Animal Health News & Notes for October 19, 2001

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Brakke Consulting’s
Animal Health News & Notes for October 19, 2001
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases

>  Pfizer reported Animal Health sales for the third quarter of 2001 increased 22% (up 29% excluding foreign exchange) to $254 million, compared to the same period in 2000.  The improved performance in this business reflected new promotional and distribution practices, various restructuring initiatives, and the performance of Revolution, an anti-parasitic for companion animals.  These benefits were partially offset by lost revenue from the divestment of feed-additive product lines, the impact of mad cow disease and foot and mouth disease in Europe and the negative effect of foreign exchange. (PRNewswire)

>  IDEXX Laboratories, Inc. reported that net income for the quarter ended September 30, 2001 increased 10% to $10.2 million from $9.3 million for the same period in the prior year.  Revenues for the third quarter increased 7% to $97.5 million from $90.9 million for the third quarter of 2000.  For the nine months ended September 30, 2001, net income increased to $28.0 million from $26.8 million for the first nine months of 2000. (company press release)

>  Colgate-Palmolive reported that Hill’s had an excellent third quarter 2001 in both its domestic and international businesses. New products, veterinary endorsements and enriched marketing programs drove unit volume up a strong 8.0%. Sales rose 9.0% and operating profits increased 12% reflecting the larger revenue base and cost savings initiatives. Hill’s robust growth in the U.S. specialty retail channel continues to outpace category growth. Internationally, Hill’s achieved strong volume growth across all regions led by double-digit gains in Spain, Germany, Australia, Mexico, Brazil, Argentina and South Africa. (Business Wire)

>  Nutreco reported sales of 1.8 billion euros ($1.6 billion) and net income of 33.2 million euros ($30.2 million) for its first half 2001.  This represents a 29% increase in sales and a 27% increase in net income over the first half of 2000.  The increase was attributed to acquisitions as well as improved income and sales in both its aquaculture and agriculture units.  (Feedstuffs)

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Tufts Animal Expo

The Tufts Animal Expo in Boston last week enjoyed the attendance of more than 3,300 registrants from around the country and 7 seven other nations, including veterinarians, technicians, physicians, groomers, and others involved in the welfare of pets.  Despite the events of September 11, all but two of the 204 scheduled speakers participated in the program, and nearly all the registered exhibitors attended. Attendance was undeniably down from last year, but the Expo’s organizers were pleased with the support from the attendees and others. 

The Expo included more than 500 hours of educational programs, including lectures and hands-on laboratories.  Other unique offerings at the Expo included an “Ask the Expert” booth where registrants had the opportunity to interface one-on-one with leading experts; “What’s Hot” educational tracks focusing on the latest advances in various topics; and an Animal Showplace featuring demonstrations by service dogs and others.

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Company News Releases

>  Merial announced the launch of Purevax Ferret Distemper Vaccine.  The approval of this product makes Merial the first company to offer a complete line of specialized vaccines for ferrets.  (company press release)

> IDEXX announced the launch of a new in-clinic microbial test designed to help veterinarians easily identify and treat urinary tract infections.  The IDEXX IndicatoRx test detects the presence of bacteria in canine or feline urine samples and further indicates the bacteria’s susceptibility or resistance to common antibiotics.  Only four drops of urine are needed to run the test, and results are available in 24 hours.  (DVM Newsmagazine)

>  Forbes Magazine has named Neogen Corporation to its annual list of the 200 Best Small Companies in America for the second consecutive year. The group has a median five-year average return on equity of 15%, earnings-per-share growth of 29% and sales growth of
22%.  Neogen’s revenue growth for the past five years has averaged 20% annually. Neogen’s revenue growth for the fiscal year completed on May 31 was 48% higher than its prior year.  Forbes’ ranking system had Neogen 29th on the list for sales growth in the past 12 months.  Neogen’s composite rating on this year’s list was 113th, up from last year’s rating of 182nd. (PRNewswire)

