Zoetis(US:ZTS)2025-11-04 14:32Financial Data and Key Metrics Changes - The company reported $2.4 billion in revenue for Q3 2025, growing 1% on a reported basis and 4% on an organic operational basis, primarily driven by price, as volume was flat [19][5][15] - Adjusted net income was $754 million, reflecting a 5% increase on a reported basis and a 9% increase on an organic operational basis [19][30] - Adjusted gross margins improved to 71.6%, growing 90 basis points on a reported basis [29][30] Business Line Data and Key Metrics Changes - The global companion animal portfolio generated $1.7 billion in revenue, growing 2% operationally, with the parasiticide franchise contributing $356 million (7% growth) and key dermatology posting $469 million (3% growth) [20][19] - The osteoarthritis (OA) pain franchise declined 11% operationally to $138 million, with Librela sales down 15% globally [20][10] - The global livestock portfolio grew 10% on an organic operational basis, contributing $725 million in revenue [20][13] Market Data and Key Metrics Changes - In the U.S., revenue decreased 2% on a reported basis but increased 3% on an organic operational basis, with companion animal flat and livestock growing 14% [21][19] - International revenue grew 3% on a reported basis and 6% on an organic operational basis, with companion animal growing 4% and livestock growing 8% [26][19] Company Strategy and Development Direction - The company is focused on a multi-pronged strategy to return Librela to growth, including increasing awareness of OA as a serious disease and deepening education with specialists and veterinarians [10][11] - The company is evolving its U.S. commercial structure to enhance agility and efficiency, aiming for a leaner field organization [12][13] - The company anticipates a major new market approval each year for the next several years, highlighting its robust innovation pipeline [11][16] Management's Comments on Operating Environment and Future Outlook - Management noted that therapeutic visits have been declining, impacting new patient starts, and emphasized the importance of addressing this trend for future growth [36][66] - The company remains confident in its long-term growth trajectory, supported by a diversified portfolio and strong market fundamentals [15][31] - Management updated full-year guidance, revising organic operational revenue growth to a range of 5.5%-6.5% [15][30] Other Important Information - The company announced the retirement of Rob Polzer, head of R&D, and the appointment of Kevin Esch as his successor [17][16] - The company is investing in manufacturing excellence to support its expanding portfolio, including a new biologics facility [12][11] Q&A Session Summary Question: What changed interquarterly after raising guidance last quarter? - Management noted anticipated deceleration in the second half of the year, competitive launch dynamics, and macro impacts on U.S. clinics as key factors [35][36] Question: How is the competitive landscape affecting the dermatology category? - Management acknowledged competitive pressures but emphasized that patient share gains from competitors have been limited [42][66] Question: What is the outlook for therapeutic visits and when might recovery occur? - Management indicated that therapeutic visits have been declining, impacting patient starts, and recovery timing remains uncertain [66][63] Question: How durable are the growth drivers in livestock? - Management expressed confidence in the sustainability of livestock growth driven by increased protein demand and urbanization trends [72][71] Question: What lessons have been learned from Librela's launch for upcoming products? - Management plans to apply learnings from Librela to new launches, focusing on education and awareness of OA [58][57]