Zoetis Inc. · NYSE:ZTS
Zoetis — 41st Annual J.P. Morgan Healthcare Conference (January 2023)
24 slides from Zoetis's conference presentation, Jan 9, 2023
Slide 1: Leadership, Innovation and Growth in Animal Health
Leadership, Innovation and Growth in Animal Health Kristin Peck | Chief Executive Officer
Slide 2: Forward-Looking Statements; Non-GAAP Financial Information
Forward-Looking Statements This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospects, future operating or financial performance; future guidance, future operating models, disruptions in our global supply chain; R&D c
Slide 3: The World's Leading Animal Health Company
The World’s Leading Animal Health Company Nurturing the world and humankind by advancing animal care Providing: $8.0- • Medicines ~$45B • Vaccines $8.075B total addressable Animal Health market2 • Diagnostics 2022 estimated revenue1 • Technologies Serving: • Veterinarians 7-8% 15 Estimated Blockbust
Slide 4: Key Takeaways
Key 01 Fundamental drivers of Animal Health remain solid and sustainable Takeaways Five factors position Market leadership built on diverse, durable and Zoetis for success 02 innovation-driven portfolio and future growth Financial strength supporting investments in 03 future growth and profitability
Slide 5: Animal Health is a Growing and Resilient Industry
Animal Health is a Growing and Resilient Industry Steady and predictable growth despite economic headwinds APPROXIMATELY Core Animal Health Operational Growth 10% $45B total addressable 1 6% 5% 7% 6% 4% 5% market 4%1 4% Medicines 2% Vaccines 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Diagnost
Slide 6: Animal Health is Different than Human Health
Animal Health is Different than Human Health Sector’s unique dynamics and benefits provide differentiated value Direct access to Self-pay model Cost-effective R&D Breadth of species decision makers and markets 6 J.P. Morgan Healthcare Conference | January 2023
Slide 7: Healthy Animals Meeting Protein Demand
Healthy Animals Meeting Protein Demand The global population is growing, leading to increased demand for animal protein sources • Diverse portfolio across markets and therapeutic areas to serve wide range of species Our ultimate goal is • Nearly 2 billion more mouths to feed by to enable animals to
Slide 8: The Human-Animal Bond
The Human-Animal Bond Pet owners are prioritizing health and wellness of their animals • Gen-Z and Millennials are fueling the humanization of pets • High income households often have more than one pet and are more willing to spend during a down economy 86% of pet owners would pay • When faced with
Slide 9: Veterinary Clinic Dynamics
Veterinary Clinic Clinic Revenue Dynamics $12 B $11 B $10 B $9 B U.S. vet clinic revenue and spend per $8 B visit steadily increasing, while visits have declined recently Spend per Visit • Solid vet clinic growth drivers saw spike $170 $160 in 2021 due to pandemic, but normalizing to $150 $140 pre-p
Slide 10: Diverse, Durable and Innovative Portfolio
Diverse, 7 Durable and therapeutic 8 core species areas Innovative Portfolio Diversity across 15 1 ~30 2 geographies, species blockbusters year average market life and therapeutic areas of key brands in portfolio drives steady performance ~300 >2,000 product lines new products and lifecycle innovati
Slide 11: World-Leading Growth Franchises
World-Leading Growth Franchises Petcare innovations in dermatology, parasiticides and pain differentiate Zoetis Dermatology Parasiticides Pain • $1.25B market in 20211 • $6B+ pet market in 20211 • Significant unmet need • Market grew 23% operationally in • Market grew 13% operationally per year • >$
Slide 12: World Leader in Animal Health
World Leader in Animal Health1 By Species By Product Category By Geography Market Leader in Species High Growth Franchise Representing ~90% of Areas3 Our Portfolio by Revenue3 Other Pharma2 #1 North America #1 Companion Animal #1 Anti-Infectives #1 Dermatology #1 Latin America #1 Cattle #1 Medicated
