Zoetis (ZTS) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Key business drivers and growth outlook

• Innovation and disciplined capital allocation drive sustained growth, with strong execution in new and legacy product categories.

• Companion animal segment leads with 16% growth in H1, while livestock grows 4%, aided by Argentina's contribution.

• Divestiture of the MFA business is expected to enhance long-term growth and margin profile.

• Operational growth guidance raised to 9%-11% for the year, outpacing long-term targets.

• Price increases, especially in innovative areas, contribute to growth, with 5% price realization expected for the year.

Product performance and innovation pipeline

• Librela achieves rapid U.S. clinic penetration (80%+), with strong reorder rates and sequential growth expected to continue.

• Solensia posts 69%-70% year-over-year growth, with increasing clinic visits and revenue, already surpassing $100 million in trailing 12-month sales.

• Long-acting monoclonal antibodies in derm and pain are set to launch in 1-2 years, aiming to improve compliance and expand market reach.

• New innovation targets include renal CKD, oncology, and cardiovascular, with plans to create new billion-dollar markets in the next 5-6 years.

• Diagnostics strategy focuses on disruptive platforms and companion diagnostics to support future product launches.

Market dynamics and channel strategy

• Online and alternative channels now represent 15% of U.S. companion animal revenues, up from 5% in 2019, with strong compliance and economics.

• Despite negative same-store visit trends, therapeutic and pain visits are up, and revenue per visit continues to rise, reflecting strong consumer demand.

• Direct demand generation is prioritized for diagnostics and broader portfolio, while distribution is leveraged for order fulfillment.

• Strong relationships with corporate and independent clinics are reinforced by innovative offerings and bundled solutions.