Treating Mastitis, Improving Your Bottom Line!

1

Mastitis is the most expensive disease facing the dairy industry. There are more than 9.2 million dairy cows in the United States1 and over one-third2 are affected by mastitis annually. The effects of mastitis results in approximately $2 billion in losses to the U.S. dairy industry annually, or the equivalent of 11% of total U.S. milk production3. Sixty percent of these losses, or $1.2 billion4, result from subclinical mastitis. Recent studies have shown, for each case of clinical mastitis in a herd there can be as many as 15-40 subclinical mastitis cases5. At the farm level, mastitis is costing

and treat for subclinical mastitis3

MastPro will keep dairy producers

The total number of U.S. dairy cattle operations has decreased, while herd size continues to increase. From 2001 to 2009, farms with herds greater than 500 head increased by 20% and dairy herds over 2,000 head have increased by 128% . As dairy farms grow in size, disease management becomes even more important.

higher performance and milk output, leading to record milk production . Dairy producers are more focused on improving herd health and genetic

1. The past decade has shown increased consumer awareness and interest in hormone (rBST) free milk. Because MastPro is produced from the all-natural protein Nisin, risk for food safety and antibiotics in the milk is not a concern.

swollen teats and thick, curdled discharge in the milk. Meanwhile, subclinical cases are harder to detect since there are no visual symptoms.

treatments for subclinical mastitis have been antibiotics, which are extremely costly because milk must be dumped during treatment. Therefore, dairy producers often decide not to treat subclinical mastitis.

This could all change, however, thanks to a revolutionary subclinical mastitis treatment from Heartland Animal Health (HAH). MastPro™ will be MastPro is not an antibiotic and

MastPro will be administered directly into the teat canal of the

MastPro’s

market. MastPro,

Our target market for MastPro is the progressive U.S. dairy producer located in dense dairy regions, including the Northeast, Midwest, and

rather seamlessly implement a MastPro treatment protocol for infected animals. Through our market research, HAH recognizes progressive dairy producers as early adopters of innovative products. They are willing to implement proactive approaches to eliminate subclinical mastitis, as

will not be selective of any particular herd size demographic. This will ensure we do not alienate any part of our market, however, the dollars

As with current products marketed by HAH, large dairy producers (500+ cows)

cows) purchase through local veterinary clinics.

Treatment X

Milk Dump

Treats Subclinical

* Market Share values are calculated for the entire dairy mastitis market.

As denoted in the table, there are few competitors in the subclinical mastitis treatment market. Spectramast, ToDay, and Amoxi-Mast are clinical mastitis treatments only but can be used off label per veterinary recommendation to treat subclinical mastitis.

2

Sales GoalYear 1 2 3

4% 9%Revenue Goal $1.5 M $2.2M $3.3M

STRENGTHS WEAKNESSES

consumption

priced product

is not cost effective because current antibody treatments require milk discard

cows applicable for treatment

OPPORTUNITIES THREATS

cell count, increase milk yield, and food safety concerns

identify the best solution

priced product

treatment offerings

1. Heartland Animal Health holds exclusive patented rights to the Nisin

2. Milk buyers will continue to offer incentives for milk with low somatic cell counts.3. will continue to grow.4. on investment.

Communication Goal90% brand awareness of the brand MastPro among target audience, by the end of year threeCustomer Satisfaction95% MastPro customer satisfaction, by the end of year three

When making purchasing decisions concerning animal health products, dairy producers look to veterinarians, feed dealers, nutritionists, key feed distributors, academia, and leading industry stakeholders for recommendations.

Treatment Market Share

Treatment Days Treatment Dumped Total Cost1 2 3 4 5 8

Heartland Animal Health xx x $0.00 $27.50

x x x x x $20.85 $90.78

Spectramast 32% x x x x x $93.24 $112.89

ToDay Fort Dodge Animal Health 25% xx $58.28 $65.94

Amoxi-Mast

Animal Health10% xx x $5.94 $58.28 $64.22

MastPro’s customers are progressive owners and/or operators of modern-day U.S. dairy operations. They are forward thinking, adopters of technology and have an attraction to new products that have proven results and show measureable return to their bottom line (MastPro

dairy producers commonly switch products looking for the best results. These producers range in age from 30 to 55 and typically have a college education from a two-year or four-year academic program.

