is an acceleration of the high single digit growth the company recorded in Q1 and Q2 and has resulted in the company raising its full-year 2019 revenue growth outlook to 8%-8.5%.

This first volley of results raises some additional growth-related questions for individual companies and the animal health industry as a whole.  For Merck, Bayer, and Idexx will the strong growth trend hold or possibly accelerate in the fourth quarter?  Will these companies meet or beat the widely held industry expectation of low to middle single digit growth for the full-year 2019?  In the case of Idexx, it appears beating the industry growth benchmark is a virtual certainty. For Merck and Bayer, let’s wait and see.  For the industry as a whole, same questions: What will we see as others report their third quarter results? Will the full-year 2019 growth rate for the industry be a pleasant surprise, a ho-hum yawn, or a big disappointment?

For Merck third quarter growth came largely through acquisition (Antelliq) and pet antiparasitics (Bravecto).  Bayer, in the role of the soon to be acquired, generated its third quarter growth from the “mature” Advantage and Seresto pet antiparasitic product lines.  Idexx, at the top of the heap in the diagnostics sector, generated its growth through much better than expected placements of Catalyst analyzers and global expansion. With the exception of Merck’s Antelliq, which is growth through acquisition of innovation, the Q3 growth that’s been reported so far hasn’t been driven by new products or innovation. Does this say more about customer desires or the state of real innovation, as opposed to incremental product and platform improvements, in our industry?  There are a lot of questions to be answered as we close out 2019 and you can be sure that some of the answers and results will generate even more questions for 2020 and beyond.

To close my comments this week, I would like to add my congratulations to the founder of Brakke Consulting and our colleague, Ron Brakke on the occasion of his receiving the Alumni Achievement Award from his alma mater Augustana University in South Dakota. Congratulations on this well-deserved recognition of your many achievements!

Mike McGinley

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