» 2002

Animal Health News & Notes for November 1, 2002 11/1/2002

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Brakke Consulting’s
Animal Health News & Notes for November 1, 2002
Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Aventis reported that in the first nine months of 2002, sales by its animal health business Merial rose 6% on an activity basis to 1.44 billion euros ($1.4 billion).  This figure includes the poultry genetics business.  (company press release)

>  Alpharma reported sales for the third quarter 2002 for its animal health division were $84.6 million, compared to sales of $67.9 million in the third quarter of 2001.  Operating margin in 2002 increased to 11.9% compared to 4.1% in last year’s third quarter.  Sales for the first nine months of 2002 were $234 million compared to sales of $269 million in 2001.  Animal Health revenues, operating income, and operating margins have improved sequentially each quarter in 2002. (company website)

>  Nestle announced that sales for its petcare division for the first nine months of 2002 were 7.8 billion euros ($7.6 billion), an increase of 75% over the nine-months sales of 4.5 billion in 2001.  Real internal growth for the period was reported to be an increase of 0.7%.  (company website)

>  Virbac Corporation reported record sales and operating income for the third quarter ended September 30, 2002.  For the third quarter 2002, net sales reached a record $15.9 million, up 8% from $14.7 million in the prior-year third quarter. Sales for Virbac Corp.'s Veterinary Division, the company's largest contributor to total revenue and profit, jumped 29% to a record $7.5 million. The Veterinary Division's solid growth primarily reflects continued strong demand for Iverhart Plus, and robust sales of dermatological products, which jumped 20%. Net income for the third quarter 2002 was $947,000 compared with $206,000 for the comparable quarter of 2001. (Business Wire)

>  Embrex, Inc announced financial results for the third quarter ended September 30, 2002. Third-quarter 2002 revenues were $11.7 million, or $0.2 million more than revenues during the comparable period in 2001. Third-quarter net income was $1.8 million, a decrease of 15% over net income of $2.1 million for the same period in 2001. (company website)

>  Pilgrim's Pride reported a net loss of $3.2 million for the fourth fiscal quarter ended Sept. 28, 2002, a $16.1 million decrease compared to net income in last year's fourth fiscal quarter of $12.9 million. Pilgrim's Pride also announced net sales for the quarter of $639.8 million, a $1.5 million decrease compared to the same period last year. For fiscal 2002, Pilgrim's Pride reported net income of $14.3 million, a $26.8 million decrease when compared to last year's net income of $41.1 million. Net sales for fiscal 2002 were a record $2.5 billion, a 14% increase compared to the same period last year. (Meating Place)

>  Clorox announced that its Specialty Products division recorded 2% volume growth and 6% sales growth to $306 million in the first quarter of fiscal 2003.  Record shipments of Scoop Away cat litter were offset by declines in Fresh Step cat litter caused by a comparison to record year-ago shipments and the timing of merchandising events. (Business Wire)

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COMPANY NEWS RELEASES

>  Farnam Pet Products announced that it has acquired the pet care business of Combe Incorporated, expanding Farnam's current selection of superior over-the-counter animal health products.  The acquired pet care business includes Scratchex flea and tick chemical treatments and collars, and Sulfodene skin medications.  Both are leading products within their categories in mass-market retail outlets. During the transition, Combe will handle all customer orders for Scratchex and Sulfodene products while Farnam establishes relationships with key accounts. Financial terms were not disclosed. (company press release)

>  IDEXX Laboratories, Inc. announced that it has commenced shipping and accepting customers for
its LaserCyte Hematology Analyzer, a new, in-clinic veterinary diagnostic instrument. The LaserCyte system uses proprietary laser-flow cytometry, and provides comprehensive hematological diagnostic information at the point of care. (company press release)

>  Farmland Industries may be looking for an investment firm to sell its pork and beef processing businesses, according to the Kansas City Star newspaper. Farmland recently shed some of its large assets under a reorganization plan. Smithfield Foods has been named as a potential buyer of Farmland's meat business. (Wattnet Meatnews)

>  Lallemand Animal Nutrition announced the addition of Adjulact Pro to its range of natural probiotic animal feed ingredients. Adjulact Pro, a combination of two natural lactic acid bacteria found in the gut of healthy calves, is aimed at the calf milk replacer market, as well as on farm milk fed calves including veal. The product has been registered as a European zootechnical feed additive for young calves. (company press release)

>  Pets Choice, Inc. announced it secured $5 million in equity funding led by Northwest Venture Associates.  The company will use the funds to acquire additional veterinary hospitals and medical equipment, primarily in the metropolitan areas currently served by Pet’s Choice in Washington, Arizona, Texas and Oklahoma.  (company press release)

>  CANADA   CV Technologies Inc. and Centaur Pharmaceuticals announced the creation of the joint venture company, Vet Ex Inc. Vet Ex is a new Alberta-based company that has licensed the veterinary rights for CV Technologies' nutraceutical products and its ChemBioPrint technology. The license is exclusive in the U.S. and most markets around the world. Vet Ex will use the ChemBioPrint technology and CVT's products to create, further develop and then commercialize nutraceutical products for the veterinary market. (Animalnet – CCN)

>  CHINA   Nutreco has opened its first plant in China for manufacturing feed premixes and specialty diets. The factory is at Xiangtan in the Chinese province of Hunan, which the group notes is a center of pork production nationally with over 60 million pigs. (Wattnet Pig E-news)

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BRAKKE CONSULTING, INC.
Animal Health and Nutrition Industry Overview
to be presented in New York City December 2, 2002

At the request of several clients. Brakke Consulting has decided to kick off the annual 2003 Animal Health and Nutrition session early by holding a three-hour industry seminar and information program at the Princeton Club in New York City from 2:00 – 5:00 pm on December 2.

The presentation will include information including sales estimates for 2002 and the 2003 outlook for leading companies and products.  It will also cover US and international trends for:
- nutritional and medicinal feed additives
- flea, tick and heartworm products
- the evolving pain management market
- pet nutrition
- food safety and animal welfare and its impact on industry

There will be a fee of $300 per attendee, with discounts for multiple registrations from one company.  Attendees will be provided with an outline of the presentation at the time of the overview. 

Attendance is limited to the first 30 registrations, so sign up now!

For registration information, please call 972-243-4033. 

NOTE: Due to a power outage, we may not have received all online registrations.  If you registered for the conference and have not received a confirmation from Ms. Jane Morgan, please call 972-243-4033 to confirm your registration.

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ANIMAL HEALTH NEWS

>  SPAIN   Three new cases of BSE were recorded by the Spanish Ministry of Agriculture last week. This brings the number reported this year in Spain to 104, and 184 since the disease was first detected. (Wattnet Meatnews)

>  DENMARK   A new case of BSE has been found in Denmark. This is the 11th case of the disease discovered in the country since 1992 and the third this year. The incident was discovered by routine testing of the carcass of a seven and a half year old dairy cow.  The entire herd was destroyed after a confirmation test proved positive. A further 68 animals coming from the same farm had been sold on to a dozen other operations and the Danish authorities say that these too must be destroyed. (Wattnet Meatnews)

>  US   More than 8,000 chickens, turkeys and ducks from backyard flocks and homes in Southern California have been destroyed in a month-long battle against Newcastle disease. There has been no evidence of the disease in the state's commercial flock. However, some export markets have barred purchases of California poultry, including the European Union, Japan, Taiwan, Poland and The Philippines.  Newcastle disease was discovered on Sept. 27 in Compton, and the disease has since spread to many areas of Los Angeles and Riverside counties, and a few sites in San Bernardino Country. (Meating Place)

>  EUROPE   Ten countries of central/eastern Europe this month moved into the last phase to join the European Union (EU) in 2004, after gaining approval for their membership from the community’s administrators. Listed alphabetically, they are: Czech Republic; Cyprus; Estonia; Hungary; Latvia; Lithuania; Malta; Poland; Slovakia; and Slovenia. Together they represented an on-farm inventory of approximately 109.5 million pigs in 2001, compared with the 121.82 million in the present 15 EU member states. (Wattnet Pig E-news)

>  US   A U.S. District Court judge ruled that the Pork Production, Research and Consumer Education Act is unconstitutional and ordered a halt to national pork checkoff collections starting Nov. 24. The Campaign for Family Farms questioned the checkoff's constitutionality. By ruling in favor of the challengers, the judge denied the summary judgment and motion to strike requested by various pork producer associations. (Pork Alert)

>  US   A comprehensive Web site devoted to animal law, the Animal Legal and History Web Center, has been launched by a professor of law at Michigan State University-Detroit College of Law.  Offering users legal information about animals, the Web site (http://www.animallaw.info) includes expert explanations and materials, including policies, publications, briefs and historical documents. It also includes navigation through topics, laws, subject areas and species as well as a general search engine for queries relating to animal law.  The Animal Legal and History Web Center ultimately will contain a complete set of legal materials at the statewide, national and international levels. (AnimalNet)

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SECOND EUROVET CONFERENCE ANNOUNCED

On December 12-13, 2002, the second Eurovet Conference on EU enlargement and food safety issues will be held in Paris. During these two days, high-level speakers coming from candidate countries, member states and non-EU countries will share the latest information about food safety issues as they are reshaped by the ongoing EU enlargement process.  The conference will cover topics including
-What are the food safety risks involved in this integration ?
-How does the Union prepare to welcome the newcomers ?
-How do the candidate countries prepare to join the Union ?
-What will be the economic impact of the enlargement on the European food supply ?

The conference is organized by Eurovet with the partnership of the World Animal Health Organization, the European Commission Health and Consumer Protection Directorate-General and the General Directorate for Food of the French Ministère de l'Agriculture.

If you would like more information on the Conference, visit the website at www.eurovet-conf.org or email to eurovet2002@alternative-sante.com.

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BRAKKE CONSULTING VIEWPOINT

This week’s newsletter reports a number of positive financial results for the third quarter, making the first nine months of the year somewhat of a mixed bag.  It appears that most companies will close out 2002 with modest gains in the face of a reasonably difficult environment.  This week’s report on consumer confidence was not encouraging for packaged goods. 

We continue to believe that consumer spending on veterinary services and companion animal products will outpace the general economy over the next three to nine months.  It appears to us that the companion animal spending tracks much closer to human health care trends, which are moving higher at double digit rates.

The food animal sector is not quite so positive, and its impacted more by animal and meat inventories, cost of food grains, and government support programs. The animal health product sales in the food animal sector will continue to be under pricing pressure from current and new generic product entries on some leading products. 

In the next couple of weeks, we will be asking many of you to assist us in creating a forecast for 2003.  We hope you will share your thoughts on the industry’s future with us.

Have a great weekend.

[Ron Brakke]

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