» 2003

Animal Health News & Notes for February 14, 2003 2/14/2003

******************************************************************
Brakke Consulting’s
Animal Health News & Notes for February 14, 2003

Copyright © Brakke Consulting, Inc.
******************************************************************
COMPANY EARNINGS RELEASES

>  Virbac SA announced provisional turnover for the year 2002 was 367 million euros ($388 million), an increase of 5% over 2001.  The companion animal business grew 10% reinforced by sales of new products.  The animal feed business recorded a 3% decrease following Virbac’s decision to reduce this activity in Brazil.  (Animal Pharm)

>  Dainippon reported net sales of 12.4 billion yen ($103 million) for its animal science division for the first half of the fiscal year.  Sales through September 30, 2002 showed a 6.5% increase over the comparable period in the prior year. (Animal Pharm)

>  Heska reported financial results for the year ended December 31, 2002.  Total companion animal health product sales for the year were up 10% to $35.9 million, while total food animal health product sales for the year were up 4% to $14.2 million.  (company press release)

>  Evialis reported turnover for the first nine months of 2002 were 552 million euros ($589 million) a decrease of 5.7%.  Third quarter turnover fell to 168 million euros ($179 million) compared with 180 million euros in the prior year third quarter. The downturn in demand for the company’s main product range was partially offset by the development of value-added activities and by several acquisitions made in 2001. (Animal Pharm

> eMerge Interactive Inc. announced results for the quarter and year ended December 31, 2002.  Revenues were $1.6 million for the quarter, compared to $9.6 million in the comparable period in the prior year.  Revenues for the year were $13.2 million, down from revenues of $33.7 million in 2001.  As previously announced, the company made a decision to discontinue its cattle operations. (company press release)

>  PetMed Express, Inc. announced results for the quarter and nine months ended December 31, 2002. Net sales for the nine months ended December 31, 2002 were $40.1 million, compared to $21.4 million for the nine months ended December 31, 2001. Net sales for the quarter ended December 31, 2002 increased 34% to $11.1 million. Net income for the nine months ended December 31, 2002 was $1.5 million compared to a net loss of $344,000 for the nine months ended December 31, 2001. Net income was $435,000 for the third quarter of fiscal 2003, compared to net income of $353,000 for the third quarter of fiscal 2002. PetMed Express also reported new customer growth of approximately 74,000 customers for the third quarter of fiscal 2003, with 47% of those new customers ordering through their website. (Business Wire)

********************************************************************
New Brakke Consulting market study:
THE US SMALL ANIMAL VACCINE MARKET
NOW AVAILABLE

 - What are veterinarians’ opinions of vaccine manufacturers?
 - Are veterinarians changing their vaccine protocols because of fears over vaccinosarcomas or media attention to “overvaccination”? 
 - If they are, what are they doing in place of the annual vaccines to assure pets are still immune?
 - How popular is Fort Dodge’s new FIV vaccine?
 - What lies in the future for dog and cat vaccines?

These are a few of the critical questions that are answered in Brakke Consulting’s new study, The US Small Animal Vaccine Market. The report will include an overview of the small animal vaccine market, including market size, market shares, leading vaccines, and profiles of major vaccine manufacturers.  The report also covers a survey of veterinary practitioners regarding current vaccination protocols, veterinary opinion about the topic of “overvaccination,” and vaccine manufacturer rankings.  There is a special section on current issues in small animal vaccination, including feline vaccinosarcomas, overvaccination, and titer testing.

