LEADING THE MARKET IN ANIMAL HEALTH · 2018 MARKET POSITION BY SPECIES Cattle #1 Fish3 #1 Swine #2...
Transcript of LEADING THE MARKET IN ANIMAL HEALTH · 2018 MARKET POSITION BY SPECIES Cattle #1 Fish3 #1 Swine #2...
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LEADING THE MARKET IN ANIMAL HEALTH
JUAN RAMÓN ALAIX
CHIEF EXECUTIVE OFFICER
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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, future guidance, future operating models, expectations regarding products, expectations regarding the
performance of acquired companies and our ability to integrate new businesses, expectations regarding the financial impact of acquisitions,
future use of cash and dividend payments, tax rate and tax regimes, changes in the tax regimes and laws in other jurisdictions, and other future
events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties.
If one or more of these risks or uncertainties materialize, or if management's underlying assumptions prove to be incorrect, actual results may
differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they
are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information,
future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our most recent Annual Report
on Form 10-K, including in the sections thereof captioned “Forward-Looking Statements and Factors That May Affect Future Results” and “Item
1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. These filings and subsequent filings are
available online at www.sec.gov, www.zoetis.com, or on request from Zoetis.
NON-GAAP FINANCIAL INFORMATION
We use non-GAAP financial measures, such as adjusted net income, adjusted EBIT margin, adjusted R&D investment, normalized organic
operational growth, organic operational growth, and operational results (which excludes the impact of foreign exchange) to assess and analyze
our results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are also useful to
investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this
presentation should not be considered alternatives to measurements required by GAAP, such as net income, operating income, and revenue
growth, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP
information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are posted on our
website at www.zoetis.com.
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AGENDA
• Track Record of Results
• Competitive Advantages
• Animal Health Trends
• Investing in Future Growth
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ACHIEVING FINANCIAL RESULTS
709790
889975
1,185
24% 25%
28%
32%34%
Adjusted Net Income ($M) Adjusted EBIT Margin
4%
6% 7%
6%
4%
6%7% 7%
8% 8% 8% 8%
Market Revenue Growth Zoetis Revenue Growth
‡
1 Source: Vetnosis2 Operational revenue growth is defined as revenue growth excluding the impact of foreign exchange3 Adjusted net income and its components are defined as reported U.S. generally accepted accounting principles (GAAP) net income and its components excluding purchase accounting adjustments, acquisition-related costs and certain significant items.
Adjusted Earnings Before Interest and Taxes (EBIT) excludes interest expense net of capitalized interest, interest income and adjusted income taxes.†Normalized organic operational growth, a non-GAAP financial measure, excludes the impact of foreign exchange, operational efficiency initiative and acquisitions‡Organic operational growth, a non-GAAP financial measure, excludes the impact of the acquisition of Abaxis, as well as foreign exchange; if included, Zoetis Q3 YTD operational revenue growth is 9%
MARKET REVENUE GROWTH RATES1
VS. ZOETIS REVENUE OPERATIONAL2
GROWTH RATES
ZOETIS ADJUSTED NET INCOME3 AND ADJUSTED EBIT3 MARGINS
†
51 R&D Guidance midpoint as of November 1, 20182 Represents adjusted research and development, which is defined as reported U.S. generally accepted accounting principles (GAAP) research and development excluding purchase accounting adjustments,
acquisition-related costs and certain significant items.3 Estimate for 2018 4Through the first nine months of 2018
2018: CAPITAL ALLOCATION FOR GROWTH AND CREATION OF SHAREHOLDER VALUE
$425M1
Adjusted R&D
Investment2
~$325M3
CapEx
~$2B4
Business
