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Animal Health News & Notes for April 20, 2007 4/20/2007

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Brakke Consulting's
Animal Health News & Notes for April 20, 2007

Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon, DVM, MBA
earnings news
China Animal Husbandry Industry
Fort Dodge
other news
Carrington Labs
Fort Dodge
Natural Balance Pet Foods
National Veterinary Associates
Penford Food Ingredients
Royal Canin
Shenzhou Tongde
Trans Ova Genetics
Veterinary Products Labs
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The report is now available for a price of $5,500.
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For more information, contact us at lfondon@brakkeconsulting.com or 972-243-4033. 
> Merck reported financial results for the first quarter of 2007.  Animal Health joint venture Merial recorded sales of $678 million, an increase of 16% compared to the first quarter of 2006. (company website)  
> Wyeth reported results for the 2007 first quarter ending March 31, 2007. Net revenue at Fort Dodge Animal Health increased 11% to $276 million for the first quarter due primarily to higher sales of companion animal, livestock, equine and poultry products. Excluding the favorable impact of foreign exchange, worldwide Animal Health net revenue increased 8%. (company website)
> Schering-Plough Corporation reported financial results for the first quarter of 2007.  Animal Health sales increased 12% to $232 million, reflecting growth across most geographic areas, led by the companion animal, poultry and swine product lines and the positive impact of foreign currency exchange rates. (company press release)
> Eli Lilly and Company announced financial results for the first quarter of 2007.  Worldwide sales of animal health division Elanco in the first quarter were $215 million, an increase of 8% compared with the first quarter of 2006. (company press release)
> ImmuCell Corporation announced the results of its operations for the three month period ended March 31, 2007. Product sales were $1,509,000, representing an increase of 5% in comparison to the same period in 2006.  The Company recognized net income of $297,000 during the quarter, compared to net income of $306,000 during the same period in 2006. (company press release)
> Cargill Inc. reported higher profit as earnings rose in its several segments. The company earned $553 million in the quarter ended Feb. 28, up 49% from $370 million in the same period last year. (Meating Place)
> China's largest animal health company, the state-owned China Animal Husbandry Industry Co (CAHIC),  reported strong profit growth in 2006, despite falling revenues. Turnover fell 8.2% from $210 million in 2005 to $192 million last year, largely due to the impact of disease outbreaks and fluctuations in the price of feed materials. However, operating profit rose 17.1% to $67.2 million, while net profit more than doubled, reaching $16.9 million. (Animal Pharm)
> Bayer announced the launch of QuickBayt Spot Spray, the next generation of fly bait. QuickBayt Spot Spray with imidacloprid is applied directly on the surfaces where flies tend to rest, such as window sills, ceilings, walls, barn beams, etc., and allows treatment in places that can’t be controlled with conventional granular baits. It kills in 60 seconds and control flies for up to six weeks with an indoor application. (CattleNetwork)
> Alpharma Inc. announced it has acquired the assets of Shenzhou Tongde Pharmaceutical Co. Ltd ("Tongde") in Shenzhou City, China. Tongde, a supplier to the company's Animal Health business, currently manufactures and markets zinc bacitracin with annual sales of approximately $5 million. Following the acquisition, the company will continue to support the current customer base of Tongde while also exporting the product to other markets. (company press release)
> MWI Veterinary Supply, Inc. announced that it has priced a public offering of 2,326,493 shares of its common stock at $35.00 per share. The shares will be sold in the offering by certain selling stockholders. The Company will not sell any shares in the offering, except for shares to be sold upon any exercise of the over-allotment option, discussed below. The underwriter will be granted a 30-day option to purchase an additional 348,974 shares of common stock from the Company to cover over-allotments. The Company intends to use the net proceeds of the exercise of the over-allotment option, if any, to repay its borrowings outstanding on the revolving credit facility under its credit agreement and the remainder, if any, for general corporate purposes. The Company will not receive any proceeds from the sale of shares by the selling stockholders. (MarketWire)
> Natural Balance Pet Foods and Royal Canin announced recalls of certain of their dry pet foods. The companies stated that testing has shown that the recalled foods contain melamine, the same chemical suspected in previous pet food recalls, but from a new source: rice protein concentrate imported from China by San Francisco-based Wilbur-Ellis, which has since announced a voluntary recall of its product.  Royal Canin also announced it will no longer use Chinese suppliers for its vegetable proteins. (Feedstuffs online, Business Wire, Reuters)
> Penford Food Ingredients, a leading supplier of specialty starches, dextrose and dextrins to the processed food and nutraceutical industries, announced that it has entered the growing market for companion pet chews and treats.  Penford has developed a range of extruded and injection molded treats and chews for pets that are based on new carbohydrate technology.  Penford will exhibit its range of new products at the 2007 Petfood Forum. (Business Wire)  
> VetCentric, Inc. announced that it has received $5 million of secured debt financing from Western Technology Investment, a leading venture debt firm.  The investment will be used to accelerate the company’s growth, enhance the service offering and expand sales and marketing efforts. (company press release)
> Carrington Laboratories, Inc. announced it has signed a supply and trademark agreement for Acemannan Immunostimulant with Veterinary Products Laboratories (VPL). Under the contract, Carrington agrees to supply Acemannan Immunostimulant to VPL under an exclusive sales and supply distribution agreement for a period of up to three years. Carrington's Veterinary Products Division will focus on the veterinary wound care business with products that have been developed specifically for horses and companion animals; EquineVet, EquineSmart and CarraVet. (PR Leap)
> National Veterinary Associates, the largest private owner of free-standing companion animal veterinary hospitals in the US, announced that it has received a $128 million investment from Summit Partners, a private equity and venture capital firm. Formed in 1996, NVA owns 96 animal hospitals in 29 states and employs a staff of approximately 1,800, including 300 veterinarians. (Business Wire) 
