» 2003

Animal Health News & Notes for September 26, 2003 9/26/2003

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Brakke Consulting’s
Animal Health News & Notes for September 26, 200
3
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Oil-Dri Corporation of America announced sales for fiscal year 2003 ended July 31 were $173 million, a 7% increase from sales for fiscal year 2002. Net income for the fiscal year was $3,083,000, a significant improvement from a net loss of ($1,094,000) for fiscal 2002. Contributing to the successful year the acquisition of Jonny Cat cat litter brand as well as the manufacturing and mining facilities in Taft, California, and the geographic reorganization strategy with the Wal-Mart Company to supply Special Kitty cat litter. (Business Wire)

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COMPANY NEWS RELEASES

>  Sygen International plc announced that its subsidiary, PIC, has reached binding agreement to acquire all product lines and key assets of Cotswold Swine Genetics of North America for up to 1.7 million pounds ($2.8 billion) in cash. The acquisition increases PIC North America's leadership position in the pig genetics market.  Components of the acquisition include the artificial insemination centre and seven unique genetic lines from the North American Genetic Nucleus Farm. With the purchase, PIC also obtains the rights to market these products in USA, Canada, Mexico and Australia.  Cotswold is being sold by Ridley Inc., which, on July 16 announced its plans to divest this division, in an effort to concentrate on its core competencies, animal nutrition and animal health products.  (Business Wire)

>  The FDA amended the animal drug regulations to reflect approval of a new animal drug application (NADA) filed by Novartis Animal Health US, Inc. The NADA provides for the veterinary prescription use of cyclosporine by oral capsule for the control of atopic dermatitis in dogs. (Animalnet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of a hybrid new animal drug application (NADA) filed by Norbrook Laboratories, Ltd. The NADA provides for the prescription and over-the-counter use of a 300 milligram per milliliter (mg/mL) oxytetracycline injectable solution for the treatment of various bacterial diseases of cattle and swine, and for the control of respiratory disease in cattle at high risk of developing bovine respiratory disease (BRD). (AnimalNet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of a supplemental abbreviated new animal drug application (ANADA) filed by Phoenix Scientific, Inc. The supplemental ANADA provides for over-the-counter marketing status for pyrantel pamoate suspension, when labeled for oral administration to horses and ponies for the removal and control of certain internal parasites.  (AnimalNet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Agri Laboratories, Ltd. The ANADA provides for the administration of an oxytetracycline injectable solution to cattle and swine for the treatment of various bacterial diseases. (AnimalNet – Federal Register)

>   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 oral use of pyrantel pamoate suspension in horses and ponies for the removal and control of various internal parasites.  (AnimalNet – Federal Register)

>  The FDA amended the animal drug regulations to reflect approval of an abbreviated new animal drug application (ANADA) filed by Veterinary Laboratories, Inc. The ANADA provides for use of lincomycin injection in swine for the treatment of infectious arthritis and mycoplasma pneumonia.  (Feedstuffs)

>  Merial announced the launch of the Igenity cattle DNA testing service.  The first test, Igenity L, identifies cattle genotypes according to the type of a protein (called leptin) produced.  Leptin regulates appetite and energy use, thus fundamentally affecting most aspects of dairy and beef production.  The test can be run on animal hair samples.  Merial obtained exclusive rights to the leptin test through a global marketing agreement with Quantum Genetics. A new business unit has been formed to sell testing services directly to producers online and through Merial sales personnel.  (company press release)

>  IDEXX Laboratories announced the formation of a joint venture in China to manufacture and distribute veterinary diagnostic products for farm use for production animals. Its partner in the venture is Beijing Fortunate Century Animal Health Technology Company, in which the majority shareholder is the Chinese agriculture ministry’s national animal husbandry and veterinary service. (Wattnet Pig E-news)

>  Smithfield Foods, Inc announced a definitive agreement to sell its wholly-owned Canadian subsidiary, Schneider Corporation, to Maple Leaf Foods, Inc. for $378 million, including the assumption of Schneiders' outstanding debt. Schneider Corporation is a food processing company that had sales in fiscal 2003 of $770 million.  The purchase price represents nine times Schneider's EBITDA in fiscal 2003.  The acquisition is expected to close by year-end or early 2004.  (AnimalNet)

