» 2002

Animal Health News & Notes for August 16, 2002 8/16/2002

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Brakke Consulting’s
Animal Health News & Notes for August 16, 2002

Copyright © Brakke Consulting, Inc.
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COMPANY EARNINGS RELEASES

>  Dainippon’s Animal Pharmaceuticals Division reported results for the year ending March 31, 2001.  For the year, the division reported sales of 24.5 billion yen ($204 million), an increase of 4.2% over the prior year.  The strongest growth was recorded in small animal veterinary products.  Sales of products for food animals declined 20%, and sales of aquaculture products fell 66%. (animal Pharm)

>  PetMed Express, Inc. announced results for the quarter ended June 30, 2002, which is the first quarter of the company’s 2003 fiscal year. Net income was $902,000 for the first quarter, compared to a net loss of $1,091,000 for the comparable period last year. Net sales for the quarter were $14.8 million, compared to $5.4 million for the comparable period last year, an increase of 177%. PetMed Express also reported new customer growth of approximately 121,000 customers for the first quarter of fiscal 2003. (Business Wire)

>  IGI, Inc. reported a net profit of $9.3 million for the second quarter ended June 30, 2002 compared to a net profit of $540,000 for the comparable period in 2001.  For the six months ended June 30, 2002, net profit was $8.8 million compared to a $29,000 net profit for the comparable period in 2001. The increase in the net profit is the result of the gain on the sale of the Companion Pet Products division, net of the loss on early extinguishment of debt. (Business Wire)

>  PSF Group Holdings Inc., the parent company of Premium Standard Farms, reported that net sales for the quarter ended June 29 totaled $149.0 million, compared with $171.2 million in comparable period last year, according to a news release. The results reflected higher tonnage but lower unit prices. The net loss for the first quarter was $4.3 million, compared with net income of $9.1 million for last year. Market conditions continued to negatively impact the company’s financial performance. The excess meat proteins available in the domestic market reduced wholesale pork prices in the first quarter of fiscal 2003. The unfavorable market conditions are the result of the Russian ban on imported poultry, increased pork production and plentiful beef supplies.  (Meating Place)

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COMPANY NEWS RELEASES

>  Fort Dodge announced the release of the first-ever FIV  vaccine.  Fel-O-Vax FIV is available through licensed practicing veterinarians nationwide. Fel-O-Vax FIV is based on patented technology developed at the University of Florida.  U of Florida and the University of California/Davis hold joint patents on the FIV vaccine, and Fort Dodge, with approval by the USDA, utilized the research to develop a commercial vaccine. (company press release)

>  Bioject Medical Technologies Inc. announced that it has entered into an exclusive license and supply agreement with Merial for delivery of Merial’s veterinary pharmaceuticals and vaccines with Bioject’s newly-developed veterinary focused needle-free injector system.  Within the agreement, Merial will initially develop the system for the delivery of vaccines to food-producing animals. Financial terms of the agreement include monthly payments to Bioject for product development, with additional payments at key product development and regulatory milestones.  Bioject will also receive royalty payments on Merial’s vaccine sales which utilize the needle-free injector system. (company press release)

>  Pharmacia Corp. has spun off its controlling stake in Monsanto Co. to clear the way for Pfizer Inc. to acquire Pharmacia by year's end. Pharmacia gave its own stockholders the 220 million Monsanto shares it owned as a special, tax-free dividend. The shares represented an 84% stake in Monsanto.  (AP)

>  Future Beef Operations, an integrated beef company with a state-of-the-art processing facility and a partnership with Safeway Stores will cease operations this month. The closure comes just one year after the plant began operations. Founded in 1996, FBO's vision for an integrated beef company, with managed breeding and production of cattle, harvest and processing to meet defined specifications, was to be a blueprint for how beef companies would operate in the coming years. But severe financial losses the past year (a volatile cattle market and $118 million tied up in their processing facility) left FBO unable to continue. (Drovers Alert)

>  Pfizer announced the opening of its new state-of-the-art veterinary medicine research facility for both livestock and companion animals.  The new facility is located at Pfizer’s Terre Haute Labs in Indiana.  The new 110,000 sf building was delivered on time and under budget. (company press release)

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ANIMAL HEALTH NEWS

>  US   The USDA is reportedly considering new regulations that would require meat companies to implement more food safety safeguards. The department is said to be mulling over regulations requiring that meat companies implement new technology to kill harmful bacteria in food. One option USDA is looking into is mandatory irradiation of meat for certain plants. (Food Systems Insider - Reuters)

>  BRAZIL   Scientists at Campinas State University in Sao Paulo, Brazil have identified a virus that can destroy the eimeria protozoa responsible for the coccodiosis, a sickness often fatal to poultry. The scientists hope to use proteins extracted from this virus to make genetically modified corn effective in preventing the disease. (AnimalNet - AP)

