Zoetis Reports Revenue up Two Per Cent in Q2 of 2013

US - Zoetis Inc. reports that during the second quarter of 2013, revenue reached $1.11 billion, up two per cent compared to the same quarter of 2012.
calendar icon 7 August 2013
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Zoetis Inc., a former business unit of Pfizer Inc., that the increase in revenue reflected an operational increase of four per cent, with foreign currency having a negative impact of two percentage points.

Net income for the second quarter of 2013 was $128 million, or $0.26 per diluted share, a decrease of 26 per cent, compared to the second quarter of 2012. Adjusted net income1 for the second quarter of 2013 was $178 million, or $0.36 per diluted share, an increase of one per cent and three per cent, respectively, compared to the second quarter of 2012. Adjusted net income for the second quarter of 2013 excludes the net impact of $50 million, or $0.10 per diluted share, for purchase accounting adjustments, acquisition-related costs and certain significant items.

Executive Commentary

“In the second quarter, we achieved positive financial results while we completed our separation from Pfizer and continued delivering product innovations such as the approval of APOQUEL in the US,” said Zoetis Chief Executive Officer Juan Ramón Alaix. “Our global scale, local presence and diverse portfolio again helped us deliver growth in sales and adjusted earnings, despite ongoing weather-related challenges and economic issues.”

“The company performance - both for the quarter and year-to-date - further illustrates the commitment and talent of our people and the strength of our business model. As we look ahead, we remain confident in our ability to fully stand up our new company, while meeting our customers' needs for innovative animal health medicines and vaccines,” Mr Alaix added.

“This quarter, we have made good progress on building out our infrastructure. I am pleased with our financial results year-to-date, and we are reaffirming our guidance for full year 2013,” said Rick Passov, Executive Vice President and Chief Financial Officer of Zoetis.

Quarterly Highlights

Zoetis organizes and manages its business across four regional operating segments: the United States (US); Europe/Africa/Middle East (EuAfME); Canada/Latin America (CLAR); and Asia/Pacific (APAC). Within each of these regional segments, the company delivers a diverse portfolio of products for livestock and companion animals tailored to local trends and customer needs.

In the second quarter of 2013:

  • Revenue in the US was $437 million, an increase of four per cent over the second quarter of 2012. Growth in sales of livestock products was driven by cattle, swine and poultry. Growth in sales of companion animal products was driven by increases in small animal products, partially offset by continued contraction in the equine market.
  • Revenue in EuAfME was $278 million, an increase of one per cent operationally over the second quarter of 2012. Sales of companion animal products benefited from increased sales associated with third-party manufacturing agreements; excluding these sales, companion animal product sales were relatively flat.Sales of livestock products declined, due primarily to lower sales of cattle products resulting from cold weather conditions and overall economic weakness in Europe, partially offset by growth in swine and poultry products.
  • Revenue in CLAR was $213 million, an increase of four per cent operationally over the second quarter of 2012. Sales of companion animal products increased in the quarter, largely due to increased demand and marketing programs, primarily in Brazil and Mexico, and were slightly offset by lower sales in Canada. Growth in sales of livestock products was driven primarily by poultry and swine, while sales of cattle products declined.
  • Revenue in APAC was $186 million, an increase of seven per cent operationally over the second quarter of 2012. Sales of companion animal products were favorably impacted by the continued introduction of new products. Growth of livestock product sales was driven by swine products and the continued launch of new vaccines, while drought conditions continued to negatively impact the sale of cattle products in Australia.

Zoetis continues to drive demand and strengthen its diverse portfolio of products through brand lifecycle management, strong customer relationships and access to new markets and technologies. With an expansive and diverse product portfolio, the company focuses on improving the performance and delivery of current product lines; expanding product indications across species; and pursuing approvals across new geographies.

Some recent highlights include:

Progress with China joint venture

Zoetis's joint venture in Jilin, China, has received approval for RUI LAN AN™ - a new high standard of innovation against highly pathogenic porcine reproductive and respiratory syndrome (HP PRRS). This vaccine is a key milestone for Zoetis's business in China. The vaccine combines the global expertise of Zoetis and a strong local vaccine development programme to address vaccine needs of swine producers in China, the world's leading pork-producing nation. The joint venture was established in 2011 to develop, manufacture and distribute animal health vaccines in China.

Managing Brand Lifecycles

Zoetis continues strengthening its diverse portfolio of medicines and vaccines with new approvals in additional markets and new formulations for existing brands. For example, FOSTERA® PCV is a vaccine for swine and achieved its latest approvals in Brazil and Japan this quarter; it helps limit the very costly consequences of PCV-associated disease that could compromise herd health and performance.

Meanwhile in poultry, the POULVAC® IB QX vaccine, which was first approved in France in 2010, was recently granted registration in the German market; it has also been registered in Romania, Bulgaria and South Africa.

In the case of new formulations, DRAXXIN® is an anti-infective for livestock that was first approved in Europe in 2003, and this quarter the DRAXXIN 25 (tulathromycin) Injectable Solution was approved in the U.S. at a new, lower concentration (of tulathromycin), which is more suitable for swine.

BOVI-SHIELD GOLD ONE SHOT™ was also approved in the US in July. It is a vaccine for cattle to help prevent certain respiratory diseases and gives the company a competitive combination product in this area.

APOQUEL® - first approval of novel JAK-1 inhibitor

The US FDA approved APOQUEL (oclacitinib tablet) on 16 May for the control of pruritus associated with allergic dermatitis and the control of atopic dermatitis in dogs at least 12 months of age. Pruritus, or itching, is the most common sign of allergies in dogs. Developed by Zoetis, APOQUEL is the first Janus kinase (JAK) inhibitor approved for veterinary use that targets the itch and inflammation pathway and marks a significant improvement in the standard of care veterinarians can offer. APOQUEL provides fast-acting relief from itching and improves inflammation for the estimated 8.2 million dogs in the U.S. that suffer from short- and long-term allergic skin conditions. Meanwhile, in Europe, the CVMP (Committee for Veterinary Medicinal Products) has adopted a positive opinion recommending the granting of a market authorization for APOQUEL, an important step in the approval process with the EU Commission; the company also continues pursuing approvals of APOQUEL in additional markets.

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