Zoetis (ZTS) Q3 2026 Earnings Call: Q&A Summary

Q: Christopher Scott from JPMorgan asked for additional color on the traction of promotional activities and considerations for 2027 numbers.

A: Kristin Peck stated that promotional defense in dermatology slowed U.S. share loss to 4 points in Q3 compared to 7 points in Q2, while Simparica Trio held a 22.5% share. Jay Saccaro added that management will be conservative for 2027 and will not assume market changes in macro factors or competitive dynamics.

Q: David Westenberg from Piper Sandler asked whether Simparica will experience a normalized maturation pattern similar to past product launches.

A: Kristin Peck responded that Simparica Trio grew 4% internationally and maintained a 22.5% share in the U.S., noting that triple combinations are still in their infancy internationally and expecting upcoming approval for Simparica Duo.

Q: David Westenberg from Piper Sandler asked about defensive strategies for Cytopoint and the expected rollout of the long-acting product.

A: Kristin Peck confirmed that Cytopoint long-acting is on track for Q4 approval and a first-half launch next year, which will help expand the category.

Q: Jonathan Block from Stifel asked about the implied fourth quarter organic revenue growth rate and the sustainability of livestock growth.

A: Jay Saccaro explained that a third to fourth quarter decline in the high single-digit range was anticipated due to seasonality and Q3 promotional activity. Kristin Peck added that livestock growth of 7% was driven by protein demand and broad species strength.

Q: Brendan Vazquez from William Blair asked if gross-to-net promotional activities are short term and how they impact future margins.

A: Kristin Peck stated that these investments are targeted to defend share until new entrants stabilize between 12 and 18 months, noting that untreated animal populations remain high.

Q: Brendan Vazquez from William Blair asked for early feedback on Lenivia and its potential to reaccelerate the OA pain category.

A: Kristin Peck reported that veterinarian satisfaction for Lenivia is 97% and pet owner satisfaction is 98%, helping drive growth internationally while awaiting U.S. approval in 2027.

Q: Erin Wright from Morgan Stanley asked about ongoing share loss stabilization in Q4 and mitigating cost factors for next year's margins.

A: Kristin Peck noted the goal is to reach zero share loss and return to growth. Jay Saccaro added that SG&A declined 1% for the year, and cost savings will continue next year while funding R&D.

Q: Matthew Dellatorre from Goldman Sachs asked to break down dermatology sales declines between volume and price and provided an update on retail channel growth.

A: Kristin Peck stated that retail and home delivery growth has been strong, with MAP pricing strengthening the retail channel. Jay Saccaro added that dermatology declines were driven by gross-to-net investments rather than list price changes.

Q: Navann Ty from BNP Paribas asked about international companion animal performance, OA pain cannibalization, and breakthrough innovation timelines.

A: Kristin Peck noted that international companion animal growth was flat due to European dermatology pressure, and highlighted expected major market approvals and new categories in chronic conditions.

Q: Christopher LoBianco from TD Cowen asked to quantify one-time factors in the quarter and requested the product profile for Simparica Duo.

A: Jay Saccaro stated there were no significant one-time items aside from promotional activity shaping the Q3 to Q4 contour. Kristin Peck clarified that Simparica Duo will be an Rx product targeting fleas, ticks, and intestinal worms.

Q: Andrea Alfonso from UBS asked how competitive intensity varies by channel and how Zoetis approaches distributors versus direct engagement.

A: Kristin Peck explained that Zoetis targets corporate accounts, independent loyalty programs, and retail channels holistically while maintaining important distribution relationships.

Q: Stephen Beckert from KeyBanc Capital Markets asked about product bundling contracts with clinics and the organic decline in international key derm.

A: Kristin Peck stated that broad portfolio bundling is a key ongoing strategy with 2- to 3-year contracts, and international derm pressures vary across large markets like Brazil and Australia.