» 2002

Animal Health News & Notes for October 18, 2002 10/18/2002

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Brakke Consulting’s
Animal Health News & Notes for October 18, 2002

Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Pfizer reported that animal health sales in the third quarter 2002 increased 10% to $280 million, compared to the same period in 2001. This solid performance was led by the strong growth of companion animal products Revolution, Rimadyl, and Clavamox/Synulox and of the livestock medicine RespiSure/Stellamune. (company website)

>  Novartis reported that animal health sales for the third quarter 2002 were CHF 234 million ($148 million), an increase of 4% over the third quarter 2001.  The first nine months of 2002 increased 4% (12% in local currencies) to CHF 746 million ($473 million).  US sales grew strongly, supported by acquired vaccine businesses, which contributed 5 percentage points to the business unit’s sales growth.  The worldwide companion animal segment was driven by strong sales of Interceptor, Sentinel and Fortekor.  A number of new products were launched in key markets, and the farm animal segment benefited from the recovery of the UK foot and mouth epidemic. (company press release)

>  Colgate-Palmolive reported results for the third quarter 2002.  Hill's Pet Nutrition (13% of Company Sales), reported strong results both domestically and internationally that contributed to 6.5% unit volume growth in the third quarter. Dollar sales rose 8.0% versus third quarter 2001 and dollar-operating profit increased 14%.  Off to a great start in the U.S. is Science Diet Nature's Best, an all-natural line of cat and dog food that is being supported with trial-building promotions and in-store activity. Early sell-in of this innovative new product has exceeded expectations, and this success should continue into the fourth quarter as media support begins. (Business Wire)

>  Cargill Inc. reported a 25% jump in its 2003 first quarter earnings. The company cited strong performance in its food ingredient and grain and oilseed businesses with the positive results. Cargill earned $345 million from continuing operations in the 2003 financial year's first quarter, which ended on 31 August. This compares with $277 million in the same period last year.  Earnings among its meat businesses, though improved from a year ago, were reduced by depressed hog prices and large supplies of competing meats.  (Wattnet Meatnews)

>  Alcide Corporation announced net sales and earnings for its first fiscal quarter which ended Aug. 31, 2002.  Net sales of $5.0 million were 7% lower than for the first quarter last year.  Sales of SANOVA food antimicrobial to the poultry and red meat industries totaled increased 25% to $3.4 million.  The Company's animal health and surface disinfectant sales were $1.7 million, a decrease of $1.0 million from business unit sales during the first quarter last year. Net income of $61,669 for the fiscal first quarter was $259,432 lower than for the first quarter last year reflecting decreased sales and gross margin in the Company's animal health business unit, offset by a substantial improvement in the Company's emerging SANOVA food safety business. (Business Wire)

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COMPANY NEWS RELEASES

>  Phoenix Scientific announced the sale of a controlling equity interest in the company to Leonard Green & Partners LP, a private equity firm that also holds equity in Petco Animal Supplies and VCA/Antech.  The equity was provided by Leonard Green & Partners and the Phoenix management team.  Financial terms were not disclosed.  (company press release)

>  Doane Pet Care Company announced that it is reviewing the potential sale of its European pet food business and said that it has retained JP Morgan Securities, Inc. to assist with the review and potential sale.  The company said it anticipated that any potential sale would be completed in the first half of 2003 and the net proceeds from any such sale would be used to pay down the Company's outstanding senior debt.  (PRNewswire)

>  Hill’s Pet Nutrition, Inc. launched an all-natural line of premium canine and feline petfood made with high-quality, naturally-preserved ingredients.  Nature’s Best pet foods are formulated with no artificial preservatives, flavors or stabilizers. Nature’s Best also includes the same antioxidant formula found in Science Diet to help protect against cell damage and help maintain a pet’s healthy immune system, plus beta-carotene and selenium. (Pet Food Industry)

>  Embrex has been selected as one of the 200 Best Small Companies in America by Forbes Magazine for the third consecutive year. Embrex was ranked No. 74 among the 200 Best in Forbes' Oct. 28, 2002 issue. (company press release)

>  Varied Industries Corporation just completed negotiations for product distribution into Mexico, Central and South America, China, and Western Canada.  Varied Industries, in business for almost 40 years, manufactures lactic acid fermentation products since 1963. (company info)

>  SOUTH AMERICA   Elanco announced that it has become the exclusive sales and distribution partner for Boehringer Ingelheim Vetmedica in Argentina and Brazil for the latter’s large animal product line.   (Pig International)

CORRECTION:  Last week’s newsletter incorrectly reported that Advanced Monitors Corporation was now offering the Vet-Temp Instant Ear Thermometer through the retail channel.  The product available to pet owners through retailers is called the Pet-Temp Instant Ear Thermometer.

