Zoetis (ZTS) Jefferies London Healthcare Conference 2024 summary

Financial performance and growth drivers

• Achieved third consecutive quarter of double-digit growth, with Q3 revenue up 14% and adjusted net income up 15%.

• Growth was broad-based across key franchises: OA pain, dermatology (derm), and Simparica Trio, with livestock up 11%.

• Companion animal segment grew 15%, driven by approximately two-thirds volume and one-third price.

• Price increases contributed 6% to overall growth, with volume at 8%; excluding hyperinflationary Argentina, growth was balanced at 5% price and 5% volume.

• Guidance for 2024 was raised multiple times, now at 10%-11% operational growth, reflecting strong execution.

Franchise and product performance

• Dermatology franchise (derm) delivered 16% growth, with Apoquel and Cytopoint benefiting from increased education, DTC campaigns, and new chewable formats.

• Apoquel Chewable adoption is rising, surpassing 50% in Europe and 30% in the U.S. by Q3.

• Parasiticides, led by Simparica Trio, grew 30%, driven by share gains from collars/OTC and new puppy prescriptions.

• OA pain segment, especially Librela, is on track for $1 billion in sales, with U.S. launch metrics exceeding expectations.

• Livestock segment grew 11%, outperforming the typical 2%-4% market growth, aided by price and operational adjustments.

Market trends and strategic outlook

• Education and increased pet owner affluence are expanding the addressable market for chronic pet conditions.

• Pandemic-era pet ownership is maturing, leading to more chronic conditions and clinic visits.

• Competitive dynamics are expected to drive further market expansion, especially in derm and parasiticides.

• The divestiture of the medicated feed additive (MFA) business is expected to be accretive to growth and margins.

• Price realization is expected to remain at or slightly above historical trends (2%-3%), excluding hyperinflationary markets.