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What changed in Zoetis's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Zoetis's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+343 added−266 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in Zoetis's 2025 10-K

343 paragraphs added · 266 removed · 233 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

86 edited+43 added−18 removed82 unchanged
Biggest changeCompanion animal $ 4,054 $ 3,529 $ 3,341 15 — 15 6 — 6 Livestock 1,020 1,026 972 (1) — (1) 6 — 6 5,074 4,555 4,313 11 — 11 6 — 6 International Companion animal 2,224 2,047 1,862 9 (4) 13 10 (2) 12 Livestock 1,878 1,864 1,819 1 (7) 8 2 (5) 7 4,102 3,911 3,681 5 (5) 10 6 (3) 9 Total Companion animal 6,278 5,576 5,203 13 (1) 14 7 (1) 8 Livestock 2,898 2,890 2,791 — (5) 5 4 (2) 6 Contract manufacturing & human health 80 78 86 3 — 3 (9) 1 (10) $ 9,256 $ 8,544 $ 8,080 8 (3) 11 6 (1) 7 40 | Table of Contents Earnings by segment and the operational and foreign exchange changes versus the comparable prior year period were as follows: % Change 24/23 23/22 Related to Related to Year Ended December 31, Foreign Exchange Foreign Exchange (MILLIONS OF DOLLARS) 2024 2023 2022 Total Operational Total Operational U.S. $ 3,336 $ 2,863 $ 2,763 17 — 17 4 — 4 International 2,118 2,037 1,990 4 (7) 11 2 (2) 4 Total reportable segments 5,454 4,900 4,753 11 (3) 14 3 (1) 4 Other business activities (562) (496) (424) 13 17 Reconciling Items: Corporate (1,213) (1,042) (1,073) 16 (3) Purchase accounting adjustments (140) (159) (160) (12) (1) Acquisition and divestiture-related costs (18) (9) (5) * 80 Certain significant items (79) 33 (56) * * Other unallocated (309) (291) (379) 6 (23) Income before income taxes $ 3,133 $ 2,936 $ 2,656 7 11 * Calculation not meaningful. 2024 vs. 2023 U.S. operating segment U.S. segment revenue increased by $519 million, or 11%, in 2024 compared with 2023, of which $525 million resulted from growth in companion animal products and $6 million decline in livestock products. • Companion animal revenue growth was primarily due to growth in sales of Simparica Trio, our mAb products for OA pain, Librela and Solensia, and key dermatology products, partially offset by lower sales of our small animal vaccines. • Livestock revenue declined due to the impact of the divestiture of our medicated feed additive product portfolio, certain water soluble products and related as sets, partially offset by higher sales of cattle products, driven by timing of supply and strong demand for our ceftiofur product line.
Biggest changeCompanion animal $ 4,220 $ 4,054 $ 3,529 4 — 4 15 — 15 Livestock 877 1,020 1,026 (14) — (14) (1) — (1) 5,097 5,074 4,555 — — — 11 — 11 International Companion animal 2,367 2,224 2,047 6 (1) 7 9 (4) 13 Livestock 1,887 1,878 1,864 — (2) 2 1 (7) 8 4,254 4,102 3,911 4 (1) 5 5 (5) 10 Total Companion animal 6,587 6,278 5,576 5 — 5 13 (1) 14 Livestock 2,764 2,898 2,890 (5) (2) (3) — (5) 5 Contract manufacturing & human health 116 80 78 45 — 45 3 — 3 $ 9,467 $ 9,256 $ 8,544 2 (1) 3 8 (3) 11 Earnings by segment and the operational and foreign exchange changes versus the comparable prior year period were as follows: % Change 25/24 24/23 Related to Related to Year Ended December 31, Foreign Exchange Foreign Exchange (MILLIONS OF DOLLARS) 2025 2024 2023 Total Operational Total Operational U.S. $ 3,438 $ 3,336 $ 2,863 3 — 3 17 — 17 International 2,264 2,118 2,037 7 2 5 4 (7) 11 Total reportable segments 5,702 5,454 4,900 5 1 4 11 (3) 14 Other business activities (562) (562) (496) — 13 Reconciling Items: Corporate (1,240) (1,213) (1,042) 2 16 Purchase accounting adjustments (128) (140) (159) (9) (12) Acquisition and divestiture-related costs (2) (18) (9) (89) * Certain significant items (82) (79) 33 4 * Other unallocated (328) (309) (291) 6 6 Income before income taxes $ 3,360 $ 3,133 $ 2,936 7 7 * Calculation not meaningful. 2025 vs. 2024 U.S. operating segment U.S. segment revenue increased by $23 million in 2025, which was relatively flat compared with 2024, of which $166 million resulted from growth in companion animal products, partially offset by a $143 million decline in livestock products. • Companion animal revenue growth was primarily due to increased sales of Simparica Trio, key dermatology products and small animal diagnostics, partially offset by lower sales of Librela. • Livestock revenue declined due to the impact of the MFA divestiture across cattle, poultry and swine products.
We test goodwill for impairment on at least an annual basis, or more frequently if necessary, either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or by performing a periodic quantitative assessment.
We test goodwill for impairment on at least an annual basis, or more frequently if necessary, either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or by performing a periodic quantitative assessment.