When comparing competitor prices, a producer must consider the entire cost of treatment including the cost of dumped milk. As you can see below,

milk is included.

Product Position MastProimpacting the bottom line for producers.

Price: The suggested retail price for MastPro

Place: Heartland Animal Health is headquartered in Des Moines, Iowa. MastPro will be made available nationally. Our established national sales force will sell directly to large producers (500+ cows). Our remaining customers will be reached through veterinary clinics serviced by our sales force.

Promotional Strategies: An intensive promotional campaign will utilize several media outlets and focus on producer education, awareness, and understanding the MastPro advantages. To ensure we reach our desired target audience we will incorporate public relation events, trade shows, direct advertising, interactive soical media and an effective customer service plan in our marketing strategies.

Pre-Launch:within the animal health industry3. HAH will conduct MastPro Iowa State University, University of Wisconsin-Madison and Cornell University. The research data collected through these trials will be utilized throughout the product launch to educate producers on our revolutionary product.

Agricultural Media Summit:MastPro to numerous media channels. Editors and journalists of key media outlets will be encouraged to visit the HAH booth through teasers sent prior to the Summit. At our booth, members of the media will learn about the advantages of MastPro and will be given an invitation to join the

MastPro.

National Association for Farm Broadcasters (NAFB): With over 100 prominent agricultural radio broadcasters in attendance, HAH will introduce MastPro to farm broadcasters through similar strategy efforts used at the Agricultural Media Summit.

PROductive Tour: Further media education will play a vital role in promoting MastPro. This one-day on-farm tour will showcase MastPromedia with information on other current topics within the industry. Dairy producers will be on hand at the tour to share their MastPro stories with media.

Quality Assurance Awards:

National Dairy Scholars Program:

will help MastProScholarship winners will be publicized in industry publications, collegiate publications, and hometown newspapers.

World Dairy Expo:in Madison, WI, gives HAH the opportunity to roll out MastPro to a captive audience. A teaser sent out to producers prior to the show will attract them to our booth.

World Dairy Expo Breakout Sessions: Along with a booth at the industry tradeshow, HAH will also sponsor a breakout session for producers, who are interested in

introducing MastPro as a new treatment option with no milk discard.

World Ag Expo:

2010, 80% of attendees at the World Ag Expo traveled from the western U.S. dairy production states. HAH will have a booth at the expo with product information and demonstrations. A teaser sent out to producers prior to the show will attract them to our booth.

3

“MastPro provides dairy producers with an all-natural, effective and easy to use treatment for subclinical mastitis with zero milk discard period.”

An aggressive magazine advertising campaign will focus on educating targeted producers on the importance of treating for subclinical mastitis.

“Farmers really DO cry over spilt milk!” will include direct mailing, magazine advertisements, advertorials, and radio spots in key dairy media

Direct Mail: In addition to pre-launch trial information, HAH will create brand recognition among the industry through a direct mail campaign promoting the launch of MastPro at the World Dairy Expo in October 2012. This campaign will also generate visits to our existing website and blog sites.

Traditional Magazine Advertising: Magazine advertisement is a crucial component in reaching our target audience. Ads will be placed in Hoards Dairyman, Dairy Today, and Dairy Herd Management.

Advertorials: HAH recognizes the opportunity to educate producers in the form of advertorials. These paid editorials will run in key dairy magazines in conjuction with paid advertising. With published research and testimonials about MastPro, our message will be delivered.

Radio: our radio broadcast promotional plan.

HAH will utilize its existing sales team to provide technical support to large producers, while also promoting our products

MastPro.

Social Media:we establish our presence on social media sites including Twitter and Facebook, and blog sites including the World Dairy Diary and the National

YouTube: and treating subclinical mastitis, along with the advantages of MastPro.

