» 2003

Animal Health News & Notes for May 23, 2003 5/23/2003

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Brakke Consulting’s
Animal Health News & Notes for May 23, 2003

Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Ceva Sante Animale achieved an 8% sales increase to 51 million euros ($55 million) for the first quarter 2003. This increase is mainly due to pets products sales (DAP and FELIWAY) in the European Union and US. The other regions are also growing, despite the problems of conflicts in the Middle East and exchange rates between USD currencies and euro. (company communication)

>  PETCO Animal Supplies, Inc. reported financial results for the first quarter ended May 3, 2003.  Net sales in the first fiscal quarter of 2003 were $385 million with a comparable store net sales increase of 4.6%. Overall, net sales increased 10.2% over the first quarter of fiscal 2002. Net earnings available to common stockholders for the first quarter were $11.1 million, compared with a net loss available to common stockholders of $29.7 million in the prior-year first quarter. PETCO opened 22 new stores during the first quarter and closed five stores, three of which were relocated to new stores. (Business Wire)

>  Patterson Dental announced that sales of the Webster Veterinary Supply unit increased 20% to $53 million in the fourth quarter ended April 26, 2003. Webster was acquired in the first quarter of fiscal 2002. Assuming this unit had been acquired at the beginning of fiscal 2002, Webster's sales increased 10% in fiscal 2003 to $186 million.  The company added that it believes Webster can continue to grow faster than the estimated 6% to 7% growth rate of the U.S. companion-pet veterinary supply market. (Business Wire)

>  Advanced ID Corporation, a pioneer in the radio frequency identification (RFID) market, announced record revenues of $221,815 for its fiscal 2003 first quarter ended March 31, 2003, an 83.4% gain over fiscal 2002 first quarter revenues.  The increase in revenues was driven by increased sales of both RFID chips in the companion animal market as well as increased acceptance of the company's Internet-based PETTrac software and database system, which brings people together with their lost pets. A growing number of veterinarian offices, animal shelters, and SPCAs have adopted the PETTrac system. Advanced ID also realized an increase in government contracts.  (Business Wire)

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BRAKKE CONSULTING ANNOUNCES
UPCOMING MULTIUSER STUDY ON
VETERINARY DRUG COMPOUNDING

In the past year or two, the exhibit halls at veterinary conferences have seen a proliferation of veterinary compounding pharmacies.  In response to frequent questions about this topic, Brakke Consulting will be conducting a study of the phenomenon of veterinary compounding.  The study will answer questions such as

- what do veterinary compounders offer?
- what types of companies are offering compounding services?
- how many and how big are they?
- how frequently are veterinarians using compounding services?
- are there differences in veterinary usage between equine and small animal practitioners?
- are veterinary compounders taking business away from traditional pharmaceutical manufacturers?

The study will be completed in July 2003.  The pre-publication price, available until June 15, is $2,750, a $500 discount off the actual $3,250 cost.  Orders placed by June 15 will also be permitted to submit questions for potential inclusion in the veterinary survey.  For more information, please call 972-243-4033 or email info@brakkeconsulting.com .

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COMPANY NEWS RELEASES

>  Addison Biological Laboratory announced that the FDA has approved Neutersol (zinc gluconate neutralized by arginine) as the world's first injectable neutering drug for puppies 3 to 10 months of age. Neutersol is 99.6% effective in achieving sterilization, causing atrophy of the testicles. The new method for dogs is permanent, but some testosterone production continues. (Business Wire, AP)

>  Veterinary Pet Insurance announced it now offers coverage for a revolutionary new approach to sterilizing male puppies without surgery under its Vaccination and Routine Care Coverage endorsement. Neutersol has received approval from the FDA.  (company press release)

>  Pfizer announced that the FDA has approved an injectable form of Rimadyl (carprofen).  Rimadyl Injectable is now available for managing canine pain caused by osteoarthritis and soft tissue and orthopedic surgeries.  Pfizer also has the Rimadyl Pain Packs for post-surgery at-home dosing.  For soft-tissue surgery, the Pain Pack includes four days of chewable tablets in a ready-to-dispense caplet blister pack. For orthopedic surgery, the dosing includes eight days of therapy in a ready-to-dispense caplet blister pack. (Business Wire)

>  Embrex announced that its Newplex Newcastle disease (ND) vaccine received marketing approval from the USDA. Newplex vaccine can be delivered in ovo (in the egg) via the Embrex Inovoject system to prevent ND, a respiratory disease that can be fatal to poultry. Embrex plans to pursue regulatory approvals in key markets worldwide. (company website)

>  Digital Angel announced FDA and USDA clearance to market Bio-Thermo, its new temperature-sensing implantable microchip for pets, livestock, and other animals.  The chip transmits a signal containing accurate temperature readings to its proprietary radio frequency ID scanners.  (Feedstuffs)

>  The Thomson Corporation announced that it intends to sell its portfolio of healthcare magazines and affiliated projects and meetings. The publications to be divested primarily target physicians, pharmacists, nurses, dentists and veterinarians. In the veterinary market, Thomson's portfolio includes Veterinary Healthcare Communications, which publishes Veterinary Economics and Veterinary Medicine; produces the Central Veterinary Conference and other custom meetings; and includes a Custom Communications division producing sponsored projects in all media. (company press release)

>  PETCO Animal Supplies, Inc. announced that it has filed a preliminary prospectus supplement to its existing shelf registration statement with the SEC relating to a proposed public offering of 12,500,000 shares of its common stock, including 2,500,000 shares to be offered by PETCO and the remaining 10,000,000 shares to be offered by selling stockholders. PETCO intends to use the net proceeds of the offering to redeem $40 million in principal amount of its 10.75% senior subordinated notes or otherwise repay indebtedness. PETCO will not receive any proceeds from the sale of the shares by the selling stockholders. (Business Wire)

>  The Second Annual Animal Agriculture Alliance Stakeholders’ Summit convened in Crystal City, Virginia May 12th thru 14th.  The Summit, “Challenges to the U.S. Animal Protein Businesses: Domestic and International Responses, Risks and Repositioning,” co-sponsored by Rabobank International and Brakke Consulting, drew more than 120 attendees from across the food chain and the world. Agricultural staff members assigned to a number of foreign Embassies in the U.S., along with representatives from USDA, USTR, EPA and FDA, joined food industry executives and members of the scientific community, to hear today’s preeminent authorities on the future of global animal agriculture.  (association press release)

>  The FDA amended the regulations for food additives to provide for the safe use of feed-grade biuret in lactating dairy cattle feed. This action is in response to a food additive petition filed by ADM Alliance Nutrition, Inc.  Feed-grade biuret is a non-protein source of nitrogen. (AnimalNet – Federal Register)

>  The Meow Mix Company announced plans to air Meow TV on May 30, 2003 at 7:30pm EST on the Oxygen Network. The show will run several times throughout the month of June. Meow TV, the first programming targeted specifically at cats, was born out of research revealing that one-third of cats enjoy watching television.  TV personality Annabelle Gurwitch and her cat Stinky will host the 1/2 hour special. (Business Wire)

>  NETHERLANDS    Leading Dutch poultry processor Storteboom has declared bankruptcy because of financial problems exacerbated by the current avian flu outbreak in the Netherlands. The company's financial problems have been caused by poor poultry prices in Europe together with the competition from cheap imports from Thailand and Brazil. Storteboom produces up to 2.2 million birds each, and is the largest poultry processing company in the Netherlands, with a market share of 20. (Wattnet Meatnews)

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BRAKKE CONSULTING, INC.
The Success of Veterinarians Is Essential

The Practice Management Group of Brakke Consulting, Inc. have become some of the most frequent speakers at veterinary association meetings throughout the U.S. and abroad. They consistently fill the rooms when they present veterinary management seminars.   PMG can help your company increase its value to existing and potential veterinary customers through sponsored seminars that are educational, relevant, enjoyable and very beneficial to veterinarians and their staffs.  Contact Roger Cummings, CVPM in the Dallas office at 972.243.4033 or by email at rcummings@brakkeconsulting.com to learn how our practice management consultants can help maximize your company’s exposure to the veterinary profession.

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ANIMAL HEALTH NEWS

>  CANADA   A cow in Alberta has been diagnosed with BSE, first known case in North America in a decade. US health officials immediately banned imports of cattle, beef, beef-based products and animal feed from Canada.  The only previous known case in Canada, in 1993, involved an animal born in Britain that was imported; the herd was destroyed and there was no further spread of the disease. It was not immediately clear where the cow in the new case was born. (Foxnews.com)

>  CANADA    A Canadian official acknowledged that his country held onto samples from a cow infected with BSE for four months, possibly allowing potentially sick cows into the food chain. Canadian veterinarians took samples of the infected brood cow on Jan. 31 at a rendering plant, suspecting the cow had pneumonia - a belief that led to the long delay in discovering that the animal had mad cow disease, according to Canada's chief provincial veterinarian. (AP)

>  CANADA   Seven herds of cattle are now under quarantine in Canada as officials broadened their search for the origins of North America's first case of BSE in a decade.  Records indicate the infected cow may have been born in Saskatchewan province. If so, it would be the first case of a North American-born animal contracting BSE. (AP)

>  EU   A French food trading company could be entitled to damages because the EU continues to ban hormone treated meat from the USA. Biret, which trades in foodstuffs, particularly meat, brought an action against the Council of the EU, before the Court of First Instance in June 2000.
The company said it had suffered damages because of the continuation of the ban on hormone-treated beef from the US despite a WTO Dispute Settlement Body ruling that the ban is illegal. However, the Court of First Instance threw out the application for damages, because it said that the WTO rules did not create any rights for individuals. Now Advocate General Siegbert Alber has said that in his view, WTO law is directly applicable if the WTO Dispute Settlement Body has found a Community measure to be incompatible with WTO law and the Community has failed to implement the recommendations or decisions within the reasonable period allowed by the WTO.  The Advocate General observed that after the issue of the DSB recommendations of February 1998, a Community measure had to be adopted to implement them by May 1999.  Although the Commission has submitted a proposal to amend Community law in June 2000, the legislative procedure is still not complete, so that since May 1999 there has been no change either in the situation under WTO law or under Community law. A feature of the WTO dispute resolution mechanism is that once a DSB decision or recommendation has been made, it must be unconditionally implemented. (Wattnet Meatnews)

>  CANADA   The Canadian Government is requesting formal WTO consultations in an bid to press the EU to lift its moratorium on the approval of genetically modified organisms (GMOs). The move follows similar action taken by the USA. Since March 1998, seven EU member states (Austria, Belgium, Denmark, France, Greece, Italy and Luxembourg) have maintained a de facto moratorium on GMOs, by blocking the approval process.  (Wattnet Meatnews)

>  US   A new notice issued by the US Food Safety and Inspection Service detailed the procedures for rapid in-plant antibiotic screening tests in pigs. The notice listed symptoms and conditions that may warrant collection of samples for rapid testing by veterinary medical officers (VMOs). The notice also indicated that VMOs should retain the tested carcass until results of the screening are available and be prepared for traceback of the animal by asking the establishment to provide any information they have on the source of the pig.  (Wattnet Meatnews)

>  US   Humane Farm Animal Care (HFAC), an independent nonprofit organization supported by a coalition of the nation's leading animal protection organizations, unveiled the "Certified Humane Raised & Handled" labeling and certification program.  Supporting HFAC in its work to certify and administer the new label are the American Society for the Prevention of Cruelty to Animals (ASPCA) and The Humane Society of the United States (HSUS), as well as a number of regional and local animal welfare organizations. Copies of the "Certified Humane" standards are available at www.certifiedhumane.com. (PRNewswire)

>  US   Researchers from Evergreen State College in Washington presented research on using bacteriophages to reduce pathogen concentrations in livestock. The researchers isolated a new bacteriophage (CEV1) from the feces of sheep naturally resistant to gut colonization by E. coli O157:H7.  Preliminary trials of CEV1 in the lab have shown that it can be produced easily and can efficiently infect and kill the bacteria under proper conditions. In model systems reflecting the cow/sheep gut, CEV1 completely eliminated the bacteria in 11 days. (AnimalNet - American Society for Microbiology)

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AGRIBUSINESS NEWS

>  Devgen NV, a Belgian functional genomics and drug discovery company, announced that it has signed a three-year research collaboration with Sumitomo Chemical Company Limited to develop novel insecticides.  Devgen will select and further validate novel insecticidal targets and format high throughput assays to screen small molecule compounds, designed by Sumitomo. Devgen will deliver insect active hits, which Sumitomo will further develop into marketed products. Under the terms of the agreement, Devgen will receive an undisclosed upfront payment and research funding and is eligible for milestones and royalties.  (PRNewswire)

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BRAKKE CONSULTING VIEWPOINT

There was a great deal of industry news this week, with most of the positive stories coming from the companion animal market and products.  Most companion animal markets continue to grow at rates in excess of 5% per year and generally provide high gross profits to support consumer marketing.  It’s a great run and we need to keep it going.

The story that provided the most potentially negative implications was Canada’s announcement that a cow had been diagnosed with BSE.  Hopefully, this is a rare one-off case.  The North American cattle industry does not need additional negatives in the consumer mind to raise food safety and health issues.

Have a safe and enjoyable Memorial Day weekend.

Ron Brakke

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