Animal Health News & Notes for November 15, 2002

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Brakke Consulting’s
Animal Health News & Notes for November 15, 2002
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Bayer reported sales for the third quarter 2002 for its animal health division were 223 million euros ($220 million), a decrease of 3% over the third quarter of 2001.  Operating results for the third quarter were flat at 51 million euros ($50 million).  Sales for the 9 months ended September 30, 2002 were 638 million euros ($625 million), essentially flat compared to the prior-year period.  Operating results for the first nine months 2002 were 144 million euros ($141 million), an increase of 10% over the prior-year period.  (company website)

>  Doane Pet Care Company reported results for its third quarter and nine months ended September 28, 2002. The Company reported net income of $2.8 million for its third quarter ended September 28, 2002 on net sales of $216.3 million, compared to breakeven net income on net sales of $206.3 million for the third quarter ended September 29, 2001.  Net sales increased 4.8% for the 2002 third quarter compared to the 2001 third quarter primarily due to increased U.S. dry dog food volume and new business awarded earlier this year. (PRNewswire)

>  Synbiotics Corporation announced financial results for its third quarter ended September 30, 2002.  For the quarter, the company reported revenues of $4.5 million compared to revenues of $5.8 million for the prior year quarter. Sales decreased primarily due to the loss of one of the company’s larger distributors in January 2002, combined with increased competition in the canine heartworm market.  For the quarter the company’s net loss was ($293,000) compared to a net loss of ($216,000) for the prior year quarter. (Business Wire)

>  Tyson Foods reported earnings of $84 million for the fourth fiscal quarter ended Sept. 28, 2002, compared to earnings of $48 million for the same period last year. On Aug. 3, 2001, the company acquired 50.1% ownership of IBP, inc., and acquired the remaining 49.9% on Sept. 28, 2001. Accordingly, fiscal 2002 earnings include 52 weeks of IBP’s results, while fiscal 2001 only included 50.1% of IBP’s results for the nine weeks ended Sept. 29, 2001. Fourth quarter 2002 sales were $5.8 billion compared to $5.0 billion last year. Sales for fiscal 2002 were $23.4 billion compared to $10.6 billion last year. (Meating Place)

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GET READY!

Brakke Consulting’s 2002 US Flea Control and Heartworm Markets will be available the first week of December, immediately after the US Thanksgiving holiday. 

This year’s report will include an all-new survey of 250 dog and cat owners, as well as a new veterinarian survey.  Product sales and trends for the veterinary products, as well as an overview of the trends in OTC sales, will also be included in the report.

The report will be available until December 20, 2002 at an early-order price of $3,500.  Studies ordered after the Christmas holiday will be priced at $4,000.

For more information, call 972-243-4033 or email Dr. Lynn Fondon at lfondon@brakkeconsulting.com.

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COMPANY NEWS RELEASES

>  Bayer announced that the EPA has approved the registration for K9 Advantix, a new topical ectoparasites control product for mosquitoes, ticks and fleas on dogs.  Sold only to licensed, practicing veterinarians, K9 Advantix offers veterinarians a new monthly topical for canine patients that protects against three of the most common parasites that afflict dogs, vectors for many serious diseases and health conditions.  K9 Advantix contains imidacloprid and permethrin, and is for dogs only.  Bayer will begin taking orders for K9 Advantix immediately.  (company press release)

>  Eisai Co announced that its animal health business will be sold to Meiji Seika on February 1, 2003.  Eisai’s animal health division recorded sales of 3 billion Yen ($25 million) for the year ending March 31, 2002, derived principally from its livestock, poultry and aquaculture products such as disinfectants, insecticides and some vaccines. Meiji’s animal health division sales for the year ending March 31, 2002 reached 6 billion Yen ($50 million), mainly generated by antibiotic products. Meiji will pay several hundred million Yen (several million dollars) for Eisai’s animal health product line and its patents. (company information)

>  Fort Dodge announced that the USDA has reissued the conditional license to the company for its Equine Protozoal Myleoencephalitis (EPM) vaccine for one full year based on the demonstrated safety of the vaccine and the continued research to establish efficacy.  (company press release)