The US Small Animal Vaccine Market is now available for immediate delivery, at a purchase price of $4,000. For more information, please call Dr. Lynn Fondon at 972-243-4033 or email lfondon@brakkeconsulting.com

******************************************************************
COMPANY NEWS RELEASES

>  Roche signed the deal to sell its vitamin unit to Dutch firm DSM for 1.9 billion euros ($2.11 billion) and has settled all litigation in its vitamin price-fixing case. The company has been the world's biggest manufacturer of vitamins since it pioneered the industrial synthesis of vitamin C in 1934. The companies expect the deal, subject to government antitrust review, will close this spring. Roche said DSM would pay 1.85 billion euros in cash plus 2.24 million DSM shares with a value of approximately 100 million euros ($108 million). Roche will retain all legal liability from the vitamin price-fixing case.  (AP)

>  Lallemand, Inc. has acquired the agricultural business assets of SCOLR, Inc. for an undisclosed cash payment plus other considerations. The acquired products include BioPower forage inoculants and Cobactin microbial feed additives which will now be produced and marketed by Lallemand Animal Nutrition. Lallemand had acquired the production and marketing rights for other SCOLR (previously known as Nutraceutix) microbial feed additives in December 2001. (company press release)

>  Ceva Sante Animale announced the acquisition of Vetpharma, a Swedish veterinary laboratory that ranks 7th (turnover = 3.2 million euros) in its domestic market. Vetpharma already distributes Ceva’s main pet products, as well as those from other European companies which complete its product portfolio for large animals and horses. (company press release)

>  Schering-Plough announced the launch of a new swine vaccine, MaxiVac Platinum with Emunade.  Maxivac Platinum is described as the first combination vaccine for mycoplasma pneumonia and swine influenza with a USDA-approved label for reduced shedding of H1N1 and H3N2 flu viruses. (Animal Pharm)

>  Vetoquinol announced that it is incorporating all its equine nutraceutical products under a single brand name.  The 50 products in the line will be marketed under the brand name Equistro.  (Animal Pharm)

>  PRN Pharmacal announced that protocols for the testing required by the FDA for a NADA for phenylpropanolamine (PPA) have been submitted to the FDA’s Center for Veterinary Medicine.  The company currently markets PPA under the trade name Proin under a discretionary marketing allowance, after the product was taken off the human market in January 2001.  PPA is used to treat canine urinary incontinence. (company press release)

>  Heska and SafePath Laboratories announced that SafePath has licensed worldwide rights to Heska’s diagnostic to identify animals with trichinosis.  Under a supply agreement, Heska will provide Safepath with the unique antigen that is used to detect such antigens.  Heska’s diagnostic antigen is synthesized chemically.  Financial terms were not disclosed.  (company press release)

>  Seaboard Farms has a new online service that allows retail customers to trace individual boxes of Natural PrairieFresh Premium Pork to a source farm.  The system is fairly simple. Retailers log on to prairiefresh.com and go to "Order Status." After completing the log-in process, retailers can get information about the source farm, including the farm location, farm manager and genetics. (Pork Alert)

>  CANADA   Vetoquinol and Bimeda-MTC announced a strategic alliance in the Canadian market in which Bimeda products will be marketed and distributed in Canada by Vetoquinol.  Packaging will be changed over time to reflect the new corporate identity.  Financial terms were not disclosed.  (Animal Pharm)

>  ISRAEL   Biogal Galed Labs launched the ImmunoComb test for Canine Parvo and Distemper Virus IgM.  The kit is a modified dot ELISA test designed to determine serum antibody titers to both diseases.  The test is complementary to their Canine Parvo and Distemper Virus IgG test kit.  (Animal Pharm)

>  SPAIN   Spanish consumer goods company Agrolimen has renamed its petcare operations (formerly known as Gallina Blanca Purina) Affinity.  The company recently became Europe’s third largest manufacturer of dry petfood.  The company says that unifying the international business around the new name is the first step in expanding the business. (Animal Pharm)

********************************************************************
Brakke Consulting Due Diligence Seminar 
Kansas City: March 11-12, 2003

Whether your company is licensing technology in or out, buying, or selling a business or product line, this seminar will help you design an efficient, effective due diligence process that will help you test strategic assumptions, determine fair market value, uncover potential problems, identify opportunities and avoid costly mistakes or surprises.  The speakers at the seminar will include Brakke Consultants and senior investment bankers from a major investment bank. All of the speakers have extensive experience in product and compound licensing, divestitures, and acquisitions.

This two-day seminar was successfully conducted in 2001 and 2002 in various US and International locations.  Registration is $1,250 if registered on or before February 21, 2003 and $1,500 if registered after February 21, 2001. Registration is limited. 

