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Animal Health News & Notes for March 16, 2007 3/16/2007

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Brakke Consulting's
Animal Health News & Notes for March 16, 2007
Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon, DVM, MBA
earnings news
other news
Drs. Foster & Smith
eMerge Interactive
Fujita/Dainippon Sumitomo
In Clover
Manna Pro
Meiji Seika
Micro Beef Technologies
Organon BioSciences
Tissue Regeneration Technologies
XLNT Veterinary Care
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> Bayer reported results for the full year 2006.  Animal health sales were EUR 905 million ($1,194 million), an increase of 6% compared to 2005.  The increase was due primarily to the performance of the Advantage product line, which was up 10%, and the continued market introduction of Profender. (company website)
> Phibro Animal Health reported overall net sales of $222 million for the six months ended December 31st 2006, a 15% increase over the last six months of 2005. Sales of the animal health and nutrition segment grew by 14% to $175 million, which the company attributed to volume increases for medicated feed additives and higher average selling prices related to cost increases for nutritional feed additives. (Animal Pharm)
> Heska Corporation reported financial results for its year ended December 31, 2006. Total revenue was $75 million, up 8% from $69 million in 2005. Core Companion Animal Health product revenue was $60 million, up 10% from the same period in 2005. Net income for the year was $1.8 million, up from net income of $282,000 in 2005. (PRNewswire)
> DSM reported results for the full year 2006.  The Animal Nutrition and Health segment reported revenues of EUR 1,091 million ($1,439 million), an increase of 4% compared to 2005. (company website) 
> Genus announced its results for the six months ended December 31, 2006. Turnover from continuing operations for the six months period increased by 91% to GBP 116.3 million ($227 million) from GBP 60.9 million in 2005. This improvement in performance has been achieved through strong trading in our main markets and the rapid and smooth integration of Sygen. (company website)  
> Schering-Plough Corporation announced that its Board of Directors has approved a transaction under which Schering-Plough will acquire Organon BioSciences N.V., the human and animal health care businesses of Akzo Nobel N.V., for approximately EUR 11 billion in cash ($14.4 billion). The transaction is expected to close by the end of 2007.  2006 sales for Akzo Nobel's animal health unit Intervet were EUR 1,125 million ($1,485 million), while Schering-Plough's animal health business reported sales of $910 million.  (company website)
> Crucell N.V. and Pfizer Animal Health announced the signing of a research license agreement for PER.C6. The license agreement allows Pfizer to use Crucell's industry-leading PER.C6 cell technology in the production of a non-disclosed veterinary vaccine. Pfizer has an option to convert the research license into a commercial agreement. Financial details were not disclosed. (Marketwire)  
> Merial announced the introduction of SWIVAX-MH, the first and only USDA approved swine vaccine administered by a needle-free delivery system exclusively from Merial. Approved to aid in the reduction and control of respiratory disease due to Mycoplasma hyopneumoniae (M. hyo), this bacterin is specifically formulated to be administered exclusively with the DERMA-VAC NF Transdermal Vaccination System, also new from Merial.  In addition, the DERMA-VAC NF includes a marking apparatus that leaves a patch mark of ink on the animal’s skin at time of vaccination. (company press release)
>  The FDA amended the animal drug regulations to reflect approval of two new animal drug applications (NADAs) filed by Bayer Healthcare.  The NADAs provide for the topical use by veterinary prescription of topical solutions containing imidacloprid and two strengths of moxidectin, one for use on dogs and the other for use on cats, for the prevention of heartworm disease, the treatment of flea infestations, and the treatment and control of several internal parasites. (AnimalNet - Federal Register)
> Tissue Regeneration Technologies, LLC and Nonvasiv, LLC announced the launch of new two veterinary shockwave devices, the Vetwave140 and the Vetwave Portable.  (Business Wire) 
> In Clover, Inc., the maker of Connectin for dogs, cats and horses, announced an agreement to license the equine formulation of its patented, all natural joint supplement to Manna Pro Products, LLC.  The company will continue selling Equine Connectin to existing In Clover customers and retains all patent rights to Canine Connectin and Feline Connectin. New customers for Equine Connectin will be referred to Manna Pro’s new product, Rapid Flex. (company press release) 
> Drs. Foster & Smith announced that the company will begin offering horse products for the first time in 2007.  In addition to supplements, wormers, vaccines and other nonhealth supplies, prescription equine medications will be available through the company's online pharmacy. (Pet Product News)
> Echo Healthcare Acquisition Corp. announced  that XLNT Veterinary Care, Inc. has acquired four additional veterinary hospitals in California during the month of February. Terms of the four transactions were not disclosed. Including these four transactions, XLNT has now purchased a total of 13 hospitals since Echo announced on September 11, 2006 that it had entered into a definitive agreement to acquire XLNT.  As of March 15, 2007, XLNT has also executed agreements to acquire four additional veterinary hospitals which are expected to close in March. XLNT currently owns and operates 24 veterinary hospitals in the state of California. (PRNewswire)
> Micro Beef Technologies, Ltd., announced the acquisition of CattleLog Animal Information Systems from eMerge Interactive, Inc.  CattleLog provides a suite of comprehensive tools to help individual cattle producers participate in value-added marketing opportunities, including a USDA-approved Process Verification Program and the CattleLog Listing Service. The acquisition creates the beef industry’s most comprehensive offering of management systems for complete lifetime animal management, traceability and process verification.  Financial terms were not disclosed.  (company press release) 
>  JAPAN   Three generic versions of Merial's Heartgard Plus have been introduced in Japan. The new products are Panamectin Chewable P (Meiji Seika); Ivermec PI (Fujita/Dainippon Sumitomo); and TriHeart Chewable Tablets (Novartis).  (independent source) 
> US - POULTRY SMUGGLING TARGETED   As part of the on-going effort to protect the US from the strain of highly pathogenic influenza, the USDA will double its operations to stop the smuggling of live birds, poultry and poultry products. This year 70 anti-smuggling operations are planned by the USDA's anti-smuggling team to search for illegal poultry products at ports, mail facilities, markets, warehouses and restaurants. Last year, USDA conducted 31 special operations at ports of entry, restaurants and markets throughout the US. (Feedstuffs online)
> US - POULTRY LITTER GENERATING ELECTRICITY   In June, a Benson, MN, power plant will be fueled by turkey litter, in combination with sawdust and woodchips, producing enough power to provide electricity to as many as 50,000 homes. The soon-to-be opened 55-megawatt power plant, the first large-scale facility of its kind in the US, will use about 2,200 tons of litter per day collected from around the area, a community filled with turkey growers.  Fibrominn, the plant developer, already operates three similar facilities in the United Kingdom.  Even after combusting the litter, sawdust and woodchip blend, the remaining ash containing nutrients will be sent by conveyor to a nearby facility to be processed into fertilizer. (Meating Place)
The big news this week was the announcement of the planned acquisition of Organon Biosciences N.V. by Schering-Plough.  When this transaction is completed, Schering-Plough Animal Health may very likely become the largest company serving the animal health industry. 
Will this merger set off another round of mergers or acquisitions in animal health?  When this transaction closes, there will be three animal health companies with over $2 billion in sales, a new level.  Will those companies with revenues below $1 billion feel a new urgency to consolidate?  Or will human pharma parent companies take another look at the market value of their animal health divisions? 
As we have indicated before in this newsletter and in our oral overview briefings, we believe that human pharma parent company acquisitions will drive the consolidation process for the leading 15 animal health companies, rather than an outright acquisition of an animal health division. It could be a very interesting 2007!
Have a great weekend!!
Ron Brakke
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