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Inside Zoetis’s Growth Strategy in 2017

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International markets

In 1Q17, Zoetis (ZTS) managed to earn $615 million as revenues from international markets, which represents a YoY (year-over-year) growth of around 8%. Despite the impact of -4% from product rationalization, in 1Q17, the company witnessed 9% operational growth in revenues earned from international markets on a YoY basis.

Notably, the company’s solid international market strategy has helped it compete more effectively with animal health peers Eli Lilly (LLY), Merck (MRK), and Sanofi (SNY).

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China market trends

Zoetis witnessed a 47% YoY rise in revenues in Chinese markets in 1Q17, driven by robust demand in the medicines category for the Swine and Companion Animal segments as well as in the vaccines category.

The rise in pork prices and the company’s increased focus on safe and efficient protein product have been the key factors boosting demand in the Swine segment in China. Zoetis has also focused its attention on the rising pet population and the subsequent rising demand for medicines in China.

Brazil market trends

In 1Q17, Zoetis’s revenues from Brazil markets rose 15% operationally on a YoY basis. In addition to the rise in prices across its portfolio, Zoetis has also benefited from the increased demand in its Livestock and Companion Animal Health segments in Brazil.

Launched in 4Q16 as an oral tick and flea preventive, Simparica witnessed robust demand in this market in 1Q17.

Other international markets

In 1Q17, Zoetis saw 14% YoY operational revenue growth in Mexico. The overall revenue contribution from emerging markets was 14% higher on a YoY basis in 1Q17, despite the unfavorable impact of product rationalizations.

In 1Q17, the company witnessed a 10% YoY rise in revenues in Australian markets, driven mainly by the increased demand for medicines catering to cattle, sheep, and companion animal health. There was also an increase in the price and demand for key brands like Apoquel and Simparica.

Notably, Zoetis makes up about 0.29% of the Vanguard Growth ETF’s (VUG) total portfolio holdings.

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