>  Embrex has been selected as one of the 200 Best Small Companies in America by Forbes Magazine for the second consecutive year.  Embrex was ranked 56th among the 200 Best named in Forbes’ October 29, 2001 issue, up from a ranking of 62 in 2000. According to Forbes.com, Embrex sales over five years have grown 18% and EPS growth for the past quarter is up 16% over the previous year’s quarter. Also, Embrex’s return on equity has averaged 22% for the last five years and is 29% for the last 12 months.  (company press release)

>  VPL announced that it as formed an alliance with a manufacturer of sutures to offer a premier suture line.  VPL now offers a mid-term synthetic absorbable suture and a dry-packed cat gut suture with Quick Needle Access packaging, allowing the practitioner direct access to the needle with one tear.  (company press release)

>  Archer Daniels Midland Company announced it will merge the Moorman’s and Consolidated Nutrition operations into a single animal feed subsidiary called ADM Alliance Nutrition. This change will take effect Nov. 1. This will combine the sales and marketing groups of each company. (Pork Alert)

>  Royer Biomedical announced that it has spun off its animal health division to form Royer Animal Health, a pharmaceuticals and vaccine company for companion animal and equine care.  Royer’s platform technology is a composite used to deliver drugs to targeted areas with controlled release.  A variety of controlled-release medications are currently under development.  Products will be sold both OTC and through professional sales. (Veterinary Practice News)

>  The Butler Company recently opened its newest distribution facility in Visalia, Ca.  The new facility is part of Butler’s facility modernization program and is equipped with state-of-the-art flow and other improvements.  (Veterinary Practice News)

>  Infigen, Inc. announced the company had terminated its Agreement with Pharming Holding, N.V. to commercialize Infigen’s transgenic technologies.  The termination also means Pharming and its subsidiaries must cease using intellectual property previously licensed to Pharming by Infigen. The January, 1998 Agreement preceded Infigen’s becoming the first company in the world to clone several herds of transgenic dairy cattle that are producing commercial quantities of several therapeutic human proteins. (PRNewswire)

>  CANADA   Gensel Biotechnologies Inc., the Canadian company endeavoring to market a semen-sexing service that would enable dairy and beef farmers to choose between heifer and bull calves, has closed its doors. The company failed in a months-long bid to sell more shares to raise enough money to complete its research into monoclonal antibodies that distinguish between sperm that result in male or female embryos and to pursue some related potentials that came up during research. The board made the decision to pull the plug with great regret because the company believed it was close to identifying the monoclonal antibodies that would do the job and there is a huge market for the technology. A company spokesman said the board will make a decision in the next few weeks about the fate of the parent company, Gensel Limited. (AnimalNet – Ontario Farmer)

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Chaos caused by BSE in Japan

After news of the first BSE case found in Japan on August 6, 2001, the outbreak has caused chaos in the government, animal industry, food industry, other industries and consumers. Daily newspapers have given front page prominence to BSE issue every day.

Although the affected cow must have been given feed containing meat and bonemeal [MBM] imported from Europe, the Japanese animal health authorities have not yet found a real causative agent.  Ministry of Agriculture, Forestry and Fisheries (MAFF) had strongly recommended disuse of MBM to cattle under the administrative guidance to cattlemen since 1996. Additionally, an import ban of MBM from the EU had been enforced after the beginning of 2001. However, MAFF has recently announced the survey results that 8,017 cattle at 217 farms had been fed MBM up to Oct. 1. Consequently, MAFF has decided to suspend import and distribution of MBM for the time being.

On the other hand, local veterinarians conducted medical examination for 4.6 million cattle at 136,000 farms nationwide after Sept.12, 2001 and observed no BSE symptoms in these cattle.
Ministry of Health, Labor and Welfare [MHLE] has decided to commence inspection using  “Sandwich ELISA” test for individual cattle at every slaughter house collaborated with 117 meat inspection laboratories after Oct.18, 2001 and expect to check about 1.3 million cattle per year.

