» 2003

Animal Health News & Notes for May 16, 2003 5/16/2003

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Brakke Consulting’s
Animal Health News & Notes for May 16, 2003

Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Schering-Plough reported that first quarter 2003 sales of its animal health division declined 5% to $143 million due to current manufacturing supply issues. (company website)

>  For the first half year of 2002/03, Danish Crown posted an interim result of DKK 591 million ($91 million) after tax, virtually the same as last year.  Turnover at DKK 19.5 billion  ($3 billion) is DKK 2.7 billion below last year, which is due to low world market prices for pork. The Pork Division continues to be the largest contributor to the Group’s profits, but activities during the first half year were focused on alleviating the worst effects of the continuing weak global market for pork and falls in a number of export currencies. Despite a slightly lower turnover resulting from lower raw material prices, half-year profits were approx. DKK 30 million above last year. (Wattnet Meatnews)

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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

>  Schering-Plough Animal Health announced approval by the FDA of Zubrin (tepoxalin) Rapidly-Disintegrating Tablets for the control of pain and inflammation associated with osteoarthritis in dogs. Zubrin is the only approved canine NSAID that inhibits both the cyclooxygenase (COX-1 and COX-2) and lipoxygenase (5-LOX) pathways. Additionally, Zubrin Rapidly-Disintegrating Tablets is the only canine medication utilizing Zydis technology, which results in the tablet disintegrating within seconds of being placed in the dog’s mouth. Zubrin is administered once daily, and is available immediately to veterinarians.  (company press release)

> Schering-Plough Chairman and Chief Executive Officer Fred Hassan announced the first steps in an action agenda to stabilize and then turn around the corporation, which has been suffering from declining sales and earnings as well as legal and regulatory challenges.  Schering-Plough’s Animal Health and Consumer Health businesses will now be grouped into a new unit, Global Specialty Operations (GSO). Raul Kohan, president of Animal Health Care, will continue in that role while also leading the new GSO organization, reporting to Hassan. Further details on these actions will be provided going forward.  (company website)

>  Veterinary Products Laboratories (VPL) announced that a second, more advanced composition called Tissumend II Synthetic Absorbable Tissue Adhesive is available to the veterinary surgeon.  Tissumend II is based on the original methoxypropyl cyanoacrylate technology developed by Poly-Med, Inc., but is substantially stronger than the original and polymerizes to form a strong bond between most tissue surfaces within 10 seconds after application. Tissumend II is indicated for the closure of surgical wounds, declaws, tail dockings, incision sites, debrided trauma wounds, hemostasis and laser surgical procedures. (company press release)

>  Veterinary Products Laboratories (VPL) announced the launch of Mycodex Odor Neutralizer, a new spray that eliminates offensive odors.  It can be sprayed on pet bedding, carpets, upholstered furniture and other areas frequented by pets to eliminate unwanted odors.  Mycodex neutralizes some of the most offensive pet odors including urine, feces, vomit and canine anal glands.  Mycodex Odor Neutralizer is available exclusively through veterinary channels. (company press release)

>  The 19th International Feed Industry Symposium, sponsored by Alltech, opened in Lexington to an audience of 1100 feed industry delegates from around the world. Speakers at the symposium aim to identify and address some of the issues facing the global feed industry, including new regulatory codes, rapidly changing technologies and increased pressure on productivity and animal performance -  and present cost-effective, scientifically sound solutions. (company press release)

>  Central Garden & Pet announced that it has closed a new $200 million senior secured credit facility. The new credit facility consists of a five-year $100 million revolving credit facility and a six-year $100 million term loan.  The new facility replaces the Company's existing $175 million asset-based revolving credit facility. Net proceeds from the new facility will be used to retire outstanding debt under the asset-based revolving credit facility and other existing debt as well as provide capital for general corporate purposes and acquisitions and investments. (Business Wire)

>  PetCare Television Network announced the shipment of 3,000 new 13 inch or 20 inch color TV and DVD players to selected subscribers-veterinary hospitals throughout the United States.  Additionally, every PetCare TV subscriber receives the first quarter programming packed with 19 educational pet related topics designed to encourage, educate and entertain pet owners.   PetCARE Television Network is now starting phase 2 of their strategic business plan.   The company will focus on an outside auditing agency to conduct a 6-month compliance audit. (company press release)

>  Smithfield Foods Inc is planning a private offering of $250 million of its senior unsecured notes due in 2013. If the offering is completed, the company plans to use the proceeds initially to repay its debts under its US revolving credit agreement. Afterwards, Smithfield hopes to use these funds with others for capital projects and general corporate purposes, including expansion of its processed meats business and strategic acquisitions.  (Wattnet Meatnews)

>  According to the president of Petfinder.com, who started the adoption website in 1996, over a million pets went home last year as a result of the sponsorship and support of companies and organizations including Nestle Purina PetCare, PETCO Animal Supplies, Inc., PetHealth, Inc., the PETCO Foundation, Merial, Bissell Homecare, Inc., and ASPCA.  Petfinder.com provides online services for 5,528 shelters in the US and Canada, creating a daily searchable database of 109,743 adoptable pets. The service is free to both the shelters and the adopters, thanks to Petfinder.com's sponsors.  (PRNewswire)

>  The Dakota Beef Company announced the signing of an exclusive commercial agreement with the Canadian Organic Livestock Association (COLA) to provide a steady supply of certified organic beef to the European Union.  The company has also contracted with a leading British-based engineering company to meet EU beef importation standards.  Dakota Beef plans to begin processing COLA beef in September 2003 for distribution in the EU.  (PRNewswire)

CLARIFICATION:  The newsletter dated May 9, 2003 contained an earnings release for Alltech International Holdings.  This company is unrelated to Alltech Inc., an international animal nutrition company.

