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Published August 20, 2013, 01:47 PM

Merck suspends sales of growth additive

U.S. drugmaker Merck & Co says it is suspending sales of its Zilmax animal feed additive in the U.S. and Canada following concerns about animals showing signs of distress after use of the product, which is given to cattle to increase their weight before slaughter.

By: Theopolis Waters and Tom Polansek, Reuters

CHICAGO — U.S. drugmaker Merck & Co says it is suspending sales of its Zilmax animal feed additive in the U.S. and Canada following concerns about animals showing signs of distress after use of the product, which is given to cattle to increase their weight before slaughter.

Zilmax has been the focus of attention in the livestock industry since Tyson Foods Inc. announced last week it will no longer accept Zilmax-fed cattle for slaughter.

Chicago Mercantile Exchange cattle futures rose on expectations that a cutback in Zilmax use could trim the supply of beef beginning this fall, although producers said they did not expect major changes.

JBS USA recently presented a video from a JBS plant at a cattle industry conference showing cattle having difficulty walking after they were fed beta-agonist drugs, additives that speed weight gain in animals. Zilmax is the leading commercial brand of beta-agonist.

Merck says no safety issues had been discovered in 30 studies since the product was introduced in the United States in 2007.

Merck says it remains confident in the safety of the product, which had sales of $159 million last year in the U.S. and Canada. But the company adds it will conduct an audit of how it is used “from the feedyard to the packing plant.” The product is sold by Merck’s animal health unit.

Merck says its decision to suspend sales will allow the company time to implement its plan announced on Tuesday to establish study protocols, identify feeders and packers to participate in its audit while creating a third-party team to oversee the process and validate its results.

The U.S. Food and Drug Administration says it was working with Merck and the U.S. Department of Agriculture to gather information on Zilmax and determine if it poses a safety issue.

Health Canada says it’s keeping an eye on reports from the U.S. that a supplement designed to bulk up cattle before slaughter may be causing the animals lameness or difficulty in moving.

The Canadian health regulator says it has not received any reports of adverse reactions among cattle being fed with Zilmax in the Canadian marketplace, but it’s communicating with the makers of the drug to stay “apprised of the situation.”

Health Canada is also working with the U.S. Food and Drug Administration to “ensure a collaborative approach,” the agency says in an email.

Livestock analysts say they were surprised by Merck’s decision because the company’s earlier move to address concerns about Zilmax had not included a sales halt.

“They laid out a strategy in the last few days that did not include suspension,” says Jim Robb, director of the Livestock Marketing Information Center.

The halt in sales will not cause a major disruption in North American beef production if producers switch to Optaflexx, a less-potent growth promoter sold by Eli Lilly and Co’s Elanco animal health unit, Robb says.

Prices for CME live cattle to be delivered in late winter 2013 and spring 2014 had been down Friday morning before the Merck announcement and then rebounded after the news.

Investors bought based on a belief that cattle brought to slaughter without feeding on Zilmax would have lower body weight, resulting in less beef and higher prices, traders said.

One of Tyson’s rivals, Cargill Inc, the country’s third-largest meat producer, calls Merck’s decision to halt sales “prudent” and says it reflects a “thorough assessment of the situation.”

Under the microscope

The use of Zilmax drew increased scrutiny after Tyson on Aug. 7 said it would stop purchases of cattle fed the popular feed additive after some animals arrived at its packing plants having difficulty walking or moving.

Tyson, the country’s biggest meat processor, said it does not know what was behind the animals’ behavior, but company executives said animal health experts have suggested that the use of Zilmax may be a cause.

In response to Merck’s suspension of Zilmax, Tyson spokesman Gary Mickelson said: “We appreciate Merck’s decision and will continue to monitor this issue. We’ll also continue to seek input from our Animal Well-Being Advisory Panel as well as other independent animal health and welfare experts.”

Merck defends product

Following Tyson’s decision to stop buying cattle fed with Zilmax, Merck defended its product. The drug company says tests have proven that Zilmax is safe. Merck also says it was working with Tyson to resolve questions about the drug.

The halt of Zilmax sales may translate into a 1 percent drop in U.S. beef production, says Rich Nelson, chief strategist for commodities brokerage firm Allendale Inc.

Feedlots will shift to rival additive Optaflexx from Zilmax because they still want to add weight to their animals, Nelson says.

Optaflexx is less effective at adding weight to animals than Zilmax, according to producers.

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