Zoetis Inc. (ZTS) Business Profile

What it does

Zoetis discovers, develops, manufactures and sells animal medicines, vaccines, diagnostic products and services. It also offers genetic tests, devices and precision animal health products. Its customers include veterinarians, pet owners and livestock producers around the world.

The business serves companion animals—dogs, cats and horses—and livestock, including cattle, swine, poultry, fish and sheep. Its products help prevent or treat illness, control parasites, relieve pain and itching, and test animal samples for signs of disease. Much of the portfolio is available by prescription through veterinarians.

For dogs, Simparica Trio is a monthly chewable treatment for parasites, while Apoquel is used to control itching associated with allergic skin conditions. Librela is a monthly injectable treatment for osteoarthritis pain in dogs; Solensia serves cats. Livestock products include vaccines and treatments for infections and parasites. Zoetis also sells diagnostic instruments and consumables used by veterinary practices.

The company markets products directly in approximately 45 countries and sells them in more than 100. It has approximately 300 product lines across its companion animal and livestock portfolio. Zoetis was founded in 1952 and is headquartered in Florham Park. Kristin Peck is chief executive officer.

How it makes money

Zoetis earns revenue primarily by selling animal health products through its U.S. and International segments. Both segments sell companion animal and livestock products, but their mixes differ: companion animals accounted for 83% of U.S. segment revenue and 56% of International segment revenue in 2025.

In 2025, U.S. segment revenue was $5,097 million and International segment revenue was $4,254 million; in Q3 2026, company-wide revenue was $2.4 billion.

Companion animal products represented approximately 70% of total 2025 revenue, and livestock products approximately 29%. Contract manufacturing for third parties and human health products accounted for approximately 1%. The portfolio includes parasiticides, vaccines, dermatology treatments, anti-infectives, pain and sedation products, other pharmaceuticals and diagnostics.

Some products are administered repeatedly: Simparica Trio is a monthly chewable, Cytopoint is an injection given once every four to eight weeks, and Librela and Solensia are monthly injections. Diagnostic instruments also have associated consumables. The company sells through veterinarians and distributors and, in certain markets, through retail and e-commerce outlets.

Individual products contribute substantial portions of sales. Simparica/Simparica Trio represented approximately 16% of 2025 revenue and Apoquel/Apoquel Chewable approximately 12%. Along with Cytopoint, Librela and the ceftiofur line, those products represented approximately 42%.

Zoetis uses pricing and promotional programs to compete. In Q3 2026, it reported a 1% price decline across the business and flat volume. Its dermatology pricing actions took the form of investments deducted from gross sales rather than changes to list prices.

Customers and how it sells

Zoetis primarily sells companion animal products to veterinarians or veterinary distributors. Distributors typically sell to veterinarians, who in turn typically sell to pet owners. Some companion animal products also reach customers through pharmacies, other retailers and e-commerce outlets.

Livestock products are sold primarily to veterinarians and producers, including beef and dairy farmers and pork and poultry operators. Veterinary distributors and retailers also buy livestock products for resale to producers. Zoetis sales representatives visit veterinarians and livestock producers, while technical and veterinary specialists provide consulting, training and education.

The largest customer is a U.S. veterinary distributor that represented approximately 16.0% of 2025 revenue. Zoetis also contracts with distributors for logistics and sales support; in places where it has no direct commercial presence, it relies on distributors for those services.

The company directly markets products across North America, Europe, Africa, Asia, Australia and South America. U.S. operations represented 54% of total revenue for the year ended December 31, 2025, while International represented 45%. Within International, the mix differs by market: Brazil’s revenue was more weighted toward livestock products, while companion animal products accounted for most revenue in countries including Germany and the United Kingdom.

Suppliers and costs

Zoetis manufactures animal health products and provides contract manufacturing services to third parties. Many of its products involve complex manufacturing processes and are sole-sourced from certain manufacturing sites. The company depends on vendors, suppliers and logistics providers as well as its own facilities; the available disclosures do not identify individual key suppliers.

Manufacturing and shipping require sufficient capacity and compliance with quality and regulatory requirements. Temperature excursions, improper package sealing, material shortages or equipment malfunctions can interrupt production or distribution. Capacity can also become too limited or excessive when demand changes.