>  Smart Drug Systems Inc. announced today the completion of a $6 million Series B Preferred Stock financing led by Rothschild Bioscience Ventures.  Other participants in the round included new investor Taraval Associates Seed Capital Fund and existing investors Bay City Capital and Gresham Rabo Management Ltd.  The new funds will be used for clinical trials, registration and manufacturing of the company’s first products long term release Ivermectin implants for use in multiple species in various countries and the continued development of a strong, innovative and unique product pipeline.  (company press release)

>  Bio-Rad Laboratories announced that the USDA has approved its test kits for testing deer for chronic wasting disease. Bio-Rad’s kits will be used in testing wild mule deer populations, and the department’s veterinarians will supervise the distribution and use of the product. (AnimalNet – Reuters)

>  Adisseo announced that it received ISO 9001 version 2000 certification. The certification applies to all company sites in Europe. (Watt Feed enews)

>  Adisseo’s company president indicated that the speculated-upon possible merger of Adisseo and Provimi will not occur. Despite both companies having CVC Capital Partners as a major shareholder, each of the acquisitions involved different groups of minority investors: British investors for Adisseo and French/Dutch for Provimi. In addition, the investors find it difficult to see a benefit from combining the two companies, since their activities differ significantly. (Watt Feed enews)

>  BASF AG announced that it has reached agreements in principle to settle all remaining pending claims for damages from direct purchasers of vitamins sold in the United States. In total, BASF expects that these agreements and the settlement of claims from indirect customers that are pending in the United States will result in an additional charge on income of about EUR100 million. This amount will be included in the company’s third-quarter results. (Chemical Newsflash)

>  Smithfield Foods announced the acquisition of Vall Inc. hog production company from its international parent, Vall Companies Group, for $60.7 million in cash. The U.S.-based subsidiary has operations in Oklahoma and Texas and owns 20,000 sows that produce 350,000 market hogs a year. Almost all of the company’s production is sold under contract to another Oklahoma company, Seaboard Corp. (Meating Place)

>  The USDA announced that ProdiGene Inc. was in violation of federal rules in September when it failed to completely remove corn kernels remaining from a biotech corn crop planted in Iowa last year. Federal officials had ordered the company to burn the 155 acres of corn. ProdiGene was ordered to destroy 500,000 bushels of soybeans grown in Nebraska rather than sell them for food because the soybeans were contaminated with biotech corn. The bushels have been quarantined.  USDA and ProdiGene officials are holding meetings to determine the penalties the company would face for violating the Plant Protection Act, which regulates the transportation and planting of genetically engineered plants. Under the act, the company can be fined up to $250,000 per violation, or up to $500,000 for one proceeding or lose its permit for planting genetically modified crops. (AP)

>  INOBYS launched PetFirst Oral Care Formula, a liquid formula added to pets’ drinking water that helps reduce bad breath and plaque.  In clinical studies, the formula when added to pets’ drinking water reduced bad breath by more than 30% and plaque by nearly 20%.  The formula is available at pet supply stores. (PRNewswire)

>  SWEDEN   BioGaia awarded Japanese animal probiotics supplier Calpis Co Ltd an exclusive 10-year license to sell animal health products containing BioGaia’s patented lactic acid bacteria Lactobacillus reuteri for poultry and pigs. The license covers sales of the products in Brazil, China, Taiwan and Thailand as well as Japan. (Watt Feed enews)

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BRAKKE CONSULTING, INC.
Animal Health and Nutrition Industry Overview
to be presented in New York City December 2, 2002

PRESENTATION SEATING EXPANDED!

At the request of several clients, Brakke Consulting has decided to kick off the annual 2003 Animal Health and Nutrition session early by holding a three-hour industry seminar and information program at the Princeton Club in New York City from 2:00 – 5:00 pm on December 2.

The presentation will include information including sales estimates for 2002 and the 2003 outlook for leading companies and products.  It will also cover US and international trends for:
– nutritional and medicinal feed additives
– flea, tick and heartworm products
– the evolving pain management market
– pet nutrition
– food safety and animal welfare and its impact on industry

There will be a fee of $300 per attendee, with discounts for multiple registrations from one company.  Attendees will be provided with an outline of the presentation at the time of the overview. 

