» 2002

Animal Health News & Notes for May 3, 2002 5/3/2002

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Brakke Consulting’s
Animal Health News & Notes for May 3, 2002

Copyright © Brakke Consulting, Inc.

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Company Earnings Releases

>  Aventis reported that sales for the first quarter 2002 for animal health division Merial rose 4% to 458 million euros ($400 million).  This figure includes Merial’s poultry genetics business.  (company website)

>  Alpharma reported that sales of its animal health division in the first quarter 2002 were $70.5 million compared to $118 million in 2001.  Operating income was $2.9 million in the first quarter compared to $34.7 million in 2001.  The first quarter of 2001 included $34.5 million in revenue and $20.9 million of operating income related to last year’s financial statement revision.  As expected, first quarter revenues and operating income were negatively impacted by a change in business practices, the effect of which is substantially complete.  Distributor inventory levels are approaching targeted levels.  (company website)

>  Virbac Corporation, the US division of Virbac S.A., reported record sales and operating income results for the first quarter ending March 31, 2002.  Net sales for the first quarter 2002 rose 6% to a record $15.9 million from $15.0 million for the 2001 corresponding quarter.  Excluding the effect of an accounting change, first quarter 2002 sales would have risen 20%. Strong sales for Virbac's veterinary products continued to drive growth.  Sales in the Consumer Brands Division were $4.5 million compared with $5.1 million in the prior-year quarter. Excluding the effect of the accounting change, Consumer Brands sales would have increased 6%, due to the success of recently launched dental products. (Business Wire)

>  Heska Corporation reported financial results for its first quarter 2002.  Total reported revenue was $10.2 million, compared with $10.9 million in 2001.  Revenues in the first quarter 2001 included a sponsored product development project that was completed in 2001.  Total product sales for the first quarter 2002 were $9.9 million, down from $10.3 million last year.  The decrease was attributable to lower sales at the company’s Diamond Animal Health subsidiary.  Net loss in the first quarter 2002 declined to ($3.9) million from ($4.6) million in 2001, a 15% improvement in the company’s bottom line results.

>  Embrex announced that first-quarter revenues for 2002 were $11.4 million, an increase of 5% over revenues of $10.8 million for the same period in 2001. First-quarter net income was $2.3 million, an increase of 10% over net income of $2.1 million for the same period in 2001. The company's first-quarter revenue increase was primarily attributable to an increase in non-operating other revenue and sales of Bursaplex in ovo bursal disease vaccine, which was up 19% over Bursaplex sales during the first quarter of 2001. (company website)

>  The Clorox Company announced that for its fiscal third quarter ended March, 31, 2002, the cat litter business experienced mixed results as record volumes of Fresh Step regular and silica-gel crystals cat litters were more than offset by volume declines of Scoop Away and minor brands. (Business Wire)


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Company News Releases

>  The Iams Company and ProScan International opened the Iams Pet Imaging Center in Vienna, Virginia in March 2002.  Iams stated that it believes that its entry into diagnostic care extends its relationship with pet owners, and supports the veterinarian.  The Center houses a $2 million-plus MRI unit for use in pets in the Washington, DC area.  ProScan is a minority partner in the venture and will provide technical expertise.  (Veterinary Practice News)

>  Heska Corporation announced that its Diamond Animal Health subsidiary has signed a long-term contract extension with AgriLabs, Diamond’s largest customer.  Under the terms of the new seven-year contract extension, AgriLabs’ right to exclusively market Diamond’s line of bovine vaccines has been extended through 2011.  Diamond has received an up-front licensing fee and other consideration to facilitate capital improvements in its manufacturing plant.  (company press release)

>  The Butler Company announced the completion of its purchase of DVM Manager practice management software manufacturer.  The acquisition will allow Butler to expand its service offerings for veterinarians.  According to Butler, DVM Manager is the third-largest provider of Windows-based veterinary practice management software.  DVM Manager had sales of over $2 million in 2001.  (Feedstuffs)

>  The Florida Board of Pharmacy disciplined PetMedExpress, Inc. and Savemax, Inc. for contracting veterinarians to write prescriptions without examining the animal, and dispensing drugs not approved by the FDA.  PetMedExpress was fined $40,000, admonished to pay investigation and prosecution costs of approximately $28,000, and placed on a three-year probationary period.  Savemax was doing business in the same building as PetMedExpress and according to prosecutors was set up to allow continued operation should PetMedExpress’ pharmacy license be revoked.  Savemax was ordered to move its business operations within 3 months, fined $5,000 plus prosecution costs of approximately $4,500, and ordered to perform 100 hours of community service in the form of providing free pharmaceutical services to be pre-approved by the Board.  (AVMA)

>  Smithfield Packing Company has become the first U.S. name to appear on fresh pork in Japan. Through its strategic partner, Sumitomo Corporation, Smithfield Packing has reached an agreement with Ito Yokado Co. Ltd., the second-largest food retail chain in Japan, to sell Smithfield branded fresh pork throughout the country in 181 stores.  The Ito Yokado Group is a major retailing force in Japan with sales of more than $23 billion. (PRNewswire)

>  The BAX system, a genetics-based screening method developed by DuPont Qualicon, has been adopted by the USDA Food Safety and Inspection Service (FSIS) to detect Listeria monocytogenes in the nation’s meat and poultry supply.  FSIS is now testing the BAX system with other pathogens, including Salmonella and Escherichia coli (E.coli) 0157:H7. The BAX system has been available since November 2000. (company press release)

>  Global Pet Products, Inc. is expanding distribution of its best-selling product lines, the PetPocket and PetCap, into Europe at the upcoming Interzoo 2002 Exhibition.   The product line was previously available only to pet industry buyers through USA trade shows. The carrier is suitable for pets such as dogs, cats, rabbits, ferrets and birds.  (company press release)


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BRAKKE CONSULTING, INC.
STRATEGIC PLANNING AND BENCHMARKING

Many companies have been spending a reasonable amount of time the past few weeks in reviewing their 3- and 5-year strategic plans.  This often starts with, and includes, a review of R&D projects.  This is then followed by a comparison of last year’s revenue estimates for the current product line versus strategic plan.

We want to remind our subscribers that Brakke Consulting can be an excellent resource for you in the strategic planning process.  Brakke Consulting’s past assistance in strategic planning has included:
- reviewing the revenue estimates and success probability of the product pipeline,
- reviewing the timing of various new product introductions versus probable timing of competitive introductions, and estimating the impact of various scenarios
- benchmarking various functions against company competitors in the larger markets, which might include sales force size, technical services, and/or R&D spend vs. sales

Brakke Consulting can provide insights and professional assistance that improves the likelihood of success.  Please contact us if you would like the benefit of professional assistance in any of these areas.

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

>  FRANCE   Classical swine fever (CSF) was diagnosed in France, in a wild boar that was found dead on 10 Apr 2002. The diagnosis was confirmed on April 22.  A zone was declared infected. In this zone, wild boars are being monitored, and pig farms are under strengthened veterinary inspection and are no longer authorized to trade in live pigs with other member states of the European Union.  The last outbreak of classical swine fever in domestic swine in France was reported to the OIE in February 1993. (AnimalNet – OIE)

>  US   A handful of sick foals in recent days have raised fears in Kentucky's billion-dollar horse industry of a return of the mystery illness that killed hundreds of foals last spring.  Until now, researchers had been optimistic that the illness known as Mare Reproductive Loss Syndrome would not reappear this spring.  Late Wednesday, however, the Kentucky Association of Equine Practitioners released a statement revealing that three sickly foals had been admitted to area veterinary hospitals in recent days.  All three had symptoms similar to those in foals stricken with the illness last year: respiratory failure, lack of strength and dehydration. The president of the American Association of Equine Practitioners reported that a handful of early term foal losses have been documented. (AP)

>  US   As part of a sweeping plan to fight chronic wasting disease (CWD), Wisconsin state officials hope to test 10,000 to 15,000 deer for the disease this fall, as well as ban feeding and baiting of deer statewide.  But testing for the diseases faces serious logistical problems, and there are questions about how the carcasses of tens of thousands of deer can be properly disposed of.  (AnimalNet – Milwaukee Journal Sentinel)

>  CANADA   Preliminary testing by the Canada's National Research Council has shown promise for an ozone sterilization process for prion inactivation, according to its manufacturer, Technologies of Sterilization with Ozone Inc.  This potential will represent significant advancement in the fight against Creutzfeld-Jakob Disease, and its BSE-related variant (vCJD). Recent testing with TSO3's sterilization process on an available animal prion model shows it to have the potential to inactivate infectious prions literally breaks the chemical bonds in the prion.  (Meating Place)

>  US   The US House-Senate Farm Bill Conference dropped the Puppy Protection Act (PPA) from the final Farm Bill, which passed the House this week.  The American Kennel Club opposed the PPA because no hearings were held, no debate occurred, and no opportunities were offered to discuss puppy protection issues and enforcement of the Animal Welfare Act.  The House-Senate Conference agreement comes as a result of the hard work by dog fanciers.  Responsible breeders nationwide let their members of Congress know that the PPA was bad public policy and would weaken the Animal Welfare Act rather than improve it.  The Conference Report now goes to the House and Senate for final approval before being presented to the President. (PRNewswire)

>  NETHERLANDS   Dutch pig farmers are being offered insurance to cover the financial consequences of an outbreak of Aujesky’s disease (pseudorabies).  The insurance plan, called Porcopol, was initiated following Germany’s decision to refuse to accept pigs vaccinated against pseudorabies after April 2003.  The Netherlands supplied almost 70% of the live pigs imported into Germany last year.  (Wattnet Pig Enews)

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Agribusiness News

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Brakke Consulting Viewpoint

The companies reporting financial results this week for the first quarter show how difficult it is becoming to post big sales gains in the current market.  But all show a better focus on the bottom line, proving that animal health can be a good business if managed carefully.
 
The other subject that remains in the news is food safety, particularly meat safety.  The branding of fresh pork in Japan is a step toward assuring the consumer of purity.  On the animal health side, it is no longer enough to contain disease or vaccinate for it.  On many fronts, in many countries the objective is to eliminate disease.  Herd culling is a fairly old and crude method to achieve this.  The standard is becoming disease-free livestock.  The challenge for animal health companies is to find a role in this new environment.


[John Mannhaupt, Dallas]

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