Research and development is another cost. Zoetis incurred $698 million in R&D expenses in 2025, funding new products as well as extensions of existing products into new species, formulations, indications and markets. Its sales organization includes representatives and technical and veterinary specialists; it also pays for distributor support and marketing.

In Q3 2026, adjusted gross margin was 71%. Zoetis attributed the operational decline in that margin to strategic pricing initiatives, product mix and certain inventory-related charges, partly offset by refunds related to prior tariff assessments.

Competitive position

Zoetis competes with animal health medicines, vaccines and diagnostics companies, including Boehringer Ingelheim Animal Health, Merck Animal Health, Elanco Animal Health and IDEXX Laboratories. It also competes with smaller companies, start-ups, generic manufacturers and other producers. Competition varies by region, species and product and includes product development, quality, price, service and promotion.

Zoetis describes its business as the largest in animal health by revenue. It faces generic products and lower-cost alternatives after exclusivity ends. Draxxin competes with generics in several markets; its U.S. sales declined by 66% since 2021, the first year of generic competition. In Q3 2026, the company reported share loss in Apoquel and continued pressure from generics on Cerenia and Convenia in the U.S.

Our reading: Zoetis has a meaningful customer-relationship advantage from its sales and veterinary specialists, who provide education and support as well as sell products. Our reading: Its product portfolio and lifecycle development provide ways to retain customers, but generic competition and recent dermatology share losses show that product positions can weaken. Our reading: Brands can retain loyalty after exclusivity ends, although the Draxxin decline illustrates a limit to that protection.

Growth opportunities

Zoetis identifies increased pet-care spending, longer companion animal lives and advances in veterinary treatment as drivers of demand for medicines, vaccines and diagnostics. For livestock, it points to population growth and rising standards of living as drivers of demand for animal protein and for products that help producers manage animal health.

The company develops new medicines and vaccines and extends existing products through new claims, species, formulations and geographic approvals. Simparica Trio is an example of an extension that combines flea and tick treatment with protection against other parasites. Zoetis also develops diagnostics, genetics and digital products.

In Q3 2026, companion animal diagnostics revenue was $122 million, up 13% globally. Zoetis attributed most of the growth to acquisitions, including Vital Rads in the U.S. and Veterinary Pathology Group in the U.K. and Ireland, with adoption of its point-of-care and imaging platforms contributing the remainder.

Zoetis has launched Lenivia and Portela, longer-acting treatments for osteoarthritis pain, in markets in the EU and Canada. It is also working on products in areas including renal disease, oncology, cardiology and obesity. The company expects U.S. approval of long-acting Cytopoint in the fourth quarter of 2026 and approval of Simparica Duo by year-end 2026.

For full-year 2026, Zoetis expects revenue of $9.22 to $9.32 billion. It does not assume an improvement in the macro environment or pet-owner spending trends when planning for 2027.

Structural risks

• Competition and generics: Zoetis faces increased competition from generic products and lower-cost alternatives. In Q3 2026, it reported pressure from new dermatology entrants and generics, alongside price-sensitive pet owners and weaker veterinary visits.
• Product concentration: Simparica/Simparica Trio, Apoquel/Apoquel Chewable, Cytopoint, Librela and the ceftiofur line together represented approximately 42% of 2025 revenue. Negative perceptions of a product’s safety or quality can affect demand.
• Manufacturing and supply: Complex processes and sole-sourced manufacturing sites expose products to interruptions. Quality issues, material shortages, capacity imbalances or logistics problems can cause delays, shortages, recalls or unanticipated costs.
• Development and regulation: R&D, acquisition and licensing efforts may fail to generate new products or extensions. Animal health products are subject to regulations that differ by jurisdiction, including requirements for approval and manufacturing.
• International and financial exposure: Foreign operations face currency fluctuations, trade restrictions and differing legal and political environments. Zoetis also has substantial indebtedness, which can limit financing and flexibility and increase borrowing costs.

Bottom line

Our reading

Zoetis is an animal health business built around medicines, vaccines and diagnostics sold through veterinary and livestock channels, with companion animals providing most revenue. [item1] Its portfolio and customer relationships support the business, but several product lines account for substantial sales and face generic or branded competition. [item1] Recent companion animal pressure sits alongside livestock and diagnostics growth, while new products and extensions remain important to the company’s plans. [call_prepared]