Zoetis Inc at Piper Sandler Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Westenberg - Piper Sandler Companies - Analyst : So you've been the top innovator in the space. You have basically entire derm market or next-generation derm product market, entirety of mAb and pain. And if your growth rate sustains, probably you could be the top in parasiticides. Now I know I'm buttering you up, but the reality is that it's really hard to stay on top when you're on top. So how do you sustain above-market growth with being the market in such dominant categories?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. So you had a great year in derm and parasiticides. Now 2023 did have some interesting price and stocking dynamics. So anything we can take into next year that we should be happy about? And maybe some examples would be market positions or any learning from DTC advertising strategy that can help benefit you next year from that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 4:30PM, ZTS.N - Zoetis Inc at Piper Sandler Healthcare Conference

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. And as we move into 2025, you had Librela, I think, launched at the end of '23. maybe some destocking dynamics in Q1. You've had chewables. As we move into next year, any unusual comps to think about or stocking comps to think about as we move into 2025?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. So going back to the derm franchise and the defensibility of that, we're ranking the different factors, you mentioned 30% is now chewable. The length of time in the market, you've been in there for 11 years and then the complementary with the portfolio, obviously, you have ability to do exclusive relationships because you have the entirety of the portfolio. Though what do you think is the actual -- if you were to rank those and which ones should keep Apoquel continue to grow, what would you pick first, second, third, et cetera? And then just in general, like there is a new entrant that is going to use price. And do you think that's going to be effective or the advantages that you have will be effective against maybe a price strategy?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got it. Sticking with the theme of price, and I'm going to go -- this is my own math. So if I screw this up, it's my fault. I think CPI has been -- or veterinary CPI has definitely been up more than general CPI. But I think groceries, I think it's been 28% since pre-pandemic, but veterinary care is up over 40%. As we look at these best-selling drugs, I mean, they're premium products, they deserve to get the price increases. But how are you -- how confident are you in terms of the consumer continuing to take price across veterinary care?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. Let's move on to Librela. It was flat sequentially in the U.S. and your numbers in Q3 were really strong. So the stock took a step back there. Now -- in terms of concerns on Librela flat sequentially, can you give us maybe some other examples, including Librela ex U.S., where you maybe didn't see flat sequential -- or where you didn't see some type of flat sequential growth? I mean you've been in the international markets for years now. What's the seasonality look like in Librela?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got it. You actually -- long answer, and you actually answered the next 2, so it's okay...

Question: David Westenberg - Piper Sandler Companies - Analyst : And then -- yes, no one to hear me talk. Just in terms of concerns on the label change, I mean, do you have a time estimate when a label change might occur? And is there any concern here? I know the neurological lens label on the isoxazoline class, but you still see a major shift to isoxazolines. Any impact from any kind of label change?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. So next one is a little aggressive, so I'll start off with a little bit of softness here. When I picked up coverage a long time ago, I think you were 40% companion animal, 60% production animal. And I think it's shifted like something like 65% companion animal these days, which means great innovation across animal -- companion animal. Now maybe really -- I mean, in terms of production animal, I don't believe you had any new blockbusters. So do you anticipate building any new categories in Farm Animal? Or is this purely a kind of a product extension kind of market? And give a little credit to your competitor, Elanco is using some of this environmental sustainability is like a new category. I mean, is there any new categories outside of maybe that?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. Well, speaking of innovation here, in your Investor Day in 2023, you discussed oncology, chronic kidney disease, cardiovascular health, half-life extension technology. I don't think since then, you've discussed any of those new products for a while. So in 2025, do we get any pipeline updates? I'm not asking for specifics, but I'm asking for -- are we going to get in anticipation of...

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. Now I think you started a pretty large repurchase program. Is that the favorite capital deployment strategy right now? Or is dividends a higher priority?

Question: David Westenberg - Piper Sandler Companies - Analyst : Got you. 10 seconds left. You -- just what us what, 2, 3 years ago?

Question: David Westenberg - Piper Sandler Companies - Analyst : 3 years ago. What has surprised you the most on the positive side?