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Animal Health News & Notes for April 25, 2008 4/25/2008

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Brakke Consulting's
Animal Health News & Notes for April 25, 2008

Copyright © Brakke Consulting, Inc.
Editor: Lynn Fondon, DVM, MBA
earnings news
Fort Dodge
Maple Leaf Foods
Nestle Purina PetCare
VCA Antech
other news
Pfizer (vaccine center)
Pfizer (Schering products acquisition)
Pain Management Products for Dogs and Cats - 2008
Pain management is one of the leading topics in veterinary medicine today. While pain management products for dogs and cats represented a minor part of the pharmaceuticals market little more than a decade ago, they now represent a substantial market segment with potential still to be tapped. 
Brakke Consulting's annual report on Pain Management Products for Dogs and Cats includes such valuable information as:
  - overview of acute and chronic pain in small animals
  - review of products currently used to treat pain in dogs and cats
  - estimates of US sales and prices of leading pain management products
  - pain management products in development
  - new pain management products
  - review of nutritional supplements used for chronic pain
  - review of therapeutic diets for joint care
  - 2008 survey of small animal veterinarians regarding use of pain management products
Pain Management Products for Dogs and Cats 2008 is now available for a purchase price of $5,500. Questions about the study can be answered by project manager Lynn Fondon, DVM, MBA at 972-243-4033, or email Lfondon@brakkeconsulting.com
> Merck reported financial results for the first quarter of 2008.  Sales for joint venture Merial were $734 million, an increase of 8% compared to the comparable period in the prior year.  (company press release) 
> Schering-Plough Corporation reported financial results for the first quarter of 2008.  Animal Health sales totaled $723 million in the quarter. Included in the first quarter of 2008 were net sales of $454 million related to Intervet. Sales benefited from solid growth in all geographic areas, coupled with a positive impact from foreign currency exchange rates. (company press release) 
> Eli Lilly reported financial results for the first quarter of 2008.  Worldwide sales of animal health division Elanco were $235 million, an increase of 9% compared with the first quarter of 2007. US sales grew 16%, driven by the acquisition of Ivy Animal Health, Inc. and the launch of Comfortis, a new companion animal product. Sales outside the US grew 4%, driven primarily by the favorable impact of exchange rates. (company press release) 
> Nestle reported results for the first quarter of 2008.  PetCare sales were CHF 2.9 billion ($2.9 billion), representing organic growth of 10% and real internal growth of 4%. (company press release)
> Wyeth reported results for the 2008 first quarter ended March 31, 2008. Net revenue for Fort Dodge Animal Health in the quarter was flat at $277 million.  Higher sales of poultry and livestock products were offset by lower sales of equine and companion animal products. Excluding the favorable impact of foreign exchange, worldwide Animal Health net revenue decreased 6% for the 2008 first quarter. (company website) 
> IDEXX Laboratories, Inc. reported that revenue for the first quarter of 2008 increased 18% to $249 million from $211 million for the first quarter of 2007. Companion Animal Group ("CAG") revenue for the first quarter of 2008 increased 17% to $204 million from $173 million for the first quarter of 2007. (PRNewswire)
> VCA Antech, Inc. reported financial results for the first quarter ended March 31, 2008.  Revenue increased 16% to a first quarter record of $308 million.  Net income increased 10% to $31.2 million. Animal hospital revenue in the first quarter increased 21% to $226 million driven by acquisitions, including Healthy Pet Corp. acquired on June 1, 2007, and same-store revenue growth of 1.9%. (company press release)
> Maple Leaf Foods Inc. reported results for the three months ended March 31, 2008.  The company reported a net loss of ($10,000) compared with earnings of $10.5 million in the year-earlier period.   Quarterly sales were down 9% over last year, falling to $1.2 billion. (Meating Place)
> Schering-Plough announced two agreements to divest animal health products in Europe in connection with conditions set forth by the European Commission as part of Schering-Plough's acquisition of Intervet from Akzo Nobel N.V.  In two separate agreements, Pfizer and Virbac S.A. will acquire 12 product franchises. Pfizer will acquire Schering-Plough's parasiticide, swine E. coli vaccine, ruminant clostridia and neonatal vaccines, equine influenza vaccine, anti-inflammatory, companion animal/insulin and companion animal/euthanasia, and rabies vaccine franchises. Virbac will acquire products from Schering-Plough's endocrine, mastitis and sulphonamide franchises. The transactions are subject to certain closing conditions, including regulatory approval by the European Commission.  (company press release)
> Pfizer announced the opening of a new development center for veterinary vaccines which will accelerate the development of new animal health products.  It is Pfizer's first pilot plant in Europe for developing animal vaccines. (Business Wire) 
> Alpharma announced the availability of ActiShield, a broad-spectrum pyrethroid pesticide for use by poultry and livestock producers. ActiShield (bifenthrin) is a liquid-concentrate product that couples long-duration potency against pests with an unprecedented safety profile for animals and humans. (PoultrySite)