We believe that the following accounting policies are critical to an understanding of our consolidated financial statements as they require the application of the most difficult, subjective and complex judgments and, therefore, could have the greatest impact on our financial statements: (i) fair value; (ii) revenue; (iii) asset impairment reviews; and (iv) contingencies.
Significant Accounting Policies . We believe that the following accounting policies are critical to an understanding of our consolidated financial statements as they require the application of the most difficult, subjective and complex judgments and, therefore, could have the greatest impact on our financial statements: (i) fair value; (ii) revenue; (iii) asset impairment reviews; and (iv) contingencies.
Upon entering into a material acquisition, the maximum total leverage ratio increases to 4.00:1, and extends until the fourth full consecutive fiscal quarter ended immediately following the consummation of a material acquisition. In addition, the credit facility contains other customary covenants. We were in compliance with all financial covenants as of December 31, 2024 and December 31, 2023.
Upon entering into a material acquisition, the maximum total leverage ratio increases to 4.00:1, and extends until the fourth full consecutive fiscal quarter ended immediately following the consummation of a material acquisition. In addition, the credit facility contains other customary covenants. We were in compliance with all financial covenants as of December 31, 2025 and December 31, 2024.
Significant Accounting Policies in the Notes to Consolidated Financial Statements for discussion of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects or expected effects on our consolidated financial position, results of operations and cash flows. 49 | Table of Contents Forward-looking statements and factors that may affect future results This report contains “forward-looking” statements.
Significant Accounting Policies in the Notes to Consolidated Financial Statements for discussion of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects or expected effects on our consolidated financial position, results of operations and cash flows. 51 | Table of Contents Forward-looking statements and factors that may affect future results This report contains “forward-looking” statements.
There were no amounts drawn under the credit facility as of December 31, 2024 or December 31, 2023. We have additional lines of credit and other credit arrangements with a group of banks and other financial intermediaries for general corporate purposes. We maintain cash and cash equivalent balances in excess of our outstanding short-term borrowings.
There were no amounts drawn under the credit facility as of December 31, 2025 or December 31, 2024. We have additional lines of credit and other credit arrangements with a group of banks and other financial intermediaries for general corporate purposes. We maintain cash and cash equivalent balances in excess of our outstanding short-term borrowings.
There can be no assurance that a challenging economic environment or an economic downturn will not impact our liquidity or our ability to obtain financing in the future. 47 | Table of Contents Contractual obligations In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.
There can be no assurance that a challenging economic environment or an economic downturn will not impact our liquidity or our ability to obtain financing in the future. 49 | Table of Contents Contractual obligations In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.
Impairments of identifiable intangible assets other than goodwill, are recorded in Restructuring charges and certain acquisition and divestiture-related costs and Other (income)/deductions—net , as applicable. We did not have any material intangible asset impairment charges for the years ended December 31, 2024, 2023 and 2022.
Impairments of identifiable intangible assets other than goodwill, are recorded in Restructuring charges and certain acquisition and divestiture-related costs and Other (income)/deductions—net , as applicable. We did not have any material intangible asset impairment charges for the years ended December 31, 2025, 2024 and 2023.
For the years ended December 31, 2024 and 2023, the number of days that accounts receivables were outstanding have remained within this range. We regularly monitor our accounts receivable for collectability, particularly in markets where economic conditions remain uncertain. We believe that our allowance for doubtful accounts is appropriate.
For the years ended December 31, 2025 and 2024, the number of days that accounts receivables were outstanding have remained within this range. We regularly monitor our accounts receivable for collectability, particularly in markets where economic conditions remain uncertain. We believe that our allowance for doubtful accounts is appropriate.
Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following: • the possible impact and timing of competing products, including generic alternatives, on our products and our ability to compete against such products; • unanticipated safety, quality or efficacy concerns or issues about our products; • the economic, political, legal and business environment of the foreign jurisdictions in which we do business; • the decline in global economic conditions, including the regional conflict in the Middle East, economic weakness in China and inflation; • consolidation of our customers and distributors; • changes in the distribution channel for companion animal products; • an outbreak of infectious disease carried by animals; • disruptive innovations and advances in medical practices and technologies; • failure to successfully acquire businesses, license rights or products, integrate businesses, form and manage alliances or divest businesses; • restrictions and bans on the use of and consumer preferences regarding antibacterials in food-producing animals; • perceived adverse effects linked to the consumption of food derived from animals that utilize our products or animals generally; • increased regulation or decreased governmental support relating to the raising, processing or consumption of food-producing animals; • modification of foreign trade policy by the U.S. or other countries or the imposition of tariffs on imported or exported goods; • adverse weather conditions and the availability of natural resources; • the impact of climate change on our activities and the activities of our customers and suppliers; • an inability to hire and retain executive officers and other key personnel; • product launch delays, inventory shortages, recalls or unanticipated costs caused by manufacturing problems and capacity imbalances; • failure of our R&D, acquisition and licensing efforts to generate new products and product lifecycle innovations; • difficulties or delays in the development or commercialization of new products; • illegal distribution and/or sale of our products or the misuse or off-label use of our products; • legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental concerns, laws and regulations regarding data privacy, commercial disputes and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; • fluctuations in foreign exchange rates and potential currency controls; • a cyberattack, information security breach or other misappropriation of our data; • governmental laws and regulations affecting domestic and foreign operations, including without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may result from pending or possible future proposals; • failure to protect our intellectual property rights or to operate our business without infringing the intellectual property rights of others; • failure to generate sufficient cash to service our substantial indebtedness; and • the other factors set forth under “Risk Factors” in Item 1A of Part I of this 2024 Annual Report.
Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following: • the possible impact and timing of competing products, including generic alternatives, on our products and our ability to compete against such products; • unanticipated safety, quality or efficacy concerns or issues about our products; • the economic, political, legal and business environment of the foreign jurisdictions in which we do business; • the decline in global economic conditions, including the ongoing conflicts and rising tensions in various parts of the world, economic weakness in China and inflation; • consolidation of our customers and distributors; • changes in the distribution channel for companion animal products; • an outbreak of infectious disease carried by animals; • disruptive innovations and advances in medical practices and technologies; • failure to successfully acquire businesses, license rights or products, integrate businesses, form and manage alliances or divest businesses; • restrictions and bans on the use of and consumer preferences regarding antibacterials in food-producing animals; • perceived adverse effects linked to the consumption of food derived from animals that utilize our products or animals generally; • increased regulation or decreased governmental support relating to the raising, processing or consumption of food-producing animals; • modification of foreign trade policy by the U.S. or other countries or the imposition of tariffs on imported or exported goods; • adverse weather conditions and the availability of natural resources; • the impact of climate change on our activities and the activities of our customers and suppliers; • an inability to hire and retain executive officers and other key personnel; • product launch delays, inventory shortages, recalls or unanticipated costs caused by manufacturing problems and capacity imbalances; • failure of our R&D, acquisition and licensing efforts to generate new products and product lifecycle innovations; • difficulties or delays in the development or commercialization of new products; • illegal distribution and/or sale of our products or the misuse or off-label use of our products; • legal factors, including product liability claims, antitrust litigation and governmental investigations, including tax disputes, environmental concerns, laws and regulations regarding data privacy, commercial disputes and patent disputes with branded and generic competitors, any of which could preclude commercialization of products or negatively affect the profitability of existing products; • fluctuations in foreign exchange rates and potential currency controls; • a cyberattack, information security breach or other misappropriation of our data; • governmental laws and regulations affecting domestic and foreign operations, including without limitation, tax obligations and changes affecting the tax treatment by the U.S. of income earned outside the U.S. that may result from pending or possible future proposals; • failure to protect our intellectual property rights or to operate our business without infringing the intellectual property rights of others; • failure to generate sufficient cash to service our substantial indebtedness; and • the other factors set forth under “Risk Factors” in Item 1A of Part I of this 2025 Annual Report.
While not all-inclusive, examples of items that could be included as certain significant items would be costs related to a major non-acquisition or divestiture-related restructuring charge and associated implementation costs for a program that is specific in nature with a defined term, such as those related to our non-acquisition or divestiture-related cost-reduction and productivity initiatives; amounts related to disposals of products or facilities that do not qualify as discontinued operations as defined by U.S.
While not all-inclusive, examples of items that could be included as certain significant items would be costs related to a major non-acquisition or divestiture-related restructuring charge and associated implementation costs for a program that is specific in nature with a defined term, such as those related to our non-acquisition or divestiture-related cost-reduction and productivity initiatives; costs related to our business process transformation program; amounts related to disposals of products or facilities that do not qualify as discontinued operations as defined by U.S.
The lower effective tax rate for 2024, as compared to 2023, was primarily attributable to a higher benefit in the U.S. related to foreign-derived intangible income and lower net discrete tax expenses, partially offset by a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings, repatriation costs and Pillar Two global minimum tax).
The lower effective tax rate on adjusted pretax income for 2024, as compared to 2023, was primarily attributable to a higher benefit in the U.S. related to foreign-derived intangible income and lower net discrete tax expenses, partially offset by a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings, repatriation costs and Pillar Two global minimum tax).
December 31, 2023 For a discussion about the changes in Cash and cash equivalents , Short-term borrowings, Current portion of long-term debt and Long-term debt, net of discount and issuance costs , see “Analysis of financial condition, liquidity and capital resources” below.
December 31, 2024 For a discussion about the changes in Cash and cash equivalents , Short-term borrowings, Current portion of long-term debt and Long-term debt, net of discount and issuance costs , see “Analysis of financial condition, liquidity and capital resources” below.
Historically, we have not paid significant amounts under these provisions and, as of December 31, 2024 and 2023, recorded amounts for the estimated fair value of these indemnifications are not material. New accounting standards See Note 3.
Historically, we have not paid significant amounts under these provisions and, as of December 31, 2025 and 2024, recorded amounts for the estimated fair value of these indemnifications are not material. New accounting standards See Note 3.
Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors and may not be comparable to the calculation of similar measures of other companies.
Despite the importance of these 38 | Table of Contents measures to management in goal setting and performance measurement, non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors and may not be comparable to the calculation of similar measures of other companies.
We believe the elimination of amortization attributable to acquired intangible assets provides management and investors an alternative view of our business results by providing a degree of parity to internally developed intangible assets for which R&D costs previously have been expensed.
