Guidance Increase Details
Q: What's included in the increased guidance for top and bottom line?
A: Zoetis raised the midpoint of guidance by about 50 basis points on both top and bottom lines. While committed to driving operational growth with about 450 basis points separation between top and bottom line growth, they plan to invest in areas that will drive future growth, impacting operational leverage in Q3. The back half of the year is expected to see about 9% top-line growth, with leverage more weighted toward Q4.

Dermatology Growth Outlook
Q: Is there an updated view on derm growth given strong results?
A: Given an 18% growth in Q2, Zoetis has raised expectations for its key dermatology franchise from high single digits to double-digit growth for 2025. The competitor’s product facing a black box warning positions Zoetis’s APOQUEL favorably, having treated over 23 million pets with satisfaction levels around 90% on safety and efficacy.

Librela Sales Ramp and Outlook
Q: Will Librela's U.S. sales continue to ramp up?
A: Librela experienced 142% growth this quarter, with 80% U.S. penetration and an 86% reorder rate. Zoetis expects significant quarter-over-quarter growth for the rest of the year. Potential label changes are not a concern, as similar changes in the EU and UK did not impact positive growth trends.

Pricing vs. Volume Contribution
Q: What's the split between price and volume growth?
A: In Q2, growth comprised about 8% price and 3% volume, with 2 points of price from Argentina, resulting in 6% price and 3% volume excluding Argentina. Year-to-date growth is balanced at 5% price and 5% volume, a trend expected to continue for the full year.

Impact of Economic Trends on Business
Q: How do consumer and vet visit trends affect guidance?
A: Despite lower pet discretionary spending and declining clinic visits, Zoetis saw 4% growth in clinic revenue and 13% growth in U.S. companion animal business. Pet owners view pet health as essential, with 86% willing to spend "whatever it takes," making Zoetis optimistic and confident in its guidance.

Competitive Positioning in Derm and Parasiticides
Q: How does competitive positioning affect guidance and outlook?
A: Zoetis is raising guidance based on strong core business momentum. In dermatology, expectations have increased to double-digit growth due to strong performance and competitor challenges. In parasiticides, anticipated late-year competitive launches are not expected to have a meaningful impact on guidance.

APOQUEL Chewable's Impact and Patent Life
Q: How is APOQUEL Chewable impacting sales and patent life?
A: APOQUEL Chewable is primarily converting existing APOQUEL users and is important for future strategy but isn't significantly contributing to overall growth yet. The dermatology franchise has patents extending to 2031, covering active ingredients, formulations, and dosing regimens.

Derm Market Expansion Strategies
Q: Why is there still a sizable unaddressed derm market?
A: Zoetis sees significant opportunities in improving compliance and expanding the market. There's potential to convert 3 million dogs currently on steroids and reach 8 million dogs not receiving adequate treatment. Strategies include enhancing compliance through retail and auto-ship and targeting undertreated segments.

Antitrust Investigation in Europe
Q: Any updates on the European antitrust investigation?
A: The investigation involves an experimental compound from the Nexvet acquisition 7 years ago. Zoetis believes its decision to halt the compound was sound and expects concerns to be unfounded once the investigation concludes.

Livestock Market Outlook
Q: Is livestock market growth sustainable at current rates?
A: The livestock portfolio grew 9% this quarter. While the livestock market typically grows 2% to 4%, increased pricing in hyperinflationary markets like Argentina may push growth toward the higher end of that range. Zoetis expects to align with or slightly exceed market growth under current conditions.