Beef Processors Uneasy About Zilmax Return


(Dow Jones) — A sweeping effort by Merck & Co. to revive a livestock drug it pulled from the U.S. market last year is stalling amid resistance from the nation's largest beef processors.

Merck for months has been preparing to conduct a large-scale study this summer to demonstrate the safety of its Zilmax product. The feed additive was widely used to promote weight gain in U.S. cattle before Merck suspended sales in August 2013 because of concerns in the beef industry that the drug made it difficult for some animals to walk.

The pharmaceutical company has said it wants to test Zilmax on about 250,000 cattle, in what Merck says would be the most-extensive randomized, controlled study of any drug fed to cattle. Though the cattle involved would represent less than 1{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} of the annual U.S. cattle slaughter, they would be valued at about $500 million at current prices for slaughter-ready cattle and produce roughly 200 million pounds of beef.

But Merck has delayed plans to begin its field evaluation because of continued unease among Cargill Inc., JBS SA and other meatpackers about animal welfare, as well as some packers' reluctance to try to market the beef that would be produced during the research, according to people familiar with the matter.

Merck confirmed the study has encountered setbacks. “This has become more time-intensive than we anticipated,” said David Yates, a Merck manager who helped design the planned study. He declined to discuss details of negotiations with meatpackers, but said: “We continue to work on the process to make sure we have alignment with all parties.”

The research requires the support of feedlot operators, which fatten cattle for slaughter, and the meatpackers that buy and process them into steaks and ground beef. The three-largest U.S. beef processors– Tyson Foods Inc., Brazil-based JBS and Cargill–account for about 60{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} of total production, according to industry estimates. JBS also operates one of the world's largest feedlot operations in the U.S.

Mr. Yates declined to specify a new target time period to begin testing Zilmax on cattle.

Zilmax was approved by the U.S. Food and Drug Administration in 2006 and had been fed to more than 25 million cattle before Merck suspended sales of the drug in the U.S. and Canada.

The decision came after Tyson, the largest U.S. meat processor by sales, told cattle suppliers it would halt purchases of animals fed with the drug because it had observed ambulatory problems with cattle.

Health experts in the beef industry reported last summer that some animals arriving at packing plants showed unusual signs of distress, with some walking stiffly and others barely able to move.

The FDA considers beef from Zilmax-fed cattle safe for human consumption.

Tyson declined to discuss Merck's planned study. But a spokesman for the Springdale, Ark., company said its position on whether to buy Zilmax-fed cattle “has not changed.”

Zilmax, or zilpaterol, is a beta-agonist, a class of drugs originally designed to treat asthma in humans. Rival Optaflexx, produced by Eli Lilly & Co., is made from a different beta-agonist, ractopamine, and is considered less potent.

Feedlots mix the drugs into cattle feed during the final weeks before slaughter to promote the growth of lean muscle instead of fat. Zilmax can add roughly 2{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48}–or 24 to 33 pounds–to an animal's final weight.

Cattle feeders increasingly adopted the supplements in the past decade as prices for corn, the main ingredient in cattle feed, rose to record highs. Grain prices have fallen sharply over the past year thanks to large harvests.

Around 70{ba1edae1e6da4446a8482f505d60d3b8e379ff6dedafe596d9ba4611a4e33a48} of U.S. cattle sold to slaughterhouses were fed either Zilmax or Optaflexx when Merck mothballed its product, according to Merck. Sales for Zilmax in the U.S. and Canada totaled $159 million in 2012.

Whitehouse Station, N.J.-based Merck hoped to launch its field evaluation this summer in about 50 feedlots across several states. The company in May held a meeting to train the first wave of more than 30 livestock-industry employees and animal-science researchers to evaluate the mobility of cattle fed with Zilmax, as well as cattle in a control group.

Mr. Yates said Merck hoped to recruit one slaughterhouse for every five to 15 participating feedlots. He said the resulting data would provide the industry with “a lot of additional information and potential avenues for further study to help ensure we're putting safe and well-cared-for animals into the food system.”

Mr. Yates said the company continues to train scientists and others in the beef industry on its study's protocols.

People close to the meatpackers said despite interest in the technology, the companies are concerned about the potential to expose cattle to harm during the study. The companies also worry large restaurant chains and food retailers may be reluctant to buy beef produced during the research because of the potential for public scrutiny, they said.

Some big beef buyers agreed the issue was sensitive.

“We don't want to fiddle with it as long as there's a known animal-welfare issue,” said Craig Wilson, vice president and general merchandise manager at Costco Wholesale Corp. “Costco is not going to agree to take the meat until we've got the right assurances in place.”

A spokeswoman for Burger King Worldwide Inc. said the fast-food chain “will carefully evaluate this product before making any decisions about future use.”

Meatpackers could seek to sell the beef outside the U.S., but options are scant. Many markets effectively prohibit Zilmax use, including China, Russia and the European Union.

One possibility is South Korea, which said last year it planned to ease restrictions on Zilmax-fed beef this summer. But it recently delayed those plans by at least a month. The country was the fifth-largest foreign buyer of U.S. beef last year, importing more than 200 million pounds.

During Zilmax's absence, U.S. feedlot operators increasingly have turned to Optaflexx, from Eli Lilly's animal-health unit, Elanco, to hasten weight-gain in their animals, according to people in the beef industry. A spokeswoman for Elanco said it doesn't break out sales data for Optaflexx, but continues to see “strong interest” in the product.

Meanwhile, other drug makers are eyeing the market. Zoetis Inc., an animal-health company that Pfizer Inc. spun off last year, plans to introduce its own growth-promoting drug for cattle later this year. Zoetis won FDA approval last summer for two ractopamine products, Engain for pigs and Actogain for cattle.

Some cattle producers have abandoned such drugs, reflecting public concern over risks to human and animal health from overuse of pharmaceuticals in meat production, said John Nalivka, president of Sterling Marketing Inc., an agricultural-advisory firm in Vale, Ore.

“There's a definite advantage in the feedlot to using beta-agonists,” Mr. Nalivka said. “But you have to sit and weigh: 'Does the benefit outweigh the cost of public perception?' I think that's where the equation is at.”


Source:  Dow Jones

Posted by Haylie Shipp


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