We believe the elimination of amortization attributable to acquired intangible 44 | Table of Contents assets provides management and investors an alternative view of our business results by providing a degree of parity to internally developed intangible assets for which R&D costs previously have been expensed.
Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items. A reconciliation of reported diluted earnings per share (EPS), as reported under U.S.
Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items. 45 | Table of Contents A reconciliation of reported diluted earnings per share (EPS), as reported under U.S.
Income taxes in Certain significant items also includes: • For 2024, a tax expense related to the divestiture of the medicated feed additive product portfolio, certain water soluble products and related assets. • For 2023, a benefit from the tax loss on the divestiture of Performance Livestock Analytics, partially offset by a tax expense related to changes to prior years’ tax positions with regard to the one-time mandatory deemed repatriation tax under the Tax Cuts and Jobs Act. • For 2022, a tax expense related to changes in valuation allowances related to impairments of certain assets and changes in uncertain tax positions.
Income taxes in Certain significant items also includes: • For 2024, a tax expense related to the divestiture of the medicated feed additive product portfolio, certain water soluble products and related assets. • For 2023, a benefit from the tax loss on the divestiture of Performance Livestock Analytics, partially offset by a tax expense related to changes to prior years’ tax positions with regard to the one-time mandatory deemed repatriation tax under the Tax Cuts and Jobs Act.
If we conclude it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of 35 | Table of Contents the indefinite-lived intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized.
If we conclude it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the indefinite-lived intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized.
(a) The effective tax rate on adjusted pretax income was 19.8%, 20.1% and 20.3% in 2024, 2023 and 2022, respectively.
(a) The effective tax rate on adjusted pretax income was 20.3%, 19.8% and 20.1% in 2025, 2024 and 2023, respectively.
Consequently, you should not consider the above to be a complete discussion of all potential risks or uncertainties. 50 | Table of Contents
Consequently, you should not consider the above to be a complete discussion of all potential risks or uncertainties. 52 | Table of Contents
While all identifiable intangible assets can be impacted by events and thus lead to impairment, in general, identifiable intangible assets that are at the highest risk of impairment include IPR&D assets ($136 million as of December 31, 2024). IPR&D assets are higher-risk assets given the uncertain nature of R&D activity.
While all identifiable intangible assets can be impacted by events and thus lead to impairment, in general, identifiable intangible assets that are at the highest risk of impairment include IPR&D assets ($141 million as of December 31, 2025). IPR&D assets are higher-risk assets given the uncertain nature of R&D activity.
In particular, forward-looking statements include statements relating to our future actions, business plans or prospects, prospective products, product approvals or products under development, product and supply chain disruptions, R&D costs, timing and likelihood of success, future operating or financial performance, future results of current and anticipated products and services, strategies, sales efforts, expenses, production efficiencies, production margins, anticipated timing of generic market entries, integration of acquired businesses, anticipated impact or timing of divestitures, interest rates, tax rates, tariffs, changes in tax regimes and laws, foreign exchange rates, growth in emerging markets, the outcome of contingencies, such as legal proceedings, plans related to share repurchases and dividends, government regulation, taxes and financial results.
In particular, forward-looking statements include statements relating to our future actions, business plans or prospects, prospective products, product approvals or products under development, product and supply chain disruptions, R&D costs, timing and likelihood of success, future operating or financial performance, future results of current and anticipated products and services, strategies, sales efforts, expenses, production efficiencies, production margins, anticipated timing of generic market entries, integration of acquired businesses, anticipated impact or timing of divestitures, interest rates, tax rates, tariffs, changes in tax regimes and laws, impacts of the timing and processing of sales in the International segment; possible impacts of the expected fiscal year alignment , foreign exchange rates, growth in emerging markets, the outcome of contingencies, such as legal proceedings, plans related to share repurchases and dividends, government regulation, taxes and financial results.
Other unallocated expenses increased by $18 million, or 6%, in 2024 compared with 2023, primarily due to higher manufacturing costs and unfavorable foreign exchange, partially offset by lower freight charges and lower inventory obsolescence. See Notes to Consolidated Financial Statements— Note 19. Segment Information for further information.
Other unallocated expenses increased by $19 million, or 6%, in 2025 compared with 2024, primarily due to higher manufacturing costs and other charges, partially offset by lower inventory obsolescence, freight charges and favorable foreign exchange. See Notes to Consolidated Financial Statements— Note 19. Segment Information for further information.
