Zoetis Inc. · NYSE:ZTS
Zoetis — J.P. Morgan Healthcare Conference 2015
27 slides from Zoetis's conference presentation, January 2015
Slide 1: Zoetis: Leadership & Growth in Animal Health
Zoetis: Leadership & Growth in Animal Health Juan Ramón Alaix Chief Executive Officer 1
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, expectations regarding products, future use of cash and dividend payments, and other fut
Slide 3: Agenda
AGENDA GROWTH DRIVERS IN ANIMAL HEALTH PROVEN MARKET LEADERSHIP PATHWAY FOR GROWTH AND VALUE BUILDING SHAREHOLDER VALUE Q&A 3
Slide 4: Growth Drivers in Animal Health
GROWTH DRIVERS IN ANIMAL HEALTH 4
Slide 5: At the Core of a $100+ Billion Industry
AT THE CORE OF A $100+ BILLION INDUSTRY $23B GLOBAL ANIMAL HEALTH MARKET EXPECTED TO EXCEED $33B BY 20201 ANIMAL HEALTH COMPANION ANIMAL ~$23 Billion 1 LIVESTOCK • Nutrition • Pet Supplies • Medicines • Vaccines • Genetics • Vet Services • Food Safety • Medicated Feed • Diagnostics Additives • Herd
Slide 6: Powerful Trends Creating Demand
POWERFUL TRENDS CREATING DEMAND PREDICTABLE, SUSTAINABLE AND FUNDAMENTAL ECONOMIC DRIVERS POPULATION A GROWING INCREASING GROWTH MIDDLE CLASS URBANIZATION 6
Slide 7: Protein Needs Fuel Animal Health
PROTEIN NEEDS FUEL ANIMAL HEALTH LIMITS ON POPULATION & PRODUCTION DRIVE ANIMAL HEALTH SPEND PROJECTED GROWTH BY 2023 PROTEIN # OF ANIMALS1 PRODUCTION1 1.4% 1.5% Beef Cattle CAGR CAGR ANIMAL 1.2% 1.8% HEALTH 6% Dairy Cattle CAGR CAGR 1.3% 1.7% CAGR CAGR Pigs CAGR2 GLOBAL 2.1% 2.5% LIVESTOCK Poultry
Slide 8: Drivers of Pet Care Growth
DRIVERS OF PET CARE GROWTH DISTINCT TRENDS IN EMERGING VS. DEVELOPED MARKETS EMERGING DEVELOPED MARKETS MARKETS INCREASED PET OWNERSHIP HIGHER MEDICALIZATION (ROUTINE CARE) SPECIALTY CARE PRICE 5% 1 Vetnosis STORM from 2013-2018 CAGR1 GLOBAL COMPANION ANIMAL HEALTH 8
Slide 9: Proven Market Leadership
PROVEN MARKET LEADERSHIP 9
Slide 10: World Leader in Animal Health
MARKET OUR FOCUS PRESENCE IN 35% 120+ 1 300+ PRODUCT LINES COMPANION ANIMAL HEALTH* COUNTRIES WE PROVIDE COLLEAGUES AROUND THE WORLD MEDICINES 65% 9,800+ 1 VACCINES DIAGNOSTICS LIVESTOCK HEALTH* GENETICS WORLD LEADER 2 In discovery, development and manufacture of veterinary vaccines and medicines 1
Slide 11: Diverse Portfolio Provides Strength
DIVERSE PORTFOLIO PROVIDES STRENGTH PORTFOLIO DIVERSITY IS CRITICAL TO OUR FINANCIAL RESULTS REVENUE REVENUE BY REVENUE BY REVENUE BY BY SPECIES1 THERAPEUTIC AREA1 SEGMENT1 PRODUCT LINE Top three products: 20% 2% 3% 12% 10% 16% 29% 15% 36% 39% 15% 17% 42% 61% 35% 16% 27% 25% Cattle Anti-infectives U
Slide 12: Zoetis Leads Animal Health Industry
ZOETIS LEADS ANIMAL HEALTH INDUSTRY SINGULAR FOCUS HELPS DELIVER GROWTH, STABILITY AND STRONG RETURNS 2013 AH REPORTED SALES AND % GROWTH (INCLUDING NON-AH SALES) $4,561 5.2% 2013 Reported Sales (US$M) $3,362 -1.1% $2,636 -5.9% $2,152 5.6% $1,735 $1,421 3.6% $1,171 4.1% $978 7.4% $827 9.4% 6.0% $398
Slide 13: Worldwide Market Leader
WORLDWIDE MARKET LEADER WELL POSITIONED ACROSS MULTIPLE GEOGRAPHIES, CATEGORIES & SPECIES MARKET POSITION MARKET POSITION MARKET POSITION BY GEOGRAPHY BY PRODUCT CATEGORY BY SPECIES North America #1 Anti-Infectives #1 Cattle #1 Latin America #1 Other Pharma1 #1 Swine #1 Asia #1 Medicated Feed Additi
Slide 14: Pathway for Growth and Value
PATHWAY FOR GROWTH AND VALUE 14
Slide 15: Path for Continued Leadership
PATH FOR CONTINUED LEADERSHIP STRATEGIC FOCUS & CORE BELIEFS PROVIDE ROADMAP FOR SUCCESS LEVERAGE OUR CAPABILITES 1. Leverage our local presence and customer relationships 2. Invest in innovation to extend our product portfolio 3. Provide high-quality products and improve margins EXTEND OUR REACH 4.
