» 2002

Animal Health News & Notes for May 10, 2002 5/10/2002

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Brakke Consulting’s
Animal Health News & Notes for May 10, 2002

Copyright © Brakke Consulting, Inc.

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Company Earnings Releases

>  Henry Schein's Medical Group, which serves primarily the physician office and alternate care markets, and now includes sales previously reported as Veterinary net sales, reported first quarter 2002 net sales of $231.4 million, an increase of 10.9% compared with combined Medical and Veterinary net sales in the prior-year first quarter. Sales to the Medical Group's core physician and alternate care business during the first quarter of 2002 increased 15.3%, and sales to the Group's Veterinary customers increased 7.8%. (Business Wire)

>  Church & Dwight Co., Inc. reported that for the first quarter 2002 the Lambert-Kay product lines, acquired from Carter-Wallace, essentially broke even.  Consumer products sales increased 15.9% to $212.8 million, primarily due to the addition of the Arrid antiperspirant and Lambert Kay pet care businesses. In deodorizing and pet care, the Company decided to discontinue the Lambert Kay hardware line acquired from Carter-Wallace, which accounted for about $2 million in first quarter sales. The Company, however, continues to regard pet care as a major growth area, and gained further distribution for Arm & Hammer Crystal Blend, a premium scoopable cat litter utilizing baking soda and silica crystals. (Business Wire)

>  Central Garden & Pet Company announced financial results for the fiscal second quarter ended March 30, 2002.  Net sales for the fiscal second quarter were $290.7 million, compared with $322.8 million in the comparable 2001 period. Net income for the fiscal second quarter was $10.9 million compared with net income of $2.7 million in the comparable 2001 quarter.  The improved earnings were driven primarily by a continuing strategic shift to higher margin proprietary garden and pet brands, as well as significant cost reductions in both business segments.  Net sales for the first half of fiscal 2002 were $501.4 million, compared with $534.9 million in the comparable 2001 period. Net income for the first half of fiscal 2002 was $9.4 million compared with a net loss of $1.8 million in the comparable 2001 period.  (Business Wire)

>  ABAXIS, Inc. reported revenues for its fourth fiscal quarter and twelve-month period ended March 31, 2002. For the fourth fiscal quarter, the Company reported revenues of $8.2 million, compared with revenues of $7.6 million for the comparable period last year. Net income for the quarter was $637,000 compared to a net loss of $154,000 for the same period last year. For the twelve-month period ended March 31, 2002, revenues were $30.6 million compared to $29.8 million for the same period last year. The Company reported net income of $1.3 million compared to net income of $188,000 for the same period last year. (company website)

>  ImmuCell Corporation announced the results of its operations for the three months ended March 31, 2002.  During the quarter ended March 31, 2002, total revenues increased by 27% to $1.9 million compared to the same period in 2001, while product sales increased by 21% to $1.8 million. Net income increased by 46% to $169,000 compared to net income of $116,000 for the same period in 2001.  The company noted that product sales were limited in the first quarter of 2001 due to the backlog of First Defense orders worth approximately $1,000,000 as of March 31, 2001, compared to no backlog of orders as of March 31, 2002 (company website)

>  OurPet's Company released results for its first quarter, ended March 31, 2002. Quarterly revenues of $935,867 declined by 23% versus $1,211,492 in the year-earlier period. Net income was a loss of $117,994, versus a loss of $76,242 in the first quarter of 2001. (Business Wire)

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Animal Agriculture Alliance Summit – Washington, DC

On Thursday, May 9, 100 leaders of the food animal and supplier industries attended a summit in Washington, D.C hosted by the Animal Agriculture Alliance to discuss potential industry guidelines on animal welfare and husbandry practices.  The Animal Agriculture Alliance is a consortium of producer and industry groups established a year ago, whose mission is to promote science-based production practices that protect the well-being of farm animals, and to build support for animal agriculture through public education.  The Alliance is working to develop agreement within the animal agriculture and food industries on animal welfare standards, certification programs, and third-party audits to assure adherence to industry guidelines.

At the summit, speakers from livestock and poultry organizations outlined the status of existing programs for each species.  A representative of the Federation of Animal Science Societies (FASS) spelled out work being done under contract to the Animal Agriculture Alliance to develop specific science-based criteria for animal welfare for all food animals.  Keynote speaker Rep. Charles Stenholm (D-Tex) identified animal welfare as one of the major issues facing agriculture from a government perspective, and encouraged the agricultural industry to help educate members of congress on its needs and ideas.  Following the summit, the Alliance intends to continue to build a coalition on animal welfare and public education with agriculture and food organizations. (Report filed by Brakke Consultant John Volk)

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Company News Releases

>  Coopers Brasil, the Brazilian subsidiary of Schering-Plough Animal Health, has acquired the veterinary division of Industris Quimica Farmaceutica Schering-Plough for an undisclosed amount.  The new combined business is estimated to have annual sales of approximately US$50 million, and would be the third largest animal health company in Brazil.  Then new company will be known as Schering-Plough Coopers.  IQFSP is largely locally owned, with Schering-Plough holding about 30% of the company. (Animal Pharm)

>  Heska Corporation announced that President and Chief Operating Officer Jim Fuller will be retiring effective June 2002.  His responsibilities will be assumed by Robert Grieve, Chairman and Chief Executive Officer.  (company press release)

>   Neogen Corporation announced the release of the world's first rapid test to detect ruminant by-products in animal feed ingredients. The test is designed for use by feed mills, beef, dairy and sheep producers, and regulatory agencies, to be sure feed ingredients have not been contaminated with ruminant by-product meal.  Neogen's new test, Agri-Screen for Ruminant Meat and Bone Meal (MBM) Strip Test, requires only simple sample preparation and 10 minutes to provide a clear result.  The test involves the boiling of a sample in an extraction solution, followed by the immersion of a dipstick test device. (company press release)

>  BASF has acquired the intellectual property rights to FORMI potassium diformate, a patented formic acid salt, from Hydro Formates, a subsidiary of Norsk Hydro. According to BASF, FORMI has been shown to have effective antimicrobial properties and can be used as an alternative to animal feed antibiotics. Last year, the EU approved the product for animal nutrition use in pigs. BASF will initially market FORMI in Europe. The company plans to seek approval for use of the product in animal nutrition in other countries and to expand sales around the globe. (Wattnet Poultry)

>  Danisco Animal Nutrition will be the new name for Finnfeeds, following Danisco’s reorganizing of its activities into eight new divisions. The result will be “a new Danisco, with a focus on food and feed ingredients, sweeteners and sugar,” said the company. Danisco’s animal nutrition activities began in the early 1980s and examined the development and use of enzymes and betaine in animal nutrition. (Wattnet Feed E-news)

>  ConAgra Beef is the first major beef processing company to adopt an innovative Thermal Organic Rinse process that claims to significantly improves control of pathogens during beef processing. The Thermal Organic Rinse (TOR) has been documented by independent university researchers as providing bacteria reduction of 99.99999% when used as part of the company's "multiple hurdle" intervention system.  Researchers at Colorado State University found that when TOR is used as a replacement for a cold organic acid rinse, both as a pre-evisceration application and as a final rinse, the process creates a one log (or 90%) improvement in effectiveness over the industry's previous standard of 99.9999% bacterial reduction. (Meating Place)

>  Ridley Inc. announced the sale of its European swine breeding and genetics business to JSR Newsham Limited (JSR), a U.K. based farming and swine genetics company. JSR purchased all shares of Cotswold Pig Development Co. Limited. This includes the U.K. operating entity and its German subsidiary.  Total consideration for the business will be $3.1 million, of which $1.1 million will be from the liquidation of residual assets. $1.1 million of the sale proceeds is a deferred payment due in three years with the balance on completion.  A total loss on divestiture is estimated at $6 million, including a loss on the book value of the business plus all the associated costs of the divestiture and write-down. Ridley Inc. will continue to own and operate its North American based Cotswold Swine Genetics business, which has been positioned to function independently of the divested operations in Europe.  (Business Wire)

>   MetaMorphix, Inc. announced that the U.S. Patent and Trademark Office has taken positive action on three patents directed to its Myostatin technology, a potent and highly specific regulator of skeletal muscle tissue. MetaMorphix was issued two patents including a novel method for treating Type II diabetes and an immunological method for increasing muscle growth in livestock. The Johns Hopkins School of Medicine also received a notice of allowance of claims for a patent involving a method of increasing skeletal muscle using Myostatin antibodies. MetaMorphix has exclusive worldwide rights for the Myostatin technology from The Johns Hopkins School of Medicine. (PRNewswire)

>  The owner of Buckeye Egg Farm, which produces 4% of the nation’s eggs, gave up control of its day-to-day operations a month after the state began revoking its permits.  The company is trying to find a buyer for the company.  Neighbors of the farm's sites in several counties have complained about the nuisances caused by manure from the 15.5 million hens.  The company has until May 22 to appeal.  An agriculture management company, Compliance Consulting Associates LLC, will run the farm until the sale. (AP)

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BRAKKE CONSULTING, INC.
COMMUNICATIONS SERVICES

One of the largest yearly investments most companies make is in Advertising and Promotion.  When was the last time you seriously evaluated your program?  Are you using the right mix of sales promotion, public relations, database marketing and advertising?  Do you have a customer retention program?  Are you taking advantage of global synergies?  Do you have an Internet strategy, or merely a web site?  Are your communications agencies performing?

Brakke Consulting has helped several companies evaluate and improve their marketing communications programs.  Senior Consultant John Volk has more than 25 years of experience in animal health advertising and public relations, and pioneered direct-to-consumer advertising for companion animal products. 

If you are interested in improving the return on your A&P investment, contact John Volk in the Chicago office of Brakke Consulting, (773) 327-4941, email: volkchi@aol.com

Brakke Consulting has the experience, insight, abilities, and contacts that provide our clients with the highest quality services in the animal health, pet, veterinary, and specialty chemicals markets.  Please contact any of our offices for a confidential consultation on our range of services.  Contact information for all offices are available on our website at www.brakkeconsulting.com http://www.brakkeconsulting.com and click on a starred location on the world map.

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Animal Health News

>  KOREA   South Korea confirmed that foot-and-mouth disease killed 280 pigs at a farm and the livestock disease may be spreading.  The announcement comes two years after a foot-and-mouth outbreak that devastated the country's pork exports.  Agriculture officials slaughtered 10,000 pigs at nearby farms this week and are restricting movements of livestock nationwide. They instructed the nation's pig and cattle farmers to fumigate their facilities. South Korean livestock traders have temporarily closed over half the total 106 livestock trading markets to contain the foot-and-mouth disease outbreak. (AnimalNet - Reuters)

>  JAPAN   In a related story, Japan's Agriculture Ministry reported that it was concerned about the possible spread of the disease during the May 31-June 30 World Cup soccer tournament, being co-hosted by Japan and South Korea.  Tens of thousands of soccer fans are expected to travel between the two countries during the World Cup, raising worries in Japan that the disease will be transmitted via food or tracked in on shoes.  Following the South Korean outbreak, Japan banned the import of pigs and other livestock and now requires visitors who spent time near contaminated South Korean farms to disinfect their shoes at ports of entry. (AP)

>  POLAND    Tests have confirmed the first case of BSE in Poland.  Veterinary services across the country have been put on alert.  The news is a blow to efforts to stop the disease reaching Poland; authorities here have previously banned beef and related products from countries where the disease has been discovered. (AnimalNet – AP)

>  US    The Georgia Department of Agriculture is taking steps to prevent the poultry disease, avian influenza (AI), from entering the state by enacting an emergency rule that will restrict the movement of poultry from states where AI is present. Earlier this year, the mild form of the disease was discovered in several states (Pennsylvania, Virginia and North Carolina) that ship live poultry and poultry products into Georgia.  Discovery of the disease in those states led to foreign countries banning the importation of their poultry.  The emergency rule is a list of requirements for testing, disinfecting and restricting poultry movements in order to prevent entry of the disease.  (PRNewswire)

>  US   The American Feed Industry Association (AFIA) and the China Feed Industry Association (CFIA) announced that they are close to signing an agreement of cooperation. Objectives of the proposed agreement include harmonizing international feed industry positions, collaborating on feed regulatory issues, establishing a dialogue on trade policies and providing new educational opportunities.  (Wattnet Feed E-news)

>  EUROPE   The European Standing Committee on the Food Chain and Animal Health has backed European Commission proposals over classical swine fever (CSF) in Germany, Luxembourg, France and Spain. The export of live pigs and porcine semen, ova and embryos from some areas bordering France, Germany and Luxembourg has been banned.  For Spain, the existing measures, applicable until 31 May, will be extended until 30 June. The proposals will now be adopted by the Commission. The situation will be reviewed at the next meeting of the Committee, scheduled for June 4 - 5.   (Wattnet Meatnews)

>  US   AAA has published the fourth edition of one of its most popular guidebooks, "Traveling With Your Pet, The AAA PetBook.”  "Traveling With Your Pet” lists more than 10,000 properties that welcome pets, about one-third of all lodgings rated by AAA.  Many of those properties that allow pets, also are enthusiastic about offering special amenities and benefits such as a pet sitting or walking service, treats and toys, a dog bed, pillows and sheets for the dog bed, a pet room-service menu, food and water dishes, or other extras. (Business Wire)

>   Researchers from Nestle Purina PetCare have demonstrated that a dog's median life span can be extended by 15%, nearly two years for the Labrador Retrievers in this study, by restricting diet to maintain ideal body condition.  The study findings are published in the current edition of the Journal of the American Veterinary Medical Association.  The 14-year "Life Span" study found that dogs that consumed 25 percent fewer calories than their littermates during their lifetimes maintained a lean or ideal body condition, resulting in longer life.  The "Life Span" study reveals the crucial role ideal body condition plays in health and longevity.  However, obesity remains the number one nutritional problem among dogs.  Studies have documented that at least 25% of dogs in the U.S. may be overweight.  (AnimalNet – company press release)
 
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Brakke Consulting Viewpoint

The summit of industry leaders held yesterday, and the work of the new Animal Agriculture Alliance to develop science-based guidelines for animal welfare, is the type of proactive program that will serve both producers and consumers well.  Our hats are off to Alliance president Bruce Andrews and his board of directors for their ambitious and visionary initiatives.  By fostering sound animal treatment at the production level, and building bridges to the food industry and consumers, animal agriculture can build stronger customer relationships and head off the burdensome and bureaucratic regulation which so often cripples industries.  We encourage you to support this exciting effort.

[John Volk, Chicago]

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