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] - Adjusted net income was $754 million, reflecting a 5% increase on a reported basis and a 9% increase on an organic operational basis [19][5] - Adjusted gross margins improved to 71.6%, growing 90 basis points on a reported basis [29] 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][5] - The osteoarthritis (OA) pain franchise declined 11% operationally to $138 million, with Librela sales down 15% globally [10][20] - 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 by 2% on a reported basis but increased by 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 livestock segment is expected to continue demonstrating above-market growth, driven by rising protein consumption and urbanization trends [14][72] 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 these visits for growth [35][46] - The company anticipates a return to growth in 2026, particularly for Librela, as signs of stabilization are observed [36][70] - The guidance for full-year revenue has been revised to a range of $9.4 billion to $9.475 billion, reflecting a more measured view of macro and operational trends [30][15] Other Important Information - The company announced the retirement of Rob Polzer, head of R&D, and the appointment of Kevin Esch as his successor [16][17] - The company is excited about the upcoming launches of Linivi and Portela, which are expected to expand the market for OA pain management [11][58] 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][64] Question: What are the expectations for livestock growth moving forward? - Management expressed confidence in the sustainability of livestock growth drivers, citing increased demand for protein and urbanization trends [72][71]