Our outstanding debt securities are as follows: Description Principal Amount Interest Rate Terms 2015 Senior Notes due 2025 $750 million 4.500% Interest due semi annually, not subject to amortization, aggregate principal due on November 13, 2025 2022 Senior Notes due 2025 $600 million 5.400% Interest due semi annually, not subject to amortization, aggregate principal due on November 14, 2025 2017 Senior Notes due 2027 $750 million 3.000% Interest due semi annually, not subject to amortization, aggregate principal due on September 12, 2027 2018 Senior Notes due 2028 $500 million 3.900% Interest due semi annually, not subject to amortization, aggregate principal due on August 20, 2028 2020 Senior Notes due 2030 $750 million 2.000% Interest due semi annually, not subject to amortization, aggregate principal due on May 15, 2030 2022 Senior Notes due 2032 $750 million 5.600% Interest due semi annually, not subject to amortization, aggregate principal due on November 16, 2032 2013 Senior Notes due 2043 $1,150 million 4.700% Interest due semi annually, not subject to amortization, aggregate principal due on February 1, 2043 2017 Senior Notes due 2047 $500 million 3.950% Interest due semi annually, not subject to amortization, aggregate principal due on September 12, 2047 2018 Senior Notes due 2048 $400 million 4.450% Interest due semi annually, not subject to amortization, aggregate principal due on August 20, 2048 2020 Senior Notes due 2050 $500 million 3.000% Interest due semi annually, not subject to amortization, aggregate principal due on May 15, 2050 Credit ratings Two major corporate debt-rating organizations, Moody's and S&P, assign ratings to our short-term and long-term debt.
Our outstanding debt securities are as follows: Description Principal Amount Interest Rate Terms 2017 Senior Notes due 2027 $750 million 3.000% Interest due semi annually, not subject to amortization, aggregate principal due on September 12, 2027 2018 Senior Notes due 2028 $500 million 3.900% Interest due semi annually, not subject to amortization, aggregate principal due on August 20, 2028 2025 Senior Notes due 2028 $850 million 4.150% Interest due semi annually, not subject to amortization, aggregate principal due on August 17, 2028 2025 Convertible Senior Notes due 2029 $2,000 million 0.250% Interest due semi annually, not subject to amortization, aggregate principal due on June 15, 2029 2020 Senior Notes due 2030 $750 million 2.000% Interest due semi annually, not subject to amortization, aggregate principal due on May 15, 2030 2022 Senior Notes due 2032 $750 million 5.600% Interest due semi annually, not subject to amortization, aggregate principal due on November 16, 2032 2025 Senior Notes due 2035 $1,000 million 5.000% Interest due semi annually, not subject to amortization, aggregate principal due on August 17, 2035 2013 Senior Notes due 2043 $1,150 million 4.700% Interest due semi annually, not subject to amortization, aggregate principal due on February 1, 2043 2017 Senior Notes due 2047 $500 million 3.950% Interest due semi annually, not subject to amortization, aggregate principal due on September 12, 2047 2018 Senior Notes due 2048 $400 million 4.450% Interest due semi annually, not subject to amortization, aggregate principal due on August 20, 2048 2020 Senior Notes due 2050 $500 million 3.000% Interest due semi annually, not subject to amortization, aggregate principal due on May 15, 2050 Credit ratings Two major corporate debt-rating organizations, Moody's and S&P, assign ratings to our short-term and long-term debt.
For example, due to the regulated nature of the animal health medicines, vaccines and diagnostic business, the closure of excess facilities can take several years, as all manufacturing changes are subject to extensive validation and testing and must be approved by the U.S.
For example, due to the regulated nature of the animal health medicines, vaccines and diagnostic business, the closure of excess facilities can take several years, as all manufacturing changes are subject to extensive validation and testing and must be approved by the U.S. Food and Drug Administration and/or other regulatory authorities.
In 2024, we performed a periodic quantitative impairment assessment as of September 30, 2024, which did not result in the impairment of goodwill associated with any of our reporting units. In 2023, we performed a qualitative impairment assessment as of September 30, 2023, which did not result in the impairment of goodwill associated with any of our reporting units.
In 2025, we performed a periodic qualitative impairment assessment as of September 30, 2025 and, in 2024, we performed a quantitative impairment assessment as of September 30, 2024, which did not result in the impairment of goodwill associated with any of our reporting units in either period.
GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. For a description of our significant accounting policies, see Notes to Consolidated Financial Statements— Note 3. Significant Accounting Policies .
Significant accounting policies and application of critical accounting estimates In presenting our financial statements in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. For a description of our significant accounting policies, see Notes to Consolidated Financial Statements— Note 3.
For 2023, primarily represents a net gain on the sale of a majority interest in our pet insurance business. 44 | Table of Contents The classification of the above items excluded from adjusted net income are as follows: Year Ended December 31, (MILLIONS OF DOLLARS) 2024 2023 2022 Cost of sales: Purchase accounting adjustments $ 4 $ 10 $ 6 Inventory write-offs — 2 4 Other 1 1 4 Total Cost of sales 5 13 14 Selling, general & administrative expenses: Purchase accounting adjustments 11 21 29 Other 6 — — Total Selling, general & administrative expenses 17 21 29 Research & development expenses: Purchase accounting adjustments 2 1 1 Total Research & development expenses 2 1 1 Amortization of intangible assets: Purchase accounting adjustments 123 127 124 Total Amortization of intangible assets 123 127 124 Restructuring charges and certain acquisition and divestiture-related costs: Acquisition-related costs 1 7 5 Divestiture-related costs 16 — — Employee termination costs 36 41 3 Asset impairments — 1 2 Exit costs — 4 1 Total Restructuring charges and certain acquisition and divestiture-related costs 53 53 11 Other (income)/deductions—net: Asset impairments 11 21 41 Net loss/(gain) on sale of businesses 25 (101) — Other 1 — 1 Total Other (income)/deductions—net 37 (80) 42 Provision for taxes on income 30 22 38 Total purchase accounting adjustments, acquisition and divestiture-related costs, and certain significant items—net of tax $ 207 $ 113 $ 183 Analysis of the Consolidated Statements of Comprehensive Income Changes in other comprehensive income for the periods presented are primarily related to foreign currency translation adjustments and unrealized gains/(losses) on derivative instruments.