Please contact Jane Morgan at the Dallas office 972-243-4033 or by email at jmorgan@brakkeconsulting.com for further information.  You may also register for the presentation online at www.brakkeconsulting.com.

******************************************************************
ANIMAL HEALTH NEWS

>  US   California health officials have ordered 72,000 chickens be destroyed at a ranch in San Bernardino county after the latest outbreak of Exotic Newcastle Disease. The ranch is the eighth commercial flock to be infected.  The total number of birds that have been destroyed because of the END outbreak has reached nearly 2.1 million, and eradication costs are over $35 million.  (Meating Place)

>  US   The FDA is reviewing disposal protocols at the University of Illinois concerning some hogs involved in bioengineering studies. The animals may have entered the food supply, however, FDA officials say that the incident likely doesn't pose a public-health risk. The public relations fallout could be different, however, as the general media reports the incident.  FDA does point out that, if confirmed, those responsible parties will face strong actions. FDA has specific guidelines for disposing of experimental transgenic animals. (Pork Alert)

>  The FAO's weighted average of representative international prices for meat fell in 2002; down by six per cent, eight per cent and three per cent for poultry, pig meat, and beef respectively. Lamb prices are the only exception. (Wattnet Meatnews)

>  US    Several Colorado lawmakers are supporting legislation to elevate the status of cats and dogs from property to companions.  The measure would allow people in Colorado to sue veterinarians and animal abusers and seek damages for ``loss of companionship,'' up to $100,000. If passed, it would be the first such companionship law in the nation, said lawyer Josh Pazour. The Colorado measure is opposed by the state Veterinary Medical Association, which contends the proposed changes would increase the cost of veterinary care. Colorado already is among 14 states legally recognizing dogs and cats as beneficiaries and allowing people to leave money and property to their pets. (AP)

*******************************************************************
BRAKKE CONSULTING VIEWPOINT

Recently, the CEO of one of our clients sent me Scott Bedbury's book, "A New Brand World" covering the 8 principles for achieving Brand leadership. I have been reading the book during my travels to various meeting and trade shows and find it most interesting and informative. When reading a business book of this type I'm always attempting to apply the experiences and insights to the markets we serve.

I like many others have become a fan of Starbucks coffee.  Mr. Bedbury was a senior marketing person at Starbucks.  In developing the Starbucks brand it is interesting to learn, that Starbucks brand's core identity was less about engineering a great cup of coffee than about providing a great coffee experience.  The CEO of Starbucks one morning stopped in Mr. Bedbury's office to share with him a comment from one of the store partners (employee). "One of our store partners made a great discovery this week," Shultz began.  "He said that we are not as he once thought, in the coffee business serving people. Instead, we are in the people business serving coffee." (A New Brand World, Scott Bedbury)

This reminding me of the question we often ask our clients. Are you in the drug, pet food, chemical or vaccine products business serving the animal health market? Or are you in the animal health business serving the health and service needs of customers (veterinarians, producers, pet owners and consumers). There is a difference. 

Earlier this week, we conducted our first focus groups for our Distributor Effectiveness Study. We found in these first two groups of veterinarians that a high percentage of them felt that they are being forced to purchase some products and brands from sources that are not their preferred choice. Does this come as a surprise? No, but if this situation continues we believe the companies and brands that are making the customers’ purchasing process more complex than necessary will not maximize market share as other product alternatives become available from sources that fit the customers purchasing needs more appropriately.

Have a great weekend!
 
Ron Brakke

*******************************************************************
This electronic newsletter is the sole property of Brakke Consulting, Inc.
Any use of the contents herein should be approved by and appropriately attributed to Brakke Consulting, Inc.

For more information about Brakke Consulting’s services and syndicated studies, visit our website at www.brakkeconsulting.com.

In order to receive the HTML version instead of the text version of this newsletter, use the link at the bottom of this week’s newsletter that states: “If you would like for us to remove your name from the circulation list, or if you need to change your profile or email address, please click here”.  Then click on the button below your email address that says HTML, and click “Update subscription.”