Animal Health News & Notes for January 21, 2000

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Brakke Consulting’s
Animal Health News & Notes for January 21, 2000
Copyright © Brakke Consulting, Inc.
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Company Earnings Releases
 Pfizer reported that 1999 year-end sales for the Animal Health Group were $1,345 million, a 2% increase over 1998.  4th quarter 1999 sales of Animal Health increased by 8% to $417 million.  Exceptional sales performances of companion-animal products were led by the launch of Revolution, approved in the U.S. in July.  Sales of Rimadyl continue to show strong growth. Partially offsetting the strong performance of the companion-animal business was continuing weakness in the livestock market in the U.S. and Europe.  Sales of virginiamycin, an antibiotic for poultry, cattle and swine, were adversely affected by the decision of the European Commission to ban certain antibiotic feed additives, including virginiamycin, in the European Union after June 30, 1999. (PRNewswire)
 ABAXIS, Inc. reported results for its third fiscal quarter ended 12/31/99.  Revenues increased 109% to $6.5 million compared with revenues of $3.1 million for the same quarter last year.  The Company reported a net income of $172,000, making this its first profitable quarter. (PRNewswire)

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Company News Releases
 Synbiotics Corp. announced that it has defeated an attempt by HESKA to dismiss their patent infringement lawsuit.  On Jan. 11, 2000 the United States District Court Southern District of California issued an order denying HESKA’s motion for partial summary judgement seeking a determination that their heartworm products do not infringe Synbiotics patent 4,789,631. (BW HealthWire)
 Heska Corporation responded to a recent press release by Synbiotics Corporation regarding the litigation brought by Synbiotics, which claims that Heska’s feline and canine heartworm diagnostic products infringe one of their patents.  Heska has and shall continue to pursue its defenses that it has not infringed Synbiotics’ patent and that the patent is invalid on a number of statutory grounds.  Ron Hendrick, CFO of Heska commented, “Although we believe our motion had merit, we are not surprised by the judge’s ruling, as courts do not routinely grant summary judgment.  We remain confident that at the appropriate time, a jury will confirm Heska’s belief that our heartworm diagnostic products do not infringe Synbiotics’ patent.  We also remain pleased with the sales of these products in the marketplace.” (PRNewswire)
 BISSELL, the home and floor care product experts, and pet nutrition leader Ralston Purina recently signed an agreement to co-brand certain pet care products.  The partnership will allow each company to strengthen its corporate position and, ultimately, boost sales. Under the agreement, the Ralston Purina logo will appear on select BISSELL products.  The co-branded products also will include a “recommended by Purina” seal of approval.  Furthermore, BISSELL will advertise its pet-related line of products via Ralston Purina’s Web site, include “in-pack” coupons in selected Purina pet food packages and execute a direct mail campaign with Ralston Purina customers. (PRNewswire)
 ABAXIS, Inc announced that they have entered into a strategic alliance with DVM Manager Software. Through this agreement both the VetScan Chemistry Analyzer and VetScan HMT Hematology Analyzer will interface with DVM Manager veterinary practice management software. In addition, the companies have agreed to establish a promotional relationship within the U.S. veterinary market. (PRNewswire)
 Alpharma has received a USDA license to market its cattle ringworm vaccine, Ringvac Bovis LTF-130, in the US.  The vaccine is already approved and used in a number of European countries. (Animal Pharm)
 Under a partnership between The Iams Company and the American Zoo and Aquarium Association (AZA), a national membership association representing 181 accredited zoos and aquariums, seven top zoos across the United States will feed Iams’ Eukanuba Cat Food to select big cats during the year 2000. Each participating zoo will designate one or more official Eukanuba Big Cats, who will be fed Eukanuba Cat Food to demonstrate the results that can be attained by feeding the food to both big and small felines. For all the big cats involved, Eukanuba Cat Food will complement or replace their usual fare of raw, frozen or fresh meat. Beyond providing free food for the selected big cats, The Iams Company has donated $21,000 to AZA to further the group’s cat conservation and education programs. (PRNewswire)
 Warner-Lambert held talks with Procter & Gamble to gauge interest in a possible three-way deal that would involve P&G buying both the drugmaker and American Home Products, The Wall Street Journal reported. A deal was far from certain, and the level of P&G’s interest was unclear, the newspaper said, citing sources familiar with the talks. It was unclear if talks were continuing.  Warner-Lambert is angling to get a higher price from Pfizer, whose bid is valued at about $77.8 billion, the Journal reported. (Wall Street Journal)
 American Home Products Corp. is reviving plans to sell its agricultural-chemicals unit, people familiar with the situation said. The American Cyanamid unit, which makes insecticides, weedkillers and fertilizers, could fetch $1.5 billion to $2 billion, analysts said. American Home paid about $9.7 billion for American Cyanamid in 1994. The fifth-largest U.S. drugmaker had planned to sell Cyanamid so it could focus on its more profitable drug business. The company changed course in November, when it began talks on a $56 billion merger with Warner-Lambert Co., which said Thursday it will consider rival Pfizer Inc.’s $79 billion offer. (Bloomberg News)
 ALLPETS.COM announced that, according to Nielson/Net ratings, its community members stay on its web site significantly longer than any of its competitors, making it the “stickiest” pet e-commerce site.  Users to the ALLPETS.COM web site spent an average of 21 minutes browsing the web site. (PRNewswire)
 Leading U.S. meatpacker IBP Inc. launched a cattle-buying program that will reward participating producers who provide the type of cattle needed for the company’s new brand-name beef products. The company expects to test market a new line of brand name, retail-ready beef this year.  Called Real Time Market Value (RTMV), the system uses a grid pricing system whereby cattle prices are determined by the amount of beef and the grade of beef on each carcass. Premiums will be awarded to producers who supply cattle with the desirable yields and grades suitable for the RTMV program. The RTMV premiums will be higher than under IBP’s traditional pricing system. (Reuters)
 Less than three months after commencing its Chapter 11 cases, Purina Mills, Inc. announced that it has filed its Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the District of Delaware.  A hearing on the adequacy of the Disclosure Statement is expected to occur in February.  After approval of the Disclosure Statement, Purina Mills will commence the solicitation of votes for approval of its Plan of Reorganization. (PRNewswire)