The classification of the above items excluded from adjusted net income are as follows: Year Ended December 31, (MILLIONS OF DOLLARS) 2025 2024 2023 Cost of sales: Purchase accounting adjustments $ 4 $ 4 $ 10 Inventory write-offs — — 2 Business process transformation costs 6 — — Other (1) 1 1 Total Cost of sales 9 5 13 Selling, general & administrative expenses: Purchase accounting adjustments 11 11 21 Business process transformation costs 23 — — Other — 6 — Total Selling, general & administrative expenses 34 17 21 Research & development expenses: Purchase accounting adjustments 2 2 1 Total Research & development expenses 2 2 1 Amortization of intangible assets: Purchase accounting adjustments 111 123 127 Total Amortization of intangible assets 111 123 127 Restructuring charges and certain acquisition and divestiture-related costs: Acquisition-related costs 2 1 7 Divestiture-related costs — 16 — Employee termination costs 20 36 41 Asset impairments 22 — 1 Exit costs 7 — 4 Total Restructuring charges and certain acquisition and divestiture-related costs 51 53 53 Other (income)/deductions—net: Asset impairments 5 11 21 Net loss/(gain) on sale of businesses 3 25 (101) Other (3) 1 — Total Other (income)/deductions—net 5 37 (80) Provision for taxes on income 38 30 22 Total purchase accounting adjustments, acquisition and divestiture-related costs, and certain significant items—net of tax $ 174 $ 207 $ 113 Analysis of the Consolidated Statements of Comprehensive Income Changes in other comprehensive income for the periods presented are primarily related to foreign currency translation adjustments and unrealized gains/(losses) on derivative instruments.
The decrease was primarily as a result of: • price increases; • favorable product mix; • lower inventory charges; and • lower freight costs, partially offset by: • unfavorable manufacturing and other costs; and • unfavorable foreign exchange.
The decrease was primarily as a result of: • favorable impact of the MFA divestiture; • price increases; • favorable foreign exchange; and • lower inventory charges, partially offset by: • unfavorable manufacturing and other costs.
GAAP, to non-GAAP adjusted diluted EPS follows: Year Ended December 31, % Change 2024 2023 2022 24/23 23/22 Earnings per share—diluted (a) : GAAP reported EPS attributable to Zoetis—diluted $ 5.47 $ 5.07 $ 4.49 8 13 Purchase accounting adjustments—net of tax 0.24 0.28 0.26 (14) 8 Acquisition and divestiture-related costs—net of tax 0.03 0.02 0.01 50 * Certain significant items—net of tax 0.18 (0.05) 0.12 * * Non-GAAP adjusted EPS—diluted $ 5.92 $ 5.32 $ 4.88 11 9 * Calculation not meaningful.
GAAP, to non-GAAP adjusted diluted EPS follows: Year Ended December 31, % Change 2025 2024 2023 25/24 24/23 Earnings per share—diluted (a) : GAAP reported EPS attributable to Zoetis—diluted $ 6.02 $ 5.47 $ 5.07 10 8 Purchase accounting adjustments—net of tax 0.22 0.24 0.28 (8) (14) Acquisition and divestiture-related costs—net of tax — 0.03 0.02 * 50 Certain significant items—net of tax 0.17 0.18 (0.05) (6) * Non-GAAP adjusted EPS—diluted $ 6.41 $ 5.92 $ 5.32 8 11 * Calculation not meaningful.
Adjusted net income includes the following for each of the periods presented: Year Ended December 31, (MILLIONS OF DOLLARS) 2024 2023 2022 Interest expense, net of capitalized interest $ 225 $ 239 $ 221 Interest income (106) (103) (50) Income taxes 667 618 583 Depreciation 323 302 266 Amortization 34 36 40 43 | Table of Contents Adjusted net income, as shown above, excludes the following items: Year Ended December 31, (MILLIONS OF DOLLARS) 2024 2023 2022 Purchase accounting adjustments: Amortization and depreciation $ 140 $ 153 $ 160 Cost of sales — 6 — Total purchase accounting adjustments—pre-tax 140 159 160 Income taxes (a) 31 32 40 Total purchase accounting adjustments—net of tax 109 127 120 Acquisition and divestiture-related costs: Acquisition-related costs 1 7 5 Divestiture-related costs (b) 16 — — Restructuring costs 1 2 — Total acquisition and divestiture-related costs—pre-tax 18 9 5 Income taxes (a) 4 2 1 Total acquisition and divestiture-related costs—net of tax 14 7 4 Certain significant items: Other restructuring charges and cost-reduction/productivity initiatives (c) 35 44 8 Certain asset impairment charges (d) 11 24 47 Net loss/(gain) on sale of businesses (e) 25 (101) — Other 8 — 1 Total certain significant items—pre-tax 79 (33) 56 Income taxes (a) (5) (12) (3) Total certain significant items—net of tax 84 (21) 59 Total purchase accounting adjustments, acquisition and divestiture-related costs, and certain significant items—net of tax $ 207 $ 113 $ 183 (a) Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate.
