Zoetis is a $9 billion public company that manufactures pharmaceuticals for both pets and livestock. Its CFO, Wetteny Joseph, appeared on Morning Brew’s After Earnings podcast to discuss his company’s product portfolio and the macro trends he’s seeing around animal health.
This summary has been lightly edited for length and clarity. You can listen to the whole episode on Apple Podcasts, Spotify, YouTube, or wherever you listen to podcasts.
Talk to us about some of the hero products you have within your portfolio.
We have 300 product lines, and we have more blockbusters than anyone else in our space…In animal health, a blockbuster is considered $100 million in revenue. We have two billion-dollar franchises within our product slate, and a third one on its way.
95% of pet owners consider their pet as a member of their family. That means…they’re living longer, and therefore they’re developing certain chronic conditions…osteoarthritis pain—the same things we have as humans as we get older…Our next billion-dollar franchise is in that space.
Consumer trends, at least in the West, are tending now toward meat replacement. There have also been climate questions. Cows are one of the biggest contributors to global warming in the aggregate. When you look at those trends, do you see risk for the livestock part of your business?
If you look at the data, we have about 8 billion people walking the earth today. In the next, call it 25 years or so, we’ll have 2 billion more mouths to feed around the world, and you’re going to need more healthy animal proteins to do that. You are seeing an increasing middle class in emerging markets…Their additional income levels drive more consumption.
To pivot to your point about alternatives to animal proteins, as we watch the data, you see a declining use of those. There are bigger macro trends that are going to continue to drive animal proteins forward.
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On the sustainability front…what is perhaps slightly misunderstood is, the best way to limit the impact on the environment is to make sure that the animals are healthier and they are more productive…Our genetics data is helping…[us] understand how best to drive productivity of dairy cattle, so over time, relatively speaking, you need fewer dairy cattle to produce the same amount of milk.
What are some of the top R&D priorities for Zoetis?
We have a combination of focus on new areas that we’re targeting…[and] also spending on products that have been in the portfolio for quite some time, to continue to add additional claims, get them into different markets around the world.
If you look at new categories that we’re really excited about as we look at the future, [one is] renal, including chronic kidney disease. An estimated 10 million dogs and cats suffer from renal [disorders], and I have personally been out to visit clinics and talk to veterinarians, and they describe this as the most frustrating disease state for them to deal with, because they don’t have any real good solutions here. We are working in that area to potentially bring some meaningful solutions.
Talk to us about your use of AI.
We’re very proud of having the first platform that uses AI, where you can take a sample in the clinic, put it under the slide, and it plugs into the AI engine that’s going to analyze it and tell you, while the patient is still in your clinic, if they have a certain parasite or some other disease state to address. You don’t have to wait until they go home and then call them in a couple of days. You can get the results right then and there.