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Cutting Edge Companies: Neogen by Heidi Vanni From the December 2010 issue of ValuesThis column highlights companies in the business of providing solutions to social and environmental challenges. Featured companies are typically held in the Small Cap Innovations portfolios offered to Walden clients.
On a rainy Sunday morning, I walked into my favorite diner, slid into a booth, and opened the menu. “What can I get you?” the waitress asked. “Hmmmm…” I said. “I’d like two eggs, scrambled, with Salmonella please.”
As far-fetched as this breakfast order sounds, thousands of people did, in fact, eat eggs contaminated with Salmonella bacteria this summer and hundreds were sickened. The massive egg recall by Wright County Egg has shed light on the complexity and dangers that lie within the modern industrial farm system. Cramped conditions for food animals, whether beef, poultry, or swine, create a breeding ground for bacterial contamination and other disease. As the United States continues to shift from locally produced food to consumption from the global food supply chain, the need for robust food safety testing has never been more important.
Founded in 1982, Neogen Corporation develops and manufactures a diverse line of products dedicated to food and animal safety. Neogen offers rapid diagnostic test kits used to detect foodborne bacteria, mycotoxins (i.e., mold by-products), food allergens, genetic plant modifications, animal drug residues, plant diseases, and sanitation concerns in human food and animal feed. Compared to legacy testing methods like Petri dishes, Neogen’s diagnostic test kits are less expensive, easier to use, faster, and more accurate, and the depth of the company’s food safety product line is unsurpassed in the industry. Neogen believes it has the best and most rapid test available for the detection of Salmonella in eggs.
According to the U.S. Centers for Disease Control and Prevention, one in four U.S. residents suffers from food poisoning every year (76 million reported cases). Of these, 325,000 people are hospitalized and 5,000 die, representing an annual cost to the health care system in excess of $150 billion. Two key factors–namely a shift toward more stringent government regulation and increased corporate liability concerns–are poised to affect the food safety industry dramatically. And Neogen may be a beneficiary. The Food Safety Enhancement Act (S. 510) passed the House of Representatives in July 2009 and received approval from the Senate on November 30, 2010. The bill mandates testing for food pathogens, drug residues, and food allergens, representing the most sweeping change to food safety regulation in more than 50 years. Additional regulatory tailwinds come from the Food and Drug Administration (new regulations on Salmonella contamination in shelled eggs) and the United States Department of Agriculture (draft guidelines on controlling E. coli bacteria and Campylobacter bacteria).
Farm conditions and trends warrant more food testing at the point of origin. Neogen, a company that excels at helping to identify safety concerns in the vast and changing landscape of food and animal safety, stands to benefit from increased testing requirements.
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