Adjusted net income includes the following for each of the periods presented: Year Ended December 31, (MILLIONS OF DOLLARS) 2025 2024 2023 Interest expense, net of capitalized interest $ 222 $ 225 $ 239 Interest income (93) (106) (103) Income taxes 725 667 618 Depreciation 325 323 302 Amortization 34 34 36 Adjusted net income, as shown above, excludes the following items: Year Ended December 31, (MILLIONS OF DOLLARS) 2025 2024 2023 Purchase accounting adjustments: Amortization and depreciation $ 128 $ 140 $ 153 Cost of sales — — 6 Total purchase accounting adjustments—pre-tax 128 140 159 Income taxes (a) 29 31 32 Total purchase accounting adjustments—net of tax 99 109 127 Acquisition and divestiture-related costs: Acquisition-related costs 2 1 7 Divestiture-related costs (b) — 16 — Restructuring costs — 1 2 Total acquisition and divestiture-related costs—pre-tax 2 18 9 Income taxes (a) — 4 2 Total acquisition and divestiture-related costs—net of tax 2 14 7 Certain significant items: Other restructuring charges and cost-reduction/productivity initiatives (c) 27 35 44 Business process transformation cost s (d) 29 — — Certain asset impairment charges (e) 27 11 24 Net loss/(gain) on sale of businesses (f) 3 25 (101) Other (4) 8 — Total certain significant items—pre-tax 82 79 (33) Income taxes (a) 9 (5) (12) Total certain significant items—net of tax 73 84 (21) Total purchase accounting adjustments, acquisition and divestiture-related costs, and certain significant items—net of tax $ 174 $ 207 $ 113 (a) Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate.
Accrued compensation and related items increased primarily due to the accrual of 2024 annual incentive bonuses, sales incentive bonuses and savings plan contributions to eligible employees, partially offset by the payments of 2023 annual incentive bonuses and sales incentive bonuses, as well as savings plan contributions to eligible employees.
Accrued compensation and related items decreased primarily due to the payments of 2024 annual incentive bonuses, payments for sales incentive bonuses and savings plan contributions to eligible employees, partially offset by the accrual of 2025 annual incentive bonuses, savings plan contributions to eligible employees and sales incentive bonuses.
The net changes in Noncurrent deferred tax assets, Noncurrent deferred tax liabilities, Income taxes payable and Other taxes payable primarily reflect adjustments to the accrual for the income tax provision, the timing of income tax payments and the tax impact of various acquisitions and divestitures. Other noncurrent assets increased primarily due to capitalized cloud computing arrangements implementation costs.
The net changes in Noncurrent deferred tax assets, Noncurrent deferred tax liabilities, Income taxes payable and Other taxes payable primarily reflect adjustments to the accrual for the income tax provision, the timing of income tax payments and the tax impact of various acquisitions and divestitures.
Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Revenue $ 9,256 $ 8,544 $ 8,080 8 6 Costs and expenses: Cost of sales (a) 2,719 2,561 2,454 6 4 % of revenue 29.4 % 30.0 % 30.4 % Selling, general and administrative expenses (a) 2,318 2,151 2,009 8 7 % of revenue 25 % 25 % 25 % Research and development expenses (a) 686 614 539 12 14 % of revenue 7 % 7 % 7 % Amortization of intangible assets (a) 141 149 150 (5) (1) Restructuring charges and certain acquisition and divestiture-related costs 53 53 11 — * Interest expense, net of capitalized interest 225 239 221 (6) 8 Other (income)/deductions—net (19) (159) 40 (88) * Income before provision for taxes on income 3,133 2,936 2,656 7 11 % of revenue 34 % 34 % 33 % Provision for taxes on income 637 596 545 7 9 Effective tax rate 20.3 % 20.3 % 20.5 % Net income before allocation to noncontrolling interests 2,496 2,340 2,111 7 11 Less: Net gain/(loss) attributable to noncontrolling interests 10 (4) (3) * 33 Net income attributable to Zoetis $ 2,486 $ 2,344 $ 2,114 6 11 % of revenue 27 % 27 % 26 % * Calculation not meaningful.
Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Revenue $ 9,467 $ 9,256 $ 8,544 2 8 Costs and expenses: Cost of sales (a) 2,666 2,719 2,561 (2) 6 % of revenue 28.2 % 29.4 % 30.0 % Selling, general and administrative expenses (a) 2,378 2,318 2,151 3 8 % of revenue 25 % 25 % 25 % Research and development expenses (a) 698 686 614 2 12 % of revenue 7 % 7 % 7 % Amortization of intangible assets (a) 128 141 149 (9) (5) Restructuring charges and certain acquisition and divestiture-related costs 51 53 53 (4) — Interest expense, net of capitalized interest 222 225 239 (1) (6) Other (income)/deductions—net (36) (19) (159) 89 (88) Income before provision for taxes on income 3,360 3,133 2,936 7 7 % of revenue 35 % 34 % 34 % Provision for taxes on income 687 637 596 8 7 Effective tax rate 20.4 % 20.3 % 20.3 % Net income before allocation to noncontrolling interests 2,673 2,496 2,340 7 7 Less: Net gain/(loss) attributable to noncontrolling interests — 10 (4) * * Net income attributable to Zoetis $ 2,673 $ 2,486 $ 2,344 8 6 % of revenue 28 % 27 % 27 % * Calculation not meaningful.