> Trans Ova Genetics and ViaGen announced they have partnered to launch Bovance, a new company offering cloning services to the cattle industry.  Bovance combines the cloning capabilities of ViaGen with the broad bovine reproduction expertise of Trans Ova Genetics.  (company press release)
> BASF announced the sale of its animal nutrition premix businesses in eight countries to Nutreco.  The divestment covers the majority of its premix business.  Remaining sites are smaller and focused on local markets, and may also be divested to other buyers.  Financial terms were not disclosed. (Animal Pharm)  
> EUROPE   Fort Dodge Animal Health announced the European launch of Promeris for cats and Promeris Duo for dogs, new topical medications for treatment of fleas and ticks.  Promeris contains metaflumizone and controls fleas for up to six weeks; Promeris Duo adds amitraz and controls fleas and ticks. The products are being launched initially in the UK, with other countries to follow. (Animal Pharm)
> EUROPE   Novartis announced the European launch of Prac-tic topical flea and tick control for dogs.  Prac-tic contains pyriprole and is available in four sizes. The products are being launched initially in the UK, with other countries to follow.  (Animal Pharm)
> US - PSEUDORABIES   The National Veterinary Services Laboratory has confirmed that a swine herd in Wisconsin has pseudorabies, the first case in Wisconsin since 1998.  The USDA gives states 15 days from confirmation to destroy infected herds and test all swine herds within five miles of the infected herd in order to retain their pseudorabies free status. (Animalnet)
> US - CANCER INITIATIVE   Morris Animal Foundation (MAF) announced the launch of a $30 million effort to cure canine cancer within the next 10 to 20 years. This global cancer cure initiative is attracting major corporate support including a $1.1 million donation from Pfizer Animal Health. In addition to corporate sponsorships, MAF's goal is to get 1% of the 44 million dog-owning households in the US to make a donation of at least $50 in the name of their present dog(s), pet dogs of the past, and/or on behalf a puppy of the future, for a total of $22 million. Donations can be made by calling toll-free 1-877-DOG CURE, or by donating on the Web at: www.curecaninecancer.org or at www.morrisanimalfoundation.org . (association press release)
> US - PET FOOD COMMISSION ESTABLISHED   The Pet Food Institute (PFI) announced the formation of the National Pet Food Commission, an industry-government partnership composed of government officials, veterinarians, toxicologists and food scientists who are committed to maintaining and enhancing the high standards established in this country that protect pets. The purpose of the new commission is two-fold: (1) to investigate the cause of the current pet food recall, and (2) to recommend steps the industry and government should take to further build on safety and quality standards already in place. (Feedstuffs online)
> US - STATE HOG LAGOON BAN   North Carolina State Senate voted unanimously to prohibit new hog farms that collect waste in lagoons and then spray it on fields, a practice that the state has tightly restricted for years because of its environmental harm.  The initiative would permanently ban the practice on new farms and provide farmers as much as $500,000 in grants if they volunteer to build more environmentally friendly disposal systems. Farms with existing lagoon systems would be grandfathered. (Meating Place)
> ARGENTINA - INSULIN PRODUCED IN MILK   Argentine scientists have created four cloned and genetically modified calves capable of producing human insulin in their milk.  Bio Sidus, the company behind the project, reported that the newborn Jersey heifers will start producing insulin when they reach adulthood.  (AnimalNet - Reuters)
> US - STATE LEGISLATION TO LABEL CLONED ANIMAL PRODUCTS   A California State Senator unveiled legislation which would require that milk and meat products from cloned animals that are intended for human consumption be clearly labeled. The Senator was joined by two national consumer groups, the Center for Food Safety and Consumers Union. (Food Systems Insider)
APRIL 16 - 19, 2007
The annual Petfood Forum held this week was a study in contrasts. Tuesday's sessions provided upbeat, forward-looking presentations on a wide variety of topics, from new ways to formulate, produce and package foods and treats to optimistic reports on sales trends and new product innovation.
Wednesday's sessions were more somber, as two different panels of experts wrestled with issues surrounding the massive recall facing the industry. Even this week, more recalls were announced. One company reported that it has received more than 90,000 calls so far, and has had to open up a new, remote call center just to handle the volume.
Two themes emerged from the recall discussions. First, the problem probably was not preventable by the manufacturers, because it is virtually impossible for the industry to routinely test ingredients for a wide array of unexpected contaminants. Second, there was no mechanism in place for the industry to communicate as a group with pet owners and veterinarians. Every pet food marketer was left to its own devices. Consequently, the response to the recall has been fragmented and confusing. During one of the discussions it was reported that Petfood Institute, a trade association, has just this week assembled a commission of experts to provide direction in dealing with the recall crisis.
Petfood Forum is sponsored by Watt Publishing, publisher of Petfood Industry. The Forum attracted approximately 900 attendees, including several from Latin America, Europe and Asia.
Wow!! The first of the manufacturers to report on the first quarter of 2007 have some impressive sales results.  It appears that our projections for the first quarter that we made late 2006 are going to be on target. 
Companion animal continues to be strong with some mixed messages coming from the food animal sectors.  Currently, early spring moisture and projected crop plantings are taking some of the sting out of the ethanol corn consumption.  Will the large branded integrated animal protein companies be able to pass onto the consumer some of the higher prices needed to keep all parties “whole” in the production chain? This will be interesting to watch over the coming months, but if weather and crop conditions stay positive there may less negative impact on producers than previously projected.
There are a number of companies still anticipating launches of significant new products in the companion animal area in 2007.  These should help to keep the 3rd and 4th quarter exciting. 
Have a great weekend!!!
Ron Brakke
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