>  Archer Daniels Midland announced the opening of a Ruminant Intensive Research Center at the ADM Alliance Nutrition Inc. Research & Technology Center.  The center will conduct studies to measure how feeds are digested and absorbed in the animal.   The research stalls are designed so researchers can determine how feed programs affect conversions into milk or weight gain while minimizing nutrient loss.  (Feedstuffs)

>  BASF and DSM announced that their long-standing alliance to develop the phytase enzyme under the trade name Natuphos will be dissolved, with BASF producing and marketing this and other feed enzymes independently. BASF will start a new plant for enzyme production, although DSM will continue to produce enzymes exclusively for BASF until the new factory is on-stream. (Wattnet Pig E-news)

>  Seghers Newsham Genetics has changed its name to Newsham Genetics, reflecting a decision to phase out Seghers swine lines and focus on developing the Newsham genotype. It has also appointed Filip Ackerman as chief executive. (Wattnet Pig E-news)

>  Phibro Animal Health Corporation announced (i) the commencement by it of a consent solicitation with respect to its 9 7/8% Senior Subordinated Notes Due 2008 and (ii) the commencement of a private offering of up to $105 million of units consisting of $85 million of senior secured notes due 2007 of the Company and $20 million of senior secured notes due 2007 of Philipp Brothers Netherlands III BV, an indirect wholly-owned subsidiary of the Company. (Business Wire)

>  DSM and Novozymes announced that they will continue and further develop the strategic alliance in feed enzymes between Roche Vitamins & Fine Chemicals and Novozymes after the US Federal Trade Commission’s approval of DSM's acquisition of Roche Vitamins & Fine Chemicals. The alliance began in 2001 and has been highly successful. No changes are expected in the short-term business opportunities for Novozymes in the market for animal feed enzymes. In the long run, the continuation of the alliance will contribute to an expected sales growth of 10-20% per year. (PRNewswire)

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ANIMAL HEALTH NEWS
 
>  US   The House Energy and Commerce Committee passed the "Animal Drug User Fee Act of 2003" (H.R. 1260). If enacted, the bill will authorize the FDA to implement a program of fees for the review of new animal drugs. The legislation would let the FDA expedite its review of new animal-drug applications, making safe and effective new animal-health products available more quickly.   As currently approved, the proposed legislation authorizes the collections of annual user fees totaling $43 million over five years, beginning with $5 million in fiscal year 2004. This would enable the FDA to hire and train additional scientific reviewers, and implement processes to accelerate and improve the review of new animal drugs. (Pork Alert)

>  DENMARK   A new influenza A virus type, H5N7, has been identified for the first time in ducks in Denmark. Following disease among 12,000 ducks raised to be released for hunting at a duck farm, two viruses were identified: a Duck Virus Enteritis (DVE), which caused the disease, and an influenza A virus. This type has never previously been identified and further analysis is now being carried out on the virus. Importantly, this new virus has not been detected in humans, especially not among those people who had contact with these ducks, or in several unrelated influenza A virus cases (H3N2) diagnosed in Denmark since September 1 2003.  (AnimalNet – Eurosurveillance Weekly)

>  JAPAN   Japan's Health, Labor, and Welfare Ministry is planning to ban the sale of bone-in beef in Japan if it was produced in a country that has reported cases of bovine spongiform encephalopathy, including Japan itself. A government panel researched dorsal root ganglia in cattle spines and concluded that consumption of this matter is as risky as consuming spinal marrow, cattle brains and eyes and parts of the small intestine - all of which are considered to be BSE transmission mechanisms. These products are required to be incinerated during the slaughtering process in Japan. (Wattnet Meatnews)

>  US   The US government is working on expanding its ban against brains and spinal tissue in cattle feed to include food for dogs, cats, pigs and poultry.  The agency wants to prevent animal diseases from being passed onto consumers and other animals. It will probably write new regulations, one of which could require companies that slaughter ``downer'' livestock to dispose of the brain and spinal cord before mixing animal feed and pet food. The government already bans animal feeds made with spinal and brain tissue from being fed to sheep, goats and cattle. But the tissue can still be mixed into pet food and feed for pigs or poultry. The FDA is working with slaughterhouses and animal feed companies to come up with a plan by 2007 to prevent high-risk materials like spinal tissue from ending up in feed.  (AP)