Registrations for the presentation quickly sold out at the 30 seating level so we have arranged a larger room and will be able to take some additional registrations. Call now to reserve your place because we will still have a limitation on room size.  Thanks to all of you that have already registered.   We plan to provide you with some great information in NYC.

For registration information, please call 972-243-4033. 

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ANIMAL HEALTH NEWS

>  US   The Washington State Department of Agriculture announced that West Nile virus was confirmed in a 14-year-old horse in Island County.  The horse, which became ill early in October, is recovering. It is the first horse known to have become infected with West Nile virus in Washington. (Business Wire)

>  US   Skylark Meats Inc. recalled about 110,000 pounds of frozen ground beef that may be contaminated with E. coli O157:H7, according to the Food Safety and Inspection Service.  The ground beef was produced on Sept. 10 and distributed to retail stores and institutions nationwide.  The problem was discovered through microbial testing conducted by a state department of agriculture. (Meating Place)

>  SPAIN   The Spanish Agriculture Ministry has reported three more cases of BSE in the country. This brings the number of cases reported this year in Spain to 109 and to 189 since the disease was first discovered. (Wattnet Meatnews)

>  US  Oregon voters rejected a proposal that that would have made the state the first to require mandatory labeling of genetically modified foods.  The Measure failed by a 73 percent margin. Among voters’ concern was the increased costs that such labeling would create for restaurants, grocery stores and school cafeterias. (Pork Alert)

>  US  A dog-only bloodmobile owned by the University of Pennsylvania is believed to be the only one of its kind in the country, according to officials at Penn’s School of Veterinary Medicine. The white bus travels to blood drives organized by breeders, dog clubs, veterinarians and others in Pennsylvania, New Jersey, Delaware and Maryland to collect blood for its veterinary hospital.  The bloodmobile doesn’t allow cats, because they need to be anesthetized to draw blood.  One of the bonuses for owners who bring a dog to the bloodmobile is the promise of free blood from the blood bank.  (AP)

>  US   Alternatives For Animals now offers free advice about pet behavior issues, a recent addition to the comprehensive website for natural pet care at AlternativesForAnimals.com.  Pet owners can just log on, type in their question and receive an answer via email.  Alternatives For Animals is a holistic referral network serving the continental U.S. at present.  Listed practitioners and products are pre-screened and must meet certain guidelines. (PRNewswire)

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AGRIBUSINESS NEWS

>  Bayer AG has reached an agreement to sell its household insecticides unit to SC Johnson for about $725 million.  The agreement will give SC Johnson rights to brands such as Autan, Bayclin and Bayfresh, though Bayer will retain the active ingredients used in those products. The deal is subject to regulatory approval but is expected to be closed on Dec. 31, 2002, the companies said. (AP)

>  The outlook for corn, soybean and cotton production remains grim as farmers in drought-stricken states near the end of this year’s harvest, according to the USDA’s most recent forecast.  Corn production is forecast to be down 5% from 2001 and the lowest since 1995.  Soybean production is expected to be 7% lower than last year. Cotton production is forecast to be 12% lower than last year’s record high. Dry weather this year was most severe in agricultural states in the Western Corn Belt, Great Plains, Ohio Valley and Atlantic Coastal Plain. Wheat yields also were lowered this year. The USDA predicts it will be down 17% from last year’s harvest. (AP)

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BRAKKE CONSULTING VIEWPOINT

I’ve been on the road this week visiting with several of our clients. While some are pleased that 2002 is coming to a close, others have done reasonably well in the face of a difficult year.   

There seems to be concern building that 2003 will be another challenging year.  However, we think 2003 is going to be more positive than most companies project at this time. One of the positives for 2003 should be several new products and technologies that will be introduced.  In most cases the new products should create new sales volume and in other cases there is likely to be a shifting of sales from current products to the improved product. The new products will be priced higher so sales dollars will increase along with gross margin.  If we’re right that is good for everyone. 

We still plan to involve a number of you in the coming days in providing thoughts and projections for 2003 in the markets you serve.  Thanks in advance for your assistance.  The results will be published in the newsletter in the coming weeks.

Have a great weekend.

[Ron Brakke]

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