Website: and MastProadvertising. The HAH website will include research trial data, subclinical mastitis treatment information, customer testimonials, upcoming dairy promotional events, industry news and instructional videos through

Online Magazine Advertising: Along with advertising in selected magazines, HAH will also utilize online magazine websites to advertise with interactive banner ads. Ads will be placed on Hoards Dairyman, Dairy Today, and Dairy Herd Management websites.

Search Engine Advertisements: HAH will purchase top advertising space placement on the leading

subclinical mastitis, and mastitis milk dumping period, MastPro’s featured advertisement will lead viewers to our product website for additional information.

Our sales team is dedicated to offering the highest level of customer service to our producers. HAH will utilize our existing online support team

4

Year 1 Year 2 Year 3 Magazines Full page Full page

4 timesFull page 2 times

SALES GOALS CUSTOMER SATISFACTION COMMUNICATIONGOALS Achieve 9% market share Achieve 95% customer satisfaction Attain 90% brand awereness

Means of Analysis to sales goals.

- Survey sampling of target market, and moni-tor online impact of website and social media

Goals Exceeded

Expand production facilities and increase direct sales efforts.

Develop customer testimonials to spotlight in promotional materials and on social media sites.

Utilize data in promotion materials to strengthen current marketing avenues.

Goals Less than Expected

Direct focus on sales efforts to target consumer (>500 cows) and initiate product distributor relationship if penetration under 5% threshold

Expand customer support and devote more time to evaluation of customer concerns

Explore different advertising outlets and re-evaluate overall advertising campaign.

Year 1 2 3

0% 1023%Return on Marketing 0% 45%Sa

les

Year 1 Year 2 Year 3

Units Sold 164,000 246,000 369,000

Total Revenue $1,503,880 $2,255,820 $3,383,730

Cost of Goods Sold $574,000 $861,000 $1,291,500

Net Sales $929,880 $1,394,820 $2,092,230

Expe

nses

Sales Salary $668,750 $688,813 $709,475

Handhelp Testers $540,000 0 0

Website $20,000 $10,000 $10,000

Google Serach Terms $10,000 $10,000 $10,000

Video Development $15,000 $10,000 $5,000

Direct Mailing (Incl. Ad Devel.) $37,000 $22,500 $22,500

Magazine Ad Development $10,000 $10,000 $10,000

Magazine Advertising $209,986 $139,988 $69,994

Radio Advertising $13,750 $13,750 $13,750

Monitoring and Measuring $20,000 $20,000 $20,000

Public Relations $30,400 $17,000 $22,000

Tradeshows $42,000 $32,000 $32,000

Univerisity Research Project $90,000 0 0

Total Expenses $1,706,886 $974,051 $924,719

Net Profit ($777,006) $420,770 $1,177,511

5

Monitoring and measuring efforts have been put into place by HAH to evaluate MastPro’s product performance relative to pre-established business goals. HAH has created contingency planning to evaluate performance in regards to sales goals, customer satisfaction and communication goals.

a dashboard, including measurement of the tonality of comments being made regarding MastPro and HAH. The web

The MastProcompetitors, MastPro

MastPro, “Treating Mastitis, Improving Your Bottom Line!”

SOURCES(1)United States Department of Agriculture – Economic Research Service (USDA ERS)(2)University of Illinois Extension – Illini DairyNet(3)Foundation Agricounsel Research Study – U.S. Dairy Mastitis Market

Direct Mailings Year 1 Year 2 Year 3 3 2 2

(800)3 2 2

MastPro Sales Force*On-Farm Reps 20

10Tech Reps 5

MastPro.

Bethany OlsonDarrin RahnAmber SmithAbby WebbEllie Weiss Ben Zelle

Zach BossElizabeth Burns-Thompson

Dacia Dykstra

Andy EdsonEmily Flory

Abby GooderBritney Heim

Alicia Humphrey Brittney Jurgemeyer