Development~$2.8B
~$245M3
Dividends
~$700M3
Share
Repurchases
~$945M
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OUR COMPETITIVE ADVANTAGES
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2
3
5
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Leadership in Innovation
Direct Access to Customers
High Quality Manufacturing & Supply
Diverse Global Portfolio
Track Record of Execution
Results-Driven Culture
Financial Strength and Investment
Focus7
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2018 MARKET POSITIONBY SPECIES
Cattle #1
Fish3 #1
Swine #2
Companion Animal #2
Poultry #4
2018 MARKET POSITIONBY PRODUCT CATEGORY
Other Pharma2 #1
Anti-Infectives #1
Medicated Feed Additives
(MFA)#2
Vaccines (Biologicals) #3
Parasiticides #4
WORLDWIDE MARKET LEADER1
WELL-POSITIONED ACROSS ANIMAL HEALTH;CONTINUE GROWING FASTER THAN THE OVERALL MARKET
1 Vetnosis 2018 Q3 Year-to-Date Quarterly Management Report 2 Includes pain, sedation, internal medicine, dermatology etc.3 Internal sales estimate based on distribution channels for 2018 Q3 Year-to-Date
2018 MARKET POSITIONBY GEOGRAPHY
North America #1
Latin America #2
Asia #2
Rest of World #2
Eastern Europe #2
Western Europe #3
Worldwide AH Market Leader in Total Revenue
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2018: DIVERSE PORTFOLIO AND NEW BLOCKBUSTERS
LIFECYCLE
INNOVATIONS
M&A AND
PARTNERSHIPSBLOCKBUSTERS
The average age of top 25 product lines and products is approx. 28 years1
1 Based on 2017 sales data. Age refers to the number of years a product has been commercially available. Top products each contribute at least 1% of total revenue.
All trademarks are the property of Zoetis Services LLC or a related company or a licensor unless otherwise noted.
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ANIMAL HEALTH INDUSTRY FUNDAMENTALS
AT THE CORE OF A $150+ BILLION INDUSTRY
COMPANION ANIMAL
LIVESTOCK
• Diagnostics
• Vet Services
• OTC Health
• Pet Supplies
• Diagnostics
• Genetics
• BioDevices
• Herd Health
Management
• Nutrition
• Food Safety
~$34 Billion1
• Medicines
• Vaccines
• Medicated Feed
Additives
• Parasiticides
ANIMALHEALTH
POPULATION
GROWTH
A RISING
MIDDLE CLASS
INCREASING
URBANIZATION
PREDICTABLE AND SUSTAINABLE GROWTH DRIVERS
1 Vetnosis
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Growth in
developing markets
KEY TRENDS IN ANIMAL HEALTH
Greater pet owner &
consumer influence
Continuing
customer evolution
Data & digital
enablement
Enhanced focus on
livestock productivity &
sustainability
Rising value of innovation
1 2 3
4 5 6
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MAXIMIZE PROFITABLE REVENUE GROWTH THROUGH STRATEGIC PRIORITIES
Bring innovative products to market
Maintain a diversified, market-leading portfolio and leverage its breadth
Maximize opportunities in fast-growing international markets
Develop data and digital solutions
Support our own - and our customers’ - direct engagement with pet owners and consumers
Enhance capabilities across continuum of care
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INNOVATING ACROSS THE CONTINUUM OF CARE
INTERNAL CAPABILITIES COMPLEMENTED WITH EXTERNAL PARTNERSHIPS
PREDICT DETECT TREATPREVENT
GENETICSDIAGNOSTICS
DATA
ANALYTICS
& SENSORS
VACCINES,
ROBOTICS &
AUTOMATION
MEDICINES
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DELIVERING ON OUR LONG-TERM VALUE PROPOSITION TO SHAREHOLDERS
1Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income statement line item,
excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The adjusted net income measure is not, and should not be, viewed as a
substitute for U.S. GAAP reported net income attributable to Zoetis.
GROW REVENUE IN LINE WITH OR FASTER THAN THE MARKET
TARGET VALUE-ADDED INVESTMENT OPPORTUNITIES
GROW ADJUSTED NET INCOME1
FASTER THAN REVENUE
RETURN EXCESS CAPITAL TO SHAREHOLDERS
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KEY TAKEAWAYS
• Market leader in attractive, sustainable, growing
industry
• Steady, predictable results based on proven
business model, capabilities and culture
• Diverse portfolio and integrated solutions serve
evolving customer needs across continuum of care
• Financial strength and cash flow used to invest in
key growth opportunities