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Animal Health News
 Xetal, Inc. announced that it has contracted with APO Health, Inc. to offer its online medical community discounted veterinarian and dental supplies through its health portal Sickbay.com.  The agreement between the companies allows Sickbay.com to exclusively utilize APO Health’s online catalog of over 30,000 veterinarian and dental supplies in establishing an online marketplace for Dentists and Veterinarians. (PRNewswire)
 North Carolina State University has filed for a patent on a new cryptosporidiosis vaccine for cattle.  The recombinant vaccine can be administered to pregnant cows, which then pass the antibodies on to their calves after parturition in their milk.  A recent study showed that infected calves fed milk from vaccinated cows did not develop cryptosporidiosis. (DVM Newsmagazine)
 A rhesus monkey has been cloned by Oregon researchers, who are splitting early-stage embryos at the eight-cell stage and then implanting the pieces into mother animals. The study will appear Friday in the journal Science.  The goal is to produce identical monkeys that could be used to perfect new therapies for human disease.  The technique is not cloning in the sense of producing a genetic duplicate of an adult. (AP)
 Researchers at the University of Wisconsin have developed an alternative to the practice of adding antibiotics to feed to make poultry grow quickly: adding antibodies against appetite-suppressing neurotransmitters and a fatty acid first isolated from hamburgers.  The approach is based on antibodies that block the actions of appetite- suppressing neurotransmitter peptides, which are produced in the gut. The addition of the antibodies results in a 3-5% improvement in growth. Another feed additive, called conjugated linoleic acid (CLA), also increases growth rates in chickens, by blocking the chemical messengers that cause muscle wasting. DCV is preparing to launch the antibody additive, called Ovation, in the US and will be conducting European trials early this year. Meanwhile, Conlinco is planning to market CLA supplements. (New Scientist)
 VetCentric, a venture-backed Internet and e-business company focused on supporting the veterinary medical community, today announced the launch of www.VetCentric.net, a unique e- business management site for veterinary medicine. VetCentric offers a variety of e-business tools to veterinary practices, including the ability to easily build, edit, and maintain their own free Web sites, hosted under the veterinary practices’ own URLs. VetCentric will be rolling out additional services over the next few months to allow veterinarians to choose from a menu of optional services and tools, including the ability to select retail products to sell through their Web sites. (PRNewswire)
 A New York kennel is using a doggy cam to give pet owners a chance to check on their pets via the Internet.  The concept has reportedly been so successful, the firm plans to open three more Internet-connected kennels in New York, and others in Boston, London and Paris.  (Business Wire)

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Agribusiness News
 The government is putting new planting restrictions on genetically engineered corn to prevent insects from developing resistance to the toxin in the biotech crop. About 30 percent of the corn grown last year was Bt corn, named for the bacteria it contains to kill the European corn borer. The new restrictions, which the Environmental Protection Agency worked out with the industry, will require farmers to plant at least 20 percent conventional corn in most regions, and 50 percent in areas where cotton is grown. Seed companies also will be required to expand field monitoring for signs of where insect resistance may be occurring. The restrictions are in line with recommendations made by the National Corn Growers Association. (AP)
 Ag Services of America Inc. announced that they have upgraded Powerfarm.com with additional product pricing and the ability for farmers to purchase and finance crop protection chemicals.  This latest enhancement follows the recent introduction of seed pricing and further advances Powerfarm.com as one of the leading providers of name brand agriculture products on the Internet. (PRNewswire)
 Farm Journal, Safeguard Scientifics Inc and Madison Dearborn Partners have joined to form AgWeb.com, a business-to-business commerce and content website serving the agricultural marketplace.  AgWeb.com has over $100 million in contributions of cash and assets.  AgWeb.com’s president and CEO, Roger Randall, noted that nearly 60% of commercial farmers and ranchers currently use the internet.  The portal is scheduled to launch in late January.  (company press release)

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Brakke Consulting Viewpoint

Report on the North American Veterinary Conference

This meeting to start off the year 2000 could well have been called the NAVC.com meeting.  The exhibit halls, suites and back rooms were filled with new e-commerce companies with their twist on how this will change the veterinary industry.  In addition to the dozen or so sites already established, there must have been at least 30 companies looking for some way to be heard or become involved in e-commerce in the veterinary market.

We think it is obvious that there will not be room at the table for all of these companies.  We have difficulty in finding the value added or the cost savings that will occur for most of these new firms.  Yes, e-commerce will impact the animal health industry, but get ready for a big early “shake-out.”  Look closely at those you decide to partner with in this area, and be sure to make an informed choice instead of just jumping on the bandwagon to keep from being left behind.

The year 2000 flea product market share war in the US went into full swing at this meeting.  It is going to be a real war at all levels.

Report from the International Poultry Exposition-Atlanta

This meeting just keeps getting bigger and reflects the growth occurring in the poultry industry.  Every exhibit is focused on products that either add value to the product or is part of improving production efficiency.  The poultry industry needs to be complimented on taking costs out of their system and still providing a quality product to the consumer.

We think the industry is off to an improved 2000.  We wish each of you the best in achieving your goals.

[Ron Brakke]
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