>  US   Evaluating dairy cows by how easily they give birth, and how quickly they become pregnant again, is the newest information resource that USDA’s Agricultural Research Service scientists are providing to livestock breeders to help them improve their operations. The first national genetic evaluations for cow fertility, called "daughter pregnancy rate," provides dairy cattle breeders with a tool for achieving desired levels of reproductive performance in today's milking herds. (AnimalNet – ARS)

>  US   A veterinary telemedicine research and development project entering its second stage at Kansas State University is attempting to create the infrastructure to monitor the health of cattle remotely, and if the researchers are successful, the system would give livestock producers and veterinarians heads-up to emerging disease. The National Science Foundation has awarded $899,996 to K-State researchers for five years of study. "Information Technology Research: An Infrastructure for Veterinary Telemedicine - Proactive Herd Health Management for Disease Prevention From Farm to Market" began in October 2003. The Kansas State researchers already received a $100,000 grant from the National Science Foundation in 2002 for a critical first step in this telemedicine project, to demonstrate "proof of concept." (Drovers Alert)

>  US   The US Poultry and Egg Association has established the Poultry Science Education Fund to support student recruitment at colleges and universities with poultry science courses that do not currently receive funding from the Southeastern Poultry and Egg Harold E. Ford Foundation. The USPOULTRY board of directors will appoint a committee to administer the competitive grants program. Funding recommendations will be submitted to the USPOULTRY board for approval. (Wattnet Meatnews)

>  US   Researchers have at the Center for Advancement of Genomics have pieced together a draft of the dog genome, and although the draft is very rough, it is enough to draw certain conclusions about the nature of dogginess. The draft was prepared by a team under Dr. J. Craig Venter, formerly of Celera Genomics. (AnimalNet – New York Times)

>  US   Dog owners can take pet pampering to the next level thanks to "Pawlish" nail polish for dogs, the latest offering from high-end nail care company OPI. The Pawlish is quick-drying, nontoxic and thick, so it only requires one coat. And when it starts to chip, OPI sells "It's Dog Gone! Pawlish Remover" and "Paw Pads Wipes."  Though OPI is the first major beauty company to market nail polish for pets on a wide scale, groomers have long offered "pet-i-cures" to their four-legged clients. (FoxNews)

>  GERMANY   German-style sausages are must-have items on any Oktoberfest menu, but in Munich, they take it to a whole new level.  Visitors to Germany's famous October Beer Festival will be kept awake this year with the help of a power sausage stuffed with caffeine called the Breaker.  The sausage contains just 10% fat, vitamins B1 and B6 as well as caffeine and taurine. Caffeine stimulates circulation, while taurine allows to body to absorb it faster.  Visitors to the 170th October Festival in Munich will be the first to buy the power-sausage.  (Meating Place)

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BRAKKE CONSULTING VIEWPOINT

A couple of items crossed my desk this week that I found most interesting.  The first was in the Texas Cattle Feeders Association’s weekly bulletin.  There were two graphs in the publication that visually showed the reason for the current high beef prices.  The first graph measured $/cwt selling prices, reflecting the year’s highest prices.  The second graph showed that the cattle inventory (animals on feed) is at its lowest level in three years.  Also in the publication was the headline, “Beef Production Hits Record Monthly Lows.”   There appears to be a simple economic formula at work:  When demand is high and supply is low, prices go up.

The reverse situation seems to be true at the moment in the marketplace for suppliers of products.  The supply of product is high (i.e., warehouses are full) and the demand is low.  It’s not surprising then that we’re hearing a great deal about pricing and margin pressure.

The second item relates to the several new FDA approvals for generic products compared to the number of novel active ingredient approvals.  The industry needs new technologies to address unsolved animal health problems and improve efficiency.  What percentage of your 2004 research budget is for innovation?

Have a great weekend.

Ron Brakke

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