U.S. drugmaker Merck & Co said on Friday it is temporarily suspending sales of its Zilmax animal feed additive in the United States and Canada following concerns about 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.
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Reuters reported earlier this week that a second major meat packer, JBS USA, at a cattle industry conference had presented a video from a JBS plant 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 said its decision 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.
Merck said on Friday it remains confident in the safety of the product, which had sales of $159 million last year in the United States and Canada. But the company added 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.
Also on Friday, the U.S. Food and Drug Administration said 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.
Livestock analysts said 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," said 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 said.
"It's up in the air and it depends on the producers' response," he said. "That's unfolding even as we speak."
The use of Zilmax drew increased scrutiny after Tyson said on August 7 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 that animal health experts have suggested that the use of Zilmax may be a cause.
A spokesman for Tyson was not immediately available to comment on Friday.
Following Tyson's decision to stop buying cattle fed with Zilmax, Merck defended its product. The drug company said in a statement on Friday that tests have proven that Zilmax is safe. Merck also said it was working with Tyson to resolve questions about the drug.
"Perhaps now Merck's got some data in their files somewhere where they realize maybe this is a problem," said Rich Nelson, chief strategist for commodities brokerage firm Allendale Inc.
Merck shares were down 0.7 percent at $47.65 on Friday afternoon on the New York Stock Exchange.
The halt of Zilmax sales may translate into a 1 percent drop in U.S. beef production, Nelson said.
Feedlots will shift to rival additive Optaflexx from Zilmax because they still want to add weight to their animals, Nelson said.
Optaflexx is less effective at adding weight to animals than Zilmax, according to producers.
"We're not going to see feedlots go from Zilmax down to nothing," Nelson said.
(Additional reporting by Ransdell Pierson in New York; editing by Gerald E. McCormick, David Greising and Matthew Lewis)