Beef consumption has exceedingly declined by about 40%; over 10,000 schools have dropped beef from the lunch menu; popular restaurant chains have switched to beef imported from the US and Australia. Retail prices of ordinary beef at supermarket have significantly declined by about 40%. On the other hand, sales of pork and chicken meat have very much increased. The government is funding at least hundred of thousands yen or several million dollars to spend BSE tests for individual cattle at slaughter houses, to pay compensation for incineration of MBM and cattle organs, compensation for farmers owing to unavoidable feeding for long period and compensation for meat and feed industries to be affected by BSE, and cost of purchasing beef by the government to maintain a  reasonable market price. 

Processed food manufacturers have switched to imported cattle products or chicken meat in their food products.  Nutritional supplement manufacturers have also replaced cattle bone & milk with other sources or withdrawn from manufacture and distribution of their products containing cattle products. The government has regulated an import ban of cattle products from EU to be used for drugs, cosmetics and catgut since December 2000.

[Dr. Atsuo Hata, Brakke Consulting Japan]          

Brakke Consulting provides a full range of business consulting services in Japan.  For more information, please contact Dr. Atsuo Hata at XXXX

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Animal Health News

>  UK   With two weeks since the last case of foot-and-mouth disease, Britain feels cautiously optimistic about the campaign to contain the devastating livestock infection.  Britain has recorded 2,030 cases of foot-and-mouth disease since the initial infection was confirmed on Feb. 20. Some 3.9 million animals have been slaughtered at 9,523 locations. But there have been no new cases in two weeks. (AP)

>  GERMANY   Two cases of swine fever have been detected in pigs on farms in western Germany. Contact with wild pigs was believed to be the cause. A quarantine zone had been imposed around the farms where the disease was found but there was no indication the disease had spread further. (Reuters)

>  DENMARK   Speaking at a conference on Food Safety and the Precautionary Principle in Fougères, in Brittany, France, the CEO of the Danish meat board Danske Slagetier warned that Europe was digging itself into a perilous position of the question of banning US beef bred with hormones. She stated that the EU should agree on the scientific research and the results of that research and stick by it. She added that the Danish meat industry had been hit the hardest of all the industries in the European Union because of the harsh penalties imposed by the United States. (Watt Meat News)

>  US   According to an agricultural economist at Kansas State University, U.S. beef exports have fallen prey to weakening economies abroad. Beef exports through July of this year tumbled 15% from the same period a year earlier.  Exports in the month of July sank 20%. Exports to the largest importer of U.S. beef – Japan – during 2001 have fallen 12% compared to last year. Slower sales abroad and a weakening U.S. economy have combined to drive down cattle prices in recent weeks. (DirectAg)

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European Expansion: The Impact on Animal Health, Food Safety and Agriculture

A vital two-day conference is planned in Brussels on Wednesday December 12th and Thursday December 13th.  Following the “no” vote in the referendum in Ireland, future enlargement of the European Community is still a hot subject throughout the European Union. This top-level conference will address the wide-ranging effects that the accession of new countries to the Union will have on existing members and the status quo of animal health, food safety and agricultural business in these countries.  Leading experts from throughout the community will address this meeting and offer their own interpretation of the complex issues involved.  The conference is being developed by Veterinary Business Development Ltd of Peterborough in the United Kingdom and organized by Animal Health Services.  Further information can be obtained by e-mail to nickhen@pncl.co.uk or fax +44 – (0)1483 211043.

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Agribusiness News

>  Genetically modified crops are expanding worldwide, with total area expected to reach 50 million hectares by year-end amid controversy over its effect on health and the environment, an independent biotech agency said on Thursday. The total area planted to GM crops this year is 10% higher than last year, according to initial results of a global survey made by the International Service for the Acquisition of Agri-Biotech Applications (ISAAA).  ISAAA is an independent agency tracking the use of biotechnology in crops. (Reuters)

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Brakke Consulting Viewpoint

It looks like the third quarter was excellent for the first companies to report.  We look forward to additional reports that will reflect the same types of gains during the quarter.

The reading we are obtaining from the marketplace is generally positive for the balance of the year.  Management of at least three companies, and hopefully more, indicated that 4th quarter sell-ins will reflect the needs of the marketplace and not the need to make year-end sales projections.  We’ll be watching for violations of this novel idea, so please don’t disappoint us.

 [Ron Brakke]

 
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