Zoetis (ZTS) 46th Annual William Blair Growth Stock Conference summary

Business overview and market trends

• Focus on advancing animal care through innovation, global scaling, and customer-centric delivery, with over $9.5 billion in annual revenue and 75+ years of expertise.

• Broad portfolio spans diagnostics, medicines, vaccines, biodevices, and genetic testing, serving eight core species; companion animals account for 70% of business, livestock 30%.

• Innovation pipeline includes 18 current blockbusters and potential for 12 more, targeting unmet needs in renal, oncology, cardiology, obesity, and anxiety.

• Capital allocation prioritizes R&D and manufacturing investment, business development, and consistent shareholder returns via dividends and buybacks.

Macro environment and competitive landscape

• Animal health market has historically grown 4%-6% annually, but recent quarters show consumer weakness, with pet owners delaying clinic visits and extending dosage intervals.

• Adverse macro conditions and increased competition, especially in dermatology and parasiticides, are impacting demand and pricing.

• U.S. clinic visits for pruritic conditions declined about 2% in the quarter; parasiticide share remains stable with sequential improvement.

• Secular tailwinds like the human-animal bond and rising pet care engagement remain strong, supporting long-term growth.

Financial performance and outlook

• Q1 results were impacted by the combination of competitive launches and inventory adjustments by distributors and retailers.

• No significant improvement expected in macro conditions or competition intensity for the remainder of the year; easier year-over-year comparisons anticipated in the second half.

• OA pain product Librela showed stabilization and modest sequential growth; easier comps expected to support higher growth rates in the back half.