Slide 16: Leveraging Customer Relationships
LEVERAGING CUSTOMER RELATIONSHIPS DIFFERENCES BETWEEN HUMAN HEALTH & ANIMAL HEALTH DRIVE SELLING APPROACH HUMAN HEALTH ANIMAL HEALTH • GOVERNMENT • DIRECT ACCESS TO AND THIRD-PARTY DECISION MAKER VS PAYERS • TIME FOR • LIMITED TIME CONSULTATION • ONLY PRODUCT • HIGHLY FRAGMENTED FOCUSED CUSTOMER BAS
Slide 17: Invest in Innovation
INVEST IN INNOVATION DEPTH AND BREADTH OF PORTFOLIO ENSURES SUSTAINED DELIVERY OF VALUE BIOPHARMACEUTICALS VACCINES PHARMACEUTICALS CROSS SPECIES SPECIES SPECIFIC Parasiticides Companion Animal Livestock Complementary Infectious Disease Solutions • Prevention Allergy/Dermatology Reproduction Genetic
Slide 18: Provide High-Quality Products
PROVIDE HIGH-QUALITY PRODUCTS CUSTOMERS’ TOP PRIORITIES FOCUS ON SUPPLY Q: HOW IMPORTANT ARE THESE ATTRIBUTES IN YOUR SELECTION OF AN ANIMAL HEALTH PROVIDER? 1. Provides high-quality, trusted products 92% 2. Delivers products with consistent performance 86% 3. Delivers products on time 80% 4. Always
Slide 19: Network Strategy to Improve Margins
NETWORK STRATEGY TO IMPROVE MARGINS MOVING FORWARD: 200 BASIS POINT IMPROVEMENT BY 2020 LEAN, FIT AND AGILE 1 ▪ Lean/Six Sigma quality improvement program ▪ Reduce inventory and waste ▪ Focus on speed-to-market improvements by 2017 FOCUSED EXCELLENCE AND SIMPLIFICATION 2 ▪ Simplify internal plant ne
Slide 20: Further Penetrate Emerging Markets
FURTHER PENETRATE EMERGING MARKETS GLOBAL LEADERSHIP, SCALE AND SCOPE Zoetis combines the local presence and knowledge necessary to serve the unique needs of individual customers with the global reach and resources essential to help advance animal health globally. REVENUE BY REGION • 42% U.S. • 25%1
Slide 21: Support Core Business with Partners & Expand into Complementary Businesses
SUPPORT CORE BUSINESS WITH PARTNERS & EXPAND INTO COMPLEMENTARY BUSINESSES APPLYING DISCIPLINED PORTFOLIO MANAGEMENT FOR GROWTH BUSINESS DEVELOPMENT STRENGTHS AND EXPERIENCE Position of Strength: Core Capabilities and Scale Experienced in Licensing, Acquisitions, Integrations & Divestitures Partner
Slide 22: Building Shareholder Value
BUILDING SHAREHOLDER VALUE 22
Slide 23: Business Model Drives Outperformance
BUSINESS MODEL DRIVES OUTPERFORMANCE OVER THE LAST THREE YEARS, ZOETIS HAS GROWN IN LINE WITH OR FASTER THAN THE MARKET $1,113 REVENUE CAGR $942 24% 2010 – 2013 $806 22% ZOETIS1 5.1% AH MARKET2 4.6% 19% 2011 2012 2013 Adjusted EBIT ($M) 3 % of Revenue Source: Vetnosis; Company Filings 1 Zoetis repor
Slide 24: How We Are Creating Shareholder Value
HOW WE ARE CREATING SHAREHOLDER VALUE • Leveraging competitive advantages – industry-leading sales force, R&D and manufacturing quality – to generate operational revenue growth faster than animal health market growth • Growing adjusted net income2 significantly faster than revenue • Demonstrating hi
Slide 25: What You Should Expect From Us
WHAT YOU SHOULD EXPECT FROM US • Continue to deliver revenue growth in line with or faster than overall market • Drive adjusted net income1 growth faster than revenue by improving gross margin and expense discipline • Invest in enhancing our competitive advantages • Improve working capital efficienc
Slide 26: Q&A
Q&A
Slide 27: Zoetis