* Some new Optaflexx feeders put on waiting list-customers
* Cattle feeders switch additives after Merck pulls Zilmax
* Eli Lilly unit denies shortage of Optaflexx feed additive
By Tom Polansek and P.J. Huffstutter
CHICAGO, Aug 23 Merck & Co's decision to suspend
sales of its Zilmax cattle feed additive has caused such a surge
in demand for rival Eli Lilly & Co's Optaflexx that
Lilly is telling some new customers it cannot immediately supply
them, customers told Reuters.
Zilmax became the focus of attention in the livestock
industry after Tyson Foods Inc said on Aug. 7 that it
will stop buying Zilmax-fed cattle for slaughter beginning next
month. Tyson, the biggest U.S. meat processor, said it was
concerned about Zilmax potentially causing health problems for
Merck announced on Aug. 16 it was temporarily
suspending sales of the product in the United States and Canada.
Optaflexx, sold by Lilly's Elanco Animal Health, and Zilmax
both belong to a family of drugs called beta-agonists, a class
of non-hormone growth promoters that have been deemed safe for
animals and humans by the U.S. Food and Drug Administration.
Both products are fed to cattle prior to slaughter to increase
weight by as much as 30 pounds of lean meat.
Elanco denied that its supply of Optaflexx is short of the
industry's current demand. The company is "managing the supply
over the next two weeks as we assess the long-term market
demand," company spokeswoman Colleen Parr Dekker told Reuters in
a statement on Friday.
Elanco last week told Reuters that its on-hand supply of
Optaflexx was sufficient to handle demand. That assessment was
focused on Tyson customers before the withdrawal announcement
from Merck, Elanco said on Friday.
Elanco declined to comment on how much demand for Optaflexx
has increased in recent days. The company does not publicly
break out sales figures for the additive.
Some new Elanco customers told Reuters they are being put on
a waiting list for Optaflexx due to limited supplies. Other new
customers are having their orders only partially filled, said
Tom Bejot, a feedlot manager in Ainsworth, Nebraska.
Existing customers said they are being assured that their
needs will continue to be filled by Elanco.
"For all their customers who have been using Optaflexx,
they're calling to see how much everybody needs," said Tom
Williams, manager of Chappell Feedlot in Nebraska.
Williams said an Elanco representative called his feedlot on
Thursday to find out how much Optaflexx its cattle are fed each
About 70 percent of cattle brought to slaughter in the
United States are fed beta-agonists, according to industry
estimates. Merck's Zilmax was the dominant beta-agonist for U.S.
cattle feeders, and last week Merck disclosed it had about $159
million in U.S. sales of Zilmax last year.
Merck has said no safety issues have been discovered in 30
studies since Zilmax was introduced in the United States in
Tight supplies of Optaflexx could temporarily pinch beef
production at some feedlots, said John Nalivka, an expert on
livestock and president of Sterling Marketing Inc. However,
there should be little impact on the nation's overall beef
supply, he said.
"We're not going to run out of beef," Nalivka said, adding
that feeders can adjust feed rations and take other steps to
control meat production.
Some cattle feeders who formerly used Zilmax said they are
frustrated that they are having trouble immediately ordering an
alternative. For many, the drugs have been a way to reduce some
of the economic pain caused by high costs for grain fed to
Bejot Feedlots in Nebraska, which feeds Optaflexx to some of
its 10,000 cattle, received a call on Thursday from an Elanco
sales representative who said supplies of the drug were
tightening, Tom Bejot said. According to Bejot, the
representative said Bejot would continue to receive Optaflexx
but that new customers will not be able to buy all they need.
"Guys that are switching don't get preferential treatment,
at least until Elanco catches up," said John Nelson, vice
president of commodities for Producers Livestock Marketing