Slide 13: Investing for Growth
Investing for Growth Financial strength to continue investing in areas that support future growth and value creation • Our top priority investment is R&D, with more than $500M spent in 2021 • Continued investments in supply network, Direct-To-Consumer digital campaigns, and sustainability • Targeted
Slide 14: Five Key Growth Drivers
Five Key Growth Drivers Companion animal parasiticides Key dermatology portfolio in 2023 Osteoarthritis (OA) pain Global diagnostics Growth in emerging markets 14 J.P. Morgan Healthcare Conference | January 2023
Slide 15: 10-Year Reflections
10-Year Reflections A track record of value creation and above-market performance 2013 Current Zoetis Market Cap $16 billion1 ~$70 billion1 Zoetis Revenue $4.6 billion $8-$8.075 billion2 Revenue Split: Livestock vs. Companion Animal 64% / 36%3 39% / 61%3 Operating Margins 24%3 38%3 Average Revenue p
Slide 16: Delivering Above-Market Operational Revenue Growth
Delivering Above-Market Operational Revenue Growth 15% Operational revenue growth1 vs. market2 Market Revenue Growth Zoetis Revenue Growth 10% 8% 8%3 8%3 8%3 7-8%4 5% 6% 4% 4%2 2% 2017 2018 2019 2020 2021 2022 ESTIMATED 1 Operational revenue growth (a non-GAAP financial measure) excludes the impact
Slide 17: Margin Expansion and Adjusted Net Income Growth Faster than Revenue
Margin Expansion and Adjusted Net Income Growth Faster than Revenue Adjusted net income and adjusted EBIT margin1 Adjusted Net Income ($USD M) Adjusted EBIT Margin 38% 38%2 37% 37% $2,240 $2,270-$2,3102 2,400 44% 35% 34% 39% $1,755 $1,844 1,900 34% $1,525 29% 1,400 $1,185 24% 19% 900 14% 400 9% 4% -
Slide 18: Our Long-Term Value Proposition
Our Long-Term Value Proposition Since our IPO in 2013, we have remained committed to the four tenets of our value proposition Grow revenue Grow adjusted Drive growth through Return excess capital in line with net income investments in to shareholders or faster than faster than innovation, R&D and t
Slide 19: Key Takeaways
Key 01 Fundamental drivers of Animal Health remain solid and sustainable Takeaways Market leadership built on diverse, durable and 02 innovation-driven portfolio Financial strength supporting investments in 03 future growth and profitability Strategically positioned to expand in large and 04 growing
Slide 20: Thank You
THANK YOU 20
Slide 21: Reconciliation Of Reported Growth To Non-GAAP Financial Measures
Reconciliation Of Reported Growth To Non-GAAP Financial Measures Foreign Dollars in millions 2021 2020 Change Exchange Operational1 Revenue by Product Category Key Dermatology (Apoquel and Cytopoint) $1,162 $925 26% 2% 24% Parasiticides (small animal) 1,326 909 46% 1% 45% 1 Operational growth (a non
Slide 22: Reconciliation Of Reported Revenue To Non-GAAP Financial Measures
Reconciliation Of Reported Revenue To Non-GAAP Financial Measures Organic Change From Operational Operational Dollars in millions Revenue Prior Year Foreign Exchange Growth1 Acquisitions2 Growth3 2017 $5,307 9% 1% 8% 0% 8% 2018 $5,825 10% —% 10% 2% 8% 2019 $6,260 7% (3)% 10% 2% 8% 2020 $6,675 7% (2)
Slide 23: Reconciliation Of GAAP Reported To Non-GAAP Adjusted Information
Reconciliation Of GAAP Reported To Non-GAAP Adjusted Information Dollars in millions 2017 2018 2019 2020 2021 Net Income attributable to Zoetis1 $864 $1,428 $1,500 $1,638 $2,037 Purchase Accounting Adjustments2 51 119 156 142 136 Acquisition-Related Costs3 7 50 36 19 10 Certain Significant Items4 26
Slide 24: Reconciliation Of Adjusted Net Income To Adjusted EBIT
Reconciliation Of Adjusted Net Income To Adjusted EBIT Dollars in millions 2017 2018 2019 2020 2021 Adjusted Net Income attributable to Zoetis1 $1,185 $1,525 $1,755 $1,844 $2,240 Interest Expense2 175 206 223 231 224 Interest Income2 (13) (31) (37) (12) (6) Income Taxes2 465 351 390 413 511 Adjusted
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