>  US   Scientists reported in Nature Biotechnology they had produced cloned calves that made human antibodies in their blood. The achievement could eventually pave the way to using cattle as a source for gamma globulins, which are currently derived from human blood but are in short supply. The four calves were created by a venture of Hematech and Kirin Brewery, the Japanese beer maker that is involved in pharmaceuticals. Gamma globulin, is a mixture of human antibodies given to people with immune system deficiencies or as treatment for infections. A cow carrying complete human antibody genes could simply be immunized against the target disease agent and human antibodies could be collected in a couple of months.  Scientists have long been able to make genetically engineered livestock that produce a human protein in their milk, and several companies are trying to produce drugs this way, but no drugs have reached the market. The FDA has approved for human consumption several biotechnology drugs produced in Chinese hamster cells. (AnimalNet - New York Times/AP)

>  AUSTRALIA   Australia’s Beef CRC has successfully commercialized the Genestar DNA test for marbling, and now has a gene marker test for beef tenderness in the pre-commercialization phase.  The research group has also identified potential gene markers for tick and worm resistance, net feed intake and retail beef yield. (Wattnet Meatnews)

>  ITALY   According to a report in the online Proceedings of the National Academy of Sciences, scientists in Italy treated tissue samples taken from patients with vCJD and cows with BSE with the drug tetracycline. When the prions were exposed to the antibiotic, they became less resistant to digestion by enzymes. The greater the dose, the less resistant the prions became to enzymatic digestion and, therefore, removal. The researchers then tested tetracycline in hamsters with scrapie. When the prions were exposed to tetracycline before injection, the hamsters did not become sick until significantly later and lived longer. Antibiotics could also have a role in preventing infections. When the researchers mixed tetracycline into a highly diluted solution containing scrapie, one third of the hamsters exposed to the solution did not develop the disease. (Food Systems Insider – Reuters Health)

>  US   Agricultural Research Service scientists have developed an imaging system that can detect contamination on food surfaces.  Using a real-time imaging system in the processing plant, researchers at ARS' Poultry Processing and Meat Quality Research Unit were able to detect feces and recently ingested materials on animal carcasses. This detection system could more reliably detect potential food safety contaminants, thus reducing processing delays and saving processors money. Because the system is expected to work with other animal carcasses, a broad patent application has been filed covering a wide range of poultry and meat products. An online prototype is currently under development and can scan about 140 birds per minute, approximating the processing speeds used in U.S. poultry plants. (Drovers Alert)

>  US   Green Circle Organics has teamed up with Chef Nora Pouillon to introduce the first 100% Certified Organic frozen beef burgers.  Free of antibiotics, pesticides, hormones and GMOs, the burgers are made from a crossbreed of Wagyu and Angus cattle grazed on Certified Organic pastures and fed only Certified Organic Feed. (Meating Place)

>  US   The speeDVD Co. announced the release of its "Digital Daycare For Pets" DVD, a DVD shot entirely from a dog's perspective. The DVD includes over two hours of material programmed to auto-play in a random, non-stop continuous loop. The DVD includes many fun 'doggy' favorite activities including: going for a walk, chasing the ball, taking a ride in the truck, attacking the vacuum cleaner, going to the doggy park and many other activities plus additional hidden clips only the pet will know about. (Business Wire)

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AGRIBUSINESS NEWS

>  The EPA accused Pioneer Hi-Bred International and Mycogen Seeds of failing to properly protect against “gene pollution” while growing genetically modified crops.  The allegations are sure to add to the growing criticism of how genetically modified crops are grown and regulated in the United States.  Pioneer is accused of planting genetically modified corn too close to other crops and at an unapproved location; Mycogen Seeds, a unit of Dow AgroSciences LLC, is accused of failing to plant trees around its experimental plot to create a windbreak to inhibit pollen spread. The EPA also asserts that the company planted the wrong kind of unmodified corn as a buffer zone around the experimental crop. (AP)

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BRAKKE CONSULTING VIEWPOINT

This weeks newsletter provided some reports and information related to questions we are often asked by our clients.  The first is "Will PetMed Express be successful?” The financial report by the company indicated that sales increased dramatically over prior year and that their customer base is growing rapidly.  It appears that they are becoming a bigger factor than we had anticipated. However, even at the new sales level they are a minor player in the total market. 

The quarterly report for the parent company of Premium Standard Farms reflects the difficulty with the current prices of animal protein.  This type of report will be common for the next few months for those companies involved in the production of animal protein.  In addition, the increased prices of feed grains due to the drought in much of the US will put even more pressure on the bottom line.  Yes, the low price of animal protein will impact the companies selling products to the producer.

What is the future for improved beef food production companies?  The announced closing of Future Beef is an indicator of the difficulties involved in changing a commodity market place to a specialty market. It is probably evolutionary rather than revolutionary.  We still believe that Branded Higher Quality Consistent Beef will be a big winner with consumers in the future.  When this will become commonplace, and at what cost, is still an evolving issue.

Have a great weekend

[Ron Brakke]

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