Specialist
Former senior executive at Zoetis Inc
Agenda
- Key trends and developments within the animal health sector, focusing on Zoetis (NYSE: ZTS)
- Product portfolio update, highlighting Librela and Solensia for osteoarthritis, and Apoquel and Cytopoint for dermatology
- Competitive positioning of major players surrounding Zoetis, including Boehringer Ingleheim and Elanco (NYSE: ELAN)
- Distribution strategy and 12-18-month growth outlook for Zoetis
Questions
1.
What key developments and significant shifts have you witnessed in the animal health sector across the companion production segments?
2.
Zoetis reported Q1 2022 revenue of approximately USD 1bn in the US segment and USD 948m for international – a 9% and 3% YoY increase respectively. What would you say are the company’s biggest revenue drivers and split in the US and globally?
3.
How do you expect sales of Zoetis’s Simparica Trio to evolve, given increased generic competition from Elanco’s Credelio or Boehringer Ingleheim’s NexGard? The company’s Q1 2022 US sales of companion animal products increased 18% YoY, driven by growth across the company’s parasiticide portfolio, as you said, primarily from Simparica Trio sales.
4.
Can you elaborate on how Zoetis is expanding its sales force? How has it performed in the past?
5.
Zoetis recently launched Librela and Solensia in Europe, both monoclonal and antibody products for osteoarthritis, a huge growth opportunity given there hasn’t been a drug for osteoarthritis in animals for approximately 20 years. What is your sales outlook for Librela and Solensia in Europe? How would you assess the initial approval?
6.
What is your performance outlook for Zoetis’s key dermatology portfolio, or near-term sales estimates for Apoquel and Cytopoint? What’s the potential for other indications and animals?
7.
Apoquel and Cytopoint seem more successful in the international segment than the US. What do you think drives this increased demand internationally over the US? Do you see a higher growth trend in the US for the dermatology market?
8.
Why do you think Zoetis’s Q1 2022 livestock products declined 11% and 9% YoY respectively in the US and internationally? What’s behind the company’s cattle sales decline in the US?
9.
Zoetis recently announced the addition of an AI blood smear testing to its multi-purpose platform, which was introduced in 2020. It is still in the early stage, but what are the implications of using AI for animal diagnostic purposes? How could this broaden Zoetis’s offerings?
10.
What is Zoetis’s competitive positioning on the companion diagnostic side vs Elanco and Boehringer Ingleheim? How has the company’s positioning evolved over the last couple of years?
11.
How has Zoetis changed its distribution strategy over the last two years, especially given the pandemic and customers’ high demand for a one-stop-shop system? You mentioned in a previous Forum Interview [see Zoetis – Pharmaceutical & Diagnostics Business Analysis & 2021 Outlook – 10 September 2020] that Zoetis had a more direct approach to post-utilisation and distribution with customers, which has migrated more towards its portfolio into distribution over time.
12.
Could you comment on Zoetis’s M&A strategy in building capabilities organically vs inorganically? What potential synergies could the company leverage? It spent about USD 30m for purchase accounting adjustments, acquisition-related costs and other items.
13.
Where should Zoetis deploy capital besides consolidation? How much should be allocated towards R&D and innovation? Presumably the company is already spending significantly on innovation, but what do you think makes sense?
14.
Do you think Zoetis’s updated full-year 2022 revenue guidance – approximately USD 8.2bn-8.3bn, with 9-11% operational growth – is a realistic goal or too ambitious? How much of a negative impact do today’s foreign exchange rates have on the company, and how is it dealing with these?
15.
Could you summarise some of the key recent shifts in the veterinary space? What potential near-term risks could Zoetis face? What is your 12-18-month growth forecast for the company?
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