The net cash used in investing activities for 2024 was primarily due to capital expenditures, partially offset by net proceeds on the sale of our medicated feed additive product portfolio, certain water soluble products and related assets, as well as net proceeds from derivative instrument activity.
The net cash used in investing activities for 2024 was primarily due to capital expenditures, partially offset by net proceeds on the sale of our medicated feed additive product portfolio, certain water soluble products and related assets, as well as net proceeds from derivative instrument activity. 48 | Table of Contents Financing activities 2025 vs. 2024 Net cash used in financing activities was $1,870 million in 2025 compared with $2,660 million in 2024.
Selected measures of liquidity and capital resources Certain relevant measures of our liquidity and capital resources follow: December 31, (MILLIONS OF DOLLARS) 2024 2023 Cash and cash equivalents $ 1,987 $ 2,041 Accounts receivable, net (a) 1,316 1,304 Short-term borrowings — 3 Current portion of long-term debt 1,350 — Long-term debt 5,220 6,564 Working capital 2,574 4,454 Ratio of current assets to current liabilities 1.75:1 3.36:1 (a) Accounts receivable are usually collected over a period of 45 to 75 days .
Selected measures of liquidity and capital resources Certain relevant measures of our liquidity and capital resources follow: December 31, (MILLIONS OF DOLLARS) 2025 2024 Cash and cash equivalents $ 2,312 $ 1,987 Accounts receivable, net (a) 1,590 1,316 Current portion of long-term debt — 1,350 Long-term debt 9,042 5,220 Working capital 4,533 2,574 Ratio of current assets to current liabilities 3.03:1 1.75:1 (a) Accounts receivable are usually collected over a period of 45 to 75 days .
Food and Drug Administration and/or other regulatory authorities. 42 | Table of Contents Certain significant items Adjusted net income is calculated excluding certain significant items. Certain significant items represent substantive, unusual items that are evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature.
Certain significant items Adjusted net income is calculated excluding certain significant items. Certain significant items represent substantive, unusual items that are evaluated on an individual basis. Such evaluation considers both the quantitative and the qualitative aspect of their unusual nature.
Unrealized gains/(losses) on the changes in the fair value of derivative instruments are recorded within Accumulated other comprehensive income/(loss) and reclassified into earnings depending on the nature and purpose of the financial instrument, as described in Note 9. Financial Instruments of the Notes to Consolidated Financial Statements. Analysis of the Consolidated Balance Sheets December 31, 2024 vs.
Unrealized gains/(losses) on the changes in the fair value of derivative instruments are recorded within Accumulated other comprehensive income/(loss) and reclassified into earnings depending on the nature and purpose of the financial instrument, as described in Note 9.
Analysis of the Consolidated Statements of Cash Flows Year Ended December 31, $ Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Net cash provided by (used in): Operating activities $ 2,953 $ 2,353 $ 1,912 $ 600 $ 441 Investing activities (315) (777) (883) 462 106 Financing activities (2,660) (3,109) (904) 449 (2,205) Effect of exchange-rate changes on cash and cash equivalents (32) (7) (29) (25) 22 Net (decrease)/increase in cash and cash equivalents $ (54) $ (1,540) $ 96 $ 1,486 $ (1,636) Operating activities 2024 vs. 2023 Net cash provided by operating activities was $2,953 million in 2024 compared with $2,353 million in 2023.
Analysis of the Consolidated Statements of Cash Flows Year Ended December 31, $ Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Net cash provided by (used in): Operating activities $ 2,904 $ 2,953 $ 2,353 $ (49) $ 600 Investing activities (748) (315) (777) (433) 462 Financing activities (1,870) (2,660) (3,109) 790 449 Effect of exchange-rate changes on cash and cash equivalents 39 (32) (7) 71 (25) Net increase/(decrease) in cash and cash equivalents $ 325 $ (54) $ (1,540) $ 379 $ 1,486 Operating activities 2025 vs. 2024 Net cash provided by operating activities was $2,904 million in 2025 compared with $2,953 million in 2024.
Revenue Total revenue by operating segment was as follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 U.S. $ 5,074 $ 4,555 $ 4,313 11 6 International 4,102 3,911 3,681 5 6 Total operating segments 9,176 8,466 7,994 8 6 Contract manufacturing & human health 80 78 86 3 (9) Total Revenue $ 9,256 $ 8,544 $ 8,080 8 6 37 | Table of Contents On a global basis, the mix of revenue between companion animal and livestock products was as follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Companion animal $ 6,278 $ 5,576 $ 5,203 13 7 Livestock 2,898 2,890 2,791 — 4 Contract manufacturing & human health 80 78 86 3 (9) Total Revenue $ 9,256 $ 8,544 $ 8,080 8 6 2024 vs. 2023 Total revenue increased by $712 million, or 8%, in 2024 compared with 2023 reflecting operational revenue growth of $921 million, or 11%.
Revenue Total revenue by operating segment was as follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 U.S. $ 5,097 