Zoetis Cites Pet Care Weakness, Competition in Sales Outlook
Zoetis executives maintain a forecast for a 1-3% revenue decline, attributing it to lower U.S. Veterinary visits and competition in dermatology and parasiticide products. The company is using targeted promotions to defend market share.
Zoetis Inc. Is standing by its financial guidance despite a weaker U.S. pet care market and increased competition. The company's revised outlook calls for operational revenue to decline between 1% and 3%, a shift from its prior forecast of 2% to 5% growth.
CEO Kristin Peck, speaking at a Morgan Stanley conference, said this marks the first time the company has seen a declining pet care market. She pointed to lower veterinary visits and affordability challenges for pet owners as key factors. Industrywide sales of parasiticides fell 6.7%, though demand remained stronger for diagnostic testing and products used in specialty, urgent, and critical care.
Targeted Promotions Over Price Cuts
Peck described the current pricing pressure as cyclical, not structural. Zoetis has avoided broad list price cuts for its key dermatology and parasiticide products. Instead, it is deploying targeted, time-limited promotions and discounts aimed at winning customers from competitors.
"This isn't everybody, 10% discount for anyone who wants to buy," Peck said. "This is, you're buying my competitor's product today, we want to be your parasiticide of choice."
The company began these programs in the second quarter and made them more aggressive in the third. Peck said Zoetis will assess the programs each quarter, adjusting their scope and intensity as needed. The goal is to protect market share, especially in categories where it has historically held dominant positions.
Market Share and Product Pipeline
In the competitive landscape, Zoetis reported mixed results for its leading products. The company remains the U.S. Market-share leader in parasiticides, with nearly double the share of its nearest rival, though its share declined by about 1% last quarter. In dermatology, its drug Apoquel retained approximately 87% U.S. Market share despite a new competitor entering the market.
| Product Category | Key Product | U.S. Market Share Change | Notes |
|---|---|---|---|
| Parasiticides | Portfolio | Declined ~1% | Leader with nearly twice the share of next competitor. |
| Dermatology | Apoquel | ~87% retained | Third competitor entered market; high historical share expected to decline. |
Peck highlighted a pipeline of future growth opportunities, with chronic kidney disease (renal) treatment being the nearest-term and largest. She cited an addressable market of roughly $3 billion, noting that about 20% of dogs and 40% of cats develop renal or chronic kidney disease. A renal product is targeted for approval at the end of next year.
The company also has two oncology products in development, with one having blockbuster potential of $1 billion in annual sales. Meanwhile, the livestock segment has seen double-digit growth this year, which Peck partly attributed to higher protein consumption in developed markets linked to GLP-1 medicines.
Zoetis has taken structural price cuts on two other products, Cerenia and Convenia, in response to generic competition. However, Peck stated the company does not expect other large products to face similar generic competition before 2032. Apoquel's first loss of exclusivity is expected in 2032, excluding its chewable formulation.
The company plans to provide its next update to investors in November.
