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Animal Health News & Notes for April 27, 2007 4/27/2007

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Brakke Consulting's
Animal Health News & Notes for April 27, 2007
Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon, DVM, MBA
earnings news
Maple Leaf Foods
VCA Antech
other news
American Vet Supply
Breuil SA
Chr. Hansen
First Priority
Leeds Veterinary Laboratories
New Tech Solutions
Pet Supplies 4 Less
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> Pfizer announced revenues for the first quarter of 2007.  Animal Health revenues were $586 million, an increase of 15% compared to the first quarter of 2006. (company press release)
> Akzo Nobel reported results for the first quarter of 2007. Intervet posted a record quarter with 12% autonomous growth to reach an estimated EUR 315 million ($420 million).  The European region and products for companion animals were particularly strong contributors. (company website)
> Ceva Sante Animale announced results for the 2006 financial year. Consolidated turnover was EUR 301 million ($397 million), an increase of 11% compared to  EUR 271 million in 2005.  Operating profit was up 17.5% at EUR 39 million ($51 million), compared to EUR 33 million in 2005. (company website)
> IDEXX Laboratories, Inc. reported that revenue for the first quarter of 2007 increased 26% to $211 million from $168 million for the first quarter of 2006. Companion Animal Group ("CAG") revenue for the first quarter of 2007 increased 24% to $173 million from $139 million for the first quarter of 2006 primarily due to higher sales in all CAG product and service categories. Net income was $21 million, compared to net income of $18 million in the first quarter of the prior year. (PRNewswire) 
> Abaxis, Inc. reported financial results for the fiscal year ended March 31, 2007.  Veterinary market revenues were $63.9 million, an increase of 19% over the fiscal year ended March 31, 2006. (company website) 
> Nestle reported results for the first quarter of 2007.  PetCare achieved 7.6% organic growth to reach sales of CHF 2.9 billion ($2.4 billion). The Americas were particularly strong with continued momentum from 2006 launches of products such as Beneful Prepared Meals and ONE Organics, as well as positive early signs from 2007 launches. There was also growth in Europe, with Friskies continuing to make progress. (company press release) 
>  Colgate-Palmolive Company announced results for first quarter 2007.  Hill's sales volume grew 12% to $431 million, and unit volume grew 5%, including the limited voluntary product recall during the quarter.   Like most major North American pet food producers, Hill's was affected by the unfortunate recent pet food recalls concerning the FDA's discovery of melamine in certain wheat gluten supplies during March 2007, voluntarily recalling two feline products, its only products that may have contained the affected wheat gluten. These products accounted for 0.5% of Hill's Pet Nutrition's annual sales. (company press release) 
> MWI Veterinary Supply, Inc. announced financial results for its second quarter ended March 31, 2007. Total revenues grew 22% to $175 million for the three months ended March 31, 2007 compared to $143 million for the three months ended March 31, 2006. Net income increased 57% to $3.7 million for the three months ended March 31, 2007 compared to $2.4 million for the three months ended March 31, 2006. (Genengnews.com)
> VCA Antech, Inc. reported financial results for the quarter ended March 31, 2007. Revenue increased 13% to a first quarter record of $265 million; and net income was $28.3 million. The first quarter of 2006 included a tax benefit of $6.8 million, due to a favorable outcome of an income tax audit that resulted in a change to estimated tax liabilities. Excluding this item from 2006, adjusted net income increased 24% to $28.3 million. (company press release)
> Maple Leaf Foods Inc. reported sales for the first quarter ended March 31, 2007, increased 2% to C$1.5 billion (US$1.3 billion). Earnings from operations before restructuring and other related costs increased 18% to C$61 million from C$51.8 million in the first quarter last year. (Wattnet Meatnews)
>  Farnam announced the introduction of MaxFlex XR Extended Release joint supplement for horses.  MaxFlex XR Extended Release is the only joint supplement containing an extended release glucosamine formula that keeps glucosamine in the horse’s system for a full 24 hours. Each serving of MaxFlex XR Extended Release Joint Formula delivers 5,000 mg of glucosamine, plus a combination of joint supplement ingredients including MSM, Chondroitin Sulfate, Ester C, Hyaluronic Acid and Manganese Sulfate. (company press release)
> Embrex announced it has been awarded over $1 million for damages caused by the infringement of two of its US Patents by Breuil S.A. and New Tech Solutions Inc.   The patents cover a method for distinguishing live from dead or infertile poultry eggs using pulsed light methodology and then taking that information and selectively injecting only eggs identified as suitable for inoculation. The court also issued a permanent injunction against Breuil and New Tech Solutions to prevent any further infringement. (WorldPoultry.net)
> The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by First Priority, Inc.  The ANADA provides for the veterinary prescription use of clindamycin hydrochloride oral solution in dogs and cats for the treatment of various infections due to susceptible bacterial pathogens.  (AnimalNet - Federal Register) 
> Nutrilux S.à.r.l., an indirect subsidiary of the investment funds managed or advised by Permira Advisers LLP, announced that it has acquired from Provimlux Investments SA (a company under the joint control of the investment funds managed or advised by PAI Partners and CVC Capital Partners) its 74.05% shareholding in Provimi SA for an effective price of EUR 30.22 per share. (company website)
> Chr. Hansen announced the introduction of Probios Precise, a direct-fed microbial specifically designed to target rumen acid balance.  The product is designed to be used in dairy cattle throughout the transition period and throughout lactation. (Feedstuffs)
> Pet Supplies 4 Less, a global pet products mail order company providing a broad range of health care items, recently acquired another major online retailer, American Vet Supply. This acquisition was finalized April 1, 2007. Financial terms were not disclosed. (Pets International)
> Alltech Inc. announced that it will collaborate with the University of Kentucky to advance research in nutrigenomics, a new field studying the effects of nutrition on gene expression in animals. Alltech will provide a $900,000 grant to UK to help fund the program, which includes placing UK researchers in Alltech's laboratory to study how nutritional factors affect the expression of proteins and metabolites in animals, and how diet impacts the animals’ immune function. (Drovers Alert)
> Industri Kapital announced it has reached an agreement to sell Ceva Sante Animale to its management, associated with a consortium of investors grouping Euromezzanine, Natexis Industrie and Natixis Investissement. Industri Kapital and management acquired Ceva Sant√© Animale in 2003 from PAI Partners. (company website) 
> UK  Dechra Pharmaceuticals PLC announced it acquired Leeds Veterinary Laboratories Ltd (LVL) in a cash-and-stock deal worth GBP 750,000 ($1.5 million), enabling it to increase its market share. For the full year ended May 31, 2006, LVL posted sales of GBP 955,000 ($1.9 million). LVL was founded in 1986 and offers a comprehensive range of veterinary diagnostic tests. (company website) 
> CHINA - INVESTIGATION INTO MELAMINE CONTAMINATION   The FDA confirmed that it has opened a criminal investigation into the recent pet food contamination incident, but has not named a target.  China has given American regulators permission to enter the country to investigate whether Chinese suppliers exported contaminated pet food ingredients to the US.  The FDA now believes that the Chinese companies may have intentionally added melamine to their feed ingredients to artificially bolster the protein count in those supplies. (AnimalNet - New York Times)
> US - MELAMINE IN LIVESTOCK FEED   The FDA has quarantined hog farms in at least five states due to concerns over feed contaminated with melamine. One poultry farm also could be affected, according to a release from the American Veterinary Medical Association. The FDA has traced salvaged pet food, specifically from manufacturers that have since issued pet food recalls because of potential melamine contamination, to hog farms in California, North Carolina, South Carolina, New York, Utah and possibly Ohio. The poultry farm in question is located in Missouri.  (Drovers Alert)
> US - FDA CONFIRMS MELAMINE IN RICE PROTEIN   The FDA confirmed that a shipment of rice protein imported from China was contaminated with melamine and melamine-related compounds, and that it was used in the production of pet food; a byproduct was used to make animal feed. A spokesman added that scientific research indicates that melamine alone, at detected levels, is not a human health concern; however, no scientific data exist to ascertain the effects of combining melamine and melamine-related compounds.  The USDA said it cannot rule out the possibility that food produced from animals that consumed contaminated feed might also be contaminated, which is why the agency cannot place the mark of inspection on it. The USDA is offering to compensate producers who euthanize hogs fed contaminated feed. (Meating Place)
> US - WISCONSIN PSEUDORABIES   A second Clark County, Wisconsin, swine herd has tested positive for pseudorabies.  Eleven animals on a farm tested positive at Wisconsin Veterinary Diagnostics Laboratory. The 20 animal herd has been quarantined. The herd was tested because it had been in contact with the original infected herd; a boar from that herd had been brought to the farm for breeding. The farm is outside the five-mile radius around the first infected herd. (Feedstuffs online)
> KOREA - US BEEF IMPORTS OKAYED   South Korea announced it will permit the first shipment of US beef into the country for sale since December 2003. South Korea, once the third-biggest importer of US beef, agreed to resume imports last year, but rejected all 22 tons of beef sent over in three shipments after that due to small bone chips, infuriating Washington and US cattle producers. A South Korean beef importer said the beef from Creekstone Farms Premium Beef has been cleared for sale will head to wholesalers next week. (CattleNetwork)
The first quarter financial results continue to look positive, with many companies reported double-digit gains.  We expect that the animal health market will continue to show good growth in the second quarter as well.
The pet food contamination incident has now spread to encompass feed for livestock, thus potentially contaminating the human food supply. It is sobering to realize how easily a contaminant made its way into the US marketplace.  Although it may have been intentional, the purpose of the contamination does not appear to have been malicious. Let's hope this is a wake-up call to the regulatory agencies, and to the industry as well, to tighten inspection and oversight before a more serious incident occurs.
Have a great weekend.
Lynn Fondon
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