Guidance Increase and Argentina Impact
Q: What drove the guidance increase and how much did Argentina contribute?
A: Management raised the operational revenue guidance by 150 basis points due to strong performance in key products like Librela and Simparica Trio, as well as contributions from Argentina's hyperinflationary market. Argentina added about 200 basis points to year-over-year growth in the quarter, contributing roughly one-third to half of the guidance increase, while the rest came from underlying business strength. ( , )

Librela Safety and Market Uptake
Q: Are there safety concerns with Librela affecting its uptake?
A: Management has utmost confidence in Librela's safety and efficacy, with over 14 million dogs treated and adverse event rates at 0.18% globally. No single adverse event is classified as more than rare (1 to 10 per 10,000). Despite social media attention, veterinarians continue prescribing Librela, and orders are increasing steadily. ( , , )

Simparica Trio Growth Amid Competition
Q: How is Simparica Trio performing amid competition?
A: Simparica Trio delivered 61% growth globally, reaching $243 million in revenue, with the U.S. also growing 61%. Despite head-to-head competition, it continues to gain market share, supported by effective promotion and strong demand. ( , )

Margins and Argentina's Impact
Q: Why aren't margins improving despite strong revenue?
A: Gross margins declined by 10 basis points due to nearly 200 basis points of foreign exchange headwinds, notably from Argentina's devaluation affecting cost of goods sold. Operationally, gross margins expanded by 200 basis points, contributing to 15% operational growth in adjusted net income. ( )

Librela Sales Progression and Market Expansion
Q: What is the sales outlook for Librela moving forward?
A: Librela delivered $100 million in Q1 revenue, up 189%, with the U.S. contributing $40 million. Management expects sequential growth throughout the year, driven by increasing uptake in both severe and moderate osteoarthritis cases and extended therapy duration from 6–7 months to 7–8 months. ( , , )

Product Pipeline and R&D Investment
Q: Are there updates on the product pipeline and R&D efforts?
A: The company is investing over $600 million in R&D, focusing on long-lasting monoclonal antibodies, renal, oncology, cardiovascular, and diagnostics. Near-term launches include life-cycle innovations like long-acting monoclonal antibodies, with no specific announcements at this time. ( )

Livestock Business and Portfolio Pruning
Q: Are there plans to further prune the livestock portfolio?
A: Following the sale of the feed additives business, management continues to assess the portfolio. The focus is on investing in higher-growth, higher-margin areas like preventatives, antibiotic alternatives, vaccines, and genetics. Livestock is expected to grow at the higher end of the historical 2–4% range. ( )

Dermatology Franchise and Competition
Q: How will upcoming competition affect the dermatology franchise?
A: Management remains confident in growing the dermatology franchise despite anticipated competition. They launched Apoquel Chewable to meet market preferences and as a defense strategy. In Europe, 40% of Apoquel sales have converted to chewables, and they aim to accelerate this in the U.S. High single-digit growth is expected for key dermatology products. ( , , )

Consumer Spending and Pet Adoption Trends
Q: Are economic factors affecting consumer pet spending?
A: Management is not seeing a weakening consumer. Spend per veterinary visit in the U.S. is up 6%, and essential pet healthcare remains resilient. There has been no significant increase in pet abandonment or returns to shelters. ( )

Librela Education Efforts and FDA Dialogue
Q: What is the effect of vet education sessions on Librela usage?
A: Thousands of veterinarians have participated in webinars and education sessions, increasing confidence in prescribing Librela appropriately. Regular dialogue with the FDA is ongoing as part of normal business practices to support product understanding and safety monitoring. ( )