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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.

For registration information, please visit our website at http://www.brakkeconsulting.com and click on the registration link, or call 972-243-4033.

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ANIMAL HEALTH NEWS

>  US   Pilgrim’s Pride announced that its processor Wampler Foods Inc. recalled about 27.4 million pounds of fresh and frozen ready-to-eat turkey and chicken products that may be contaminated with listeria, according to the Food Safety and Inspection Service. The recall is the largest ever by a meat or poultry company. (Meating Place)

>  US   The California Department of Agriculture announced that it is investigating an outbreak of Exotic Newcastle Disease in small flocks of backyard birds in southern California.  The outbreak started September 27, and received laboratory confirmation of the diagnosis on October 2.  The commercial industry is not involved to date.  (Feedstuffs)

>  UK   Preliminary results from UK Food Standards Agency-sponsored research have found BSE infectivity in cow tonsil. At present, BSE controls require all cow tonsil to be removed from meat intended for human consumption. The new tests are considered to be several hundred-fold more sensitive than those previously applied using mice.  As a precautionary measure, EU wide legislation classifies bovine tonsil over a certain age as specified risk material (SRM). Tongue, however, is not SRM and can enter the food chain. Tonsil tissue can be found at the root of the tongue although a limited initial study of current practice has already indicated that tonsil tissue does not appear to remain on tongues prepared for human consumption. (Wattnet Meatnews)

>  SWITZERLAND   Two new cases of BSE have been discovered in Switzerland, raising the number of infected cows detected this year to 16.  One of the cows was born in 1998, eight years after the Swiss authorities banned the use of animal-based feed for cattle, while the other was born in 1991.  Veterinary officials said that about 29 cases had been recorded in the country by the same date last year. (AnimalNet – Agence France Presse)

>  EUROPE   European Union nations failed to agree on rules to allow new biotech crops in the farming and food industry, but a top EU official said an end to the ban on such products was inevitable.  The United States is considering going to the World Trade Organization to challenge the 4-year-old moratorium on approving new genetically modified organisms. The issue will be taken up again when the environment ministers discuss food labeling and the traceability of biotech products, but no decision is expected.  (AP)
>  US   Iowa pork producers may be facing more lawsuits following a jury decision to make Iowa Select pay $33 million from a lawsuit that four Sac County, Iowa, couples filed. The plaintiffs sued Iowa Select two years ago alleging that the company's Sac County operation produced offensive odors, noxious gases and excessive flies.  Iowa Select officials say they will appeal the judgment, which is believed to be the largest one against any livestock-confinement operation in the United States. The jury awarded the plaintiffs $1.06 million in compensatory damages and $32 million in punitive damages.  (Pork Alert)

>  US  A bill was introduced in the Michigan State Senate in June 2002 that would allow up to $250,000 in noneconomic damages for loss of a companion animal caused by another person’s gross negligence or willful and wanton misconduct.  Currently, most states do not allow for noneconomic damages for the loss of a pet. (AVMLA Newsletter)

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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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AGRIBUSINESS NEWS

>  Pioneer Hi-Bred International, Inc., filed a lawsuit against Syngenta Seeds, Inc., for trade-secret misappropriation and infringement of its proprietary hybrid corn and parent seed.  The suit charges Syngenta with using Pioneer's proprietary germplasm without permission, reproducing that germplasm and incorporating it into commercial products.  (Business Wire)

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BRAKKE CONSULTING VIEWPOINT

The first companies to report third quarter sales enjoyed some impressive numbers. Hopefully, others will have numbers that are just as strong. The industry needs positive news of this type in order to maintain or obtain the recognition it deserves from corporate management and the financial community.

I'm currently in the Midwest, where I've had the opportunity to interface with several producers, local bankers and veterinarians in informal settings.  It has been a long, hot, dry summer that will impact production output.  This combined with the low livestock prices has the bankers looking at financial statements a bit closer.  Most predict that 2003 will be a challenging year in livestock production.  While things seem to be tough for livestock producers, there is a strong indication the land prices will continue to escalate. This appears to be driven by hobby farmers that have income from other sources.  It is always nice to have a few customers that are not concerned with the cost of animal health products.

Have a great weekend!

[Ron Brakke]

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