> Alltech announced the opening of what the company is calling "the world's first" nutrigenomics research facility at the firm's corporate headquarters. The new lab will study the effect of nutrition on gene expression in tissues of various animal species. Alltech's new Center for Animal Nutrigenomics and Applied Animal Nutrition also will house the company's research initiatives in functional glycomics, solid state fermentation, rumen function and ecology, aquaculture, organic trace minerals, and biorefining. (Feedstuffs) 
> ANOxA Corp announced it has completed proof of concept studies of EIPHISOL at New Bolton Center at the University Of Pennsylvania School Of Veterinary Medicine.  The unique patented treatment has shown significant potential for reducing the severity of Exercised Induced Pulmonary Hemorrhage (EIPH). ANOxA is currently working with the regulatory agencies to ultimately obtain FDA approval for the product. (company press release) 
> GlobalVetlink announced USDA approval of a security enhancement for electronic signatures. The Internet-based animal health system developed by GlobalVetLink allows veterinarians and diagnostic laboratories to more efficiently and accurately complete the regulatory requirements for interstate animal movement and EIA (Coggins) testing.  The GVL system also allows state animal health authorities to track and regulate animal movement nationally, in real-time. (CattleNetwork) 
> MSC (Milk Specialties Company) announced that its Nutritional Ingredients business has acquired the Mountain Lake whey processing facility from Protient Inc. The acquisition is part of MSC's long term strategy to consolidate its position as a leading processor of specialty proteins for nutrition. Financial terms were not disclosed. (company press release)
Brakke Consulting is pleased to announce the publication of an all-new report on the US market for small package generic products.  The report is an in-depth look at a part of the market that intrigues many industry participants.  The report includes such information as:
- the origin and evolution of animal health generics
- estimated market size and characteristics
- generics use in large vs. small animals
- profiles of generics manufacturers
The report also includes surveys of several hundred large and small animal veterinarians and producers, probing their understanding and perception of generic products, current and expected future usage.
The report is now available and can be purchased for $8,500. For more information, contact project manager Dr. Lynn Fondon at lfondon@brakkeconsulting.com
> US - LEGISLATION   The "Safeguarding America's Pharmaceuticals Act" was introduced in the US House of Representatives.  The Act seeks to improve the FDA's ability to secure the nation's drug and healthcare supply chain. The bill, if passed, would create a single set of federal laws for distributors to comply with, as well as providing for a unique Standard Numerical Identifier and standardized licensing requirements for wholesaler distributors. (AVDA)
> JAPAN - BEEF IMPORTS  Japan has suspended beef imports from a National Beef Packing Co. plant following an apparent shipping error.  One of 700 cartons shipped by the plant contained short loin that included a portion of the vertebral column, a specified risk material prohibited by Japanese protocols. A Japanese official was quoted in media reports as saying it was the first SRM case since the resumption of US beef imports in July, 2006. (Meating Place)
> US - POULTRY AD RULING   A federal judge issued a preliminary injunction barring Tyson Foods from advertising that its poultry products don't contain antibiotics thought to lead to drug resistance in humans/  The ruling was a victory for Perdue Farms and Sanderson Farms, who are suing to stop the advertisements on the basis that the ads are misleading because none of the companies use those types of drugs and shoppers could be led to think that companies other than Tyson are using them. (AP)
It appears that the uncertainty in the consumer and agricultural marketplace is starting to have an impact on the leading companies' revenue, according to those reporting first quarter results.  If it were not for consolidation revenues from mergers, the gross sales picture would be even more pessimistic. Is this likely to change in future quarters in 2008?  Not likely in our opinion. The dark clouds on the horizon for the industry are increased feed grain prices, gas at $3.50-plus per gallon and tightening credit issues, to name a few.
Inflationary pressures are everywhere in the economy and that has both political parties ducking the hard issues of resolving some of the problems that they’ve helped to create.  We encourage you to remind your local congressmen and senators that sometimes the best-laid plans by government in resolving issues so that they can be re-elected are not the best solutions in the long term. 
I recently completed some interviews with some long-time friends that are reasonably large swine producers.  It’s not a pretty sight in the swine industry and a number of them are dramatically reducing placements for the balance of the year. When there are no animals there it’s hard to sell products to them. Cattlemen are facing similar pressures; a recent article in the Dallas Morning News joked that "the oil business is so good, [Texans] can afford to be in the cattle business again."
The good news is that consumers will continue to spend on their pets for health care (albeit maybe at a reduced level) and will continue to consume increasing amounts of animal protein (probably lower value cuts or types). 
Have a great weekend!!
Ron Brakke
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