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BRAKKE CONSULTING, INC.
Do You Know Where Your Company Is Going?

Brakke Consulting is an excellent resource in the strategic planning process.  Brakke Consulting’s past assistance in strategic planning has included:
- reviewing the revenue estimates and success probability of the product pipeline,
- reviewing the timing of various new product introductions versus probable timing of competitive introductions, and estimating the impact of various scenarios
- benchmarking various functions against company competitors in the larger markets, which might include sales force size, technical services, and/or R&D spend vs. sales
Brakke Consulting can provide insights and professional assistance that improves the likelihood of success.  Please contact us if you would like the benefit of professional assistance in any of these areas. Contact information for all offices is available on our website at www.brakkeconsulting.com.

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ANIMAL HEALTH NEWS

>  At its 13th General Assembly, the International Federation for Animal Health (IFAH) announced its new President, Patrick James, President of Elanco Animal Health, Mr. James succeeds Alan Reade, Executive Chairman of Merial Limited, to the IFAH Presidency.  2002 was the IFAH’s first year as an integrated worldwide federation. (association press release)

>  GERMANY  Germany has confirmed its first case of avian influenza. The German Health Ministry said that tests on a farm near the Dutch border in western Germany were positive, confirming fears that the disease had entered the country.  The European Commission has extended emergency measures to Germany that has already been imposed on Belgium and the Netherlands. (Meating Place)

>  EU   The European Commission's Standing Committee on the Food Chain and Animal Health has reviewed the present situation surrounding the outbreak of avian influenza in the Netherlands, Belgium and Germany. The Committee voted in favor of a Commission proposal to extend the existing measures to prevent the spread of the disease and to eradicate it until May 30. To date, 252 outbreaks of avian influenza have been confirmed and another 6 holdings are suspected to be contaminated in the Netherlands. In all, approximately 28 million birds have been culled. (Wattnet Meatnews)

>  US   Just after officials announced that the spread of exotic Newcastle disease (END) in southern California, Arizona, Nevada and Texas had dramatically slowed, agriculture officials in California announced that they found a suspected case outside the quarantine zone in Southern California. They destroyed 342 birds in the area, which is very close to Los Angeles county. To that point, no new cases had been found in the past four weeks. (Watt Feed enews)

>  US   America's beef producers launched an advertising campaign that compares the nutritional benefits of lean beef and skinless chicken.  The ads are funded by checkoff dollars, and use government data to illustrate that lean beef compares favorably to skinless chicken breast in terms of fat, yet provides greater amounts of some essential nutrients.  (PRNewswire)

>  US   The Federal Crop Insurance Corporation has approved expansion of the Livestock Risk Protection insurance policy for fed cattle and feeder cattle. The fed cattle program is available in all counties in Illinois, Iowa and Nebraska. The feeder cattle program is available in all counties in Colorado, Iowa, Kansas, Nebraska, Nevada, Oklahoma, South Dakota, Texas, Utah and Wyoming. The Risk Management Agency will begin accepting applications Monday, June 9 for fed and feeder cattle insurance from approved companies. (Drovers Alert)

>  JAPAN   Research at the Institute of Physical and Chemical Research confirmed that pyrroloquinoline quinone (PQQ), a substance discovered in 1979, can be categorized as a vitamin. Mice deprived of PQQ suffer reduced fertility and roughened fur.  PQQ is the first new vitamin to be discovered since 1948.  PQQ is believed to belong to the vitamin B group. (Watt Feed enews)

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BRAKKE CONSULTING VIEWPOINT

Earlier this week, we attended the Animal Agricultural Alliance Summit in Washington DC.  It was great to see almost 150 attendees at the Summit address and discuss the issues facing animal protein production in the US and internationally.  The attendees were from the US and abroad, from across all segments of the animal agriculture & food industries: producers, processors, feed companies, animal health & nutrition companies, veterinarians, animal scientists, retailers, restaurants, USDA, USTR, EPA & FDA officials, state government officials, agricultural association representatives, consultants, and media. 
 
It was wonderful to observe and participate with the Animal Agriculture segment stake holders for this two-day period.  The views and thoughts of the various participants, related to the challenges facing the animal protein business and how these issues can be resolved, provided some stimulating question and answer periods.  While no conclusions were reached, there was clear agreement on the direction that needs to be taken in a cooperative effort.  The Animal Agriculture Alliance is providing a needed service to Animal Protein Industry by organizing this meeting and other activities.  We encourage you to visit their web site at www.animalagalliance.org
 
Most of the country in the past couple of weeks has received some needed moisture for crop production and pastures.  While one hates to see the destruction and personal tragedies created from the many tornadoes associated with some of the storms, producers must have the rain to prosper.  There are currently enough financial issues related to profitability in animal agriculture without adding another year of drought. 
 
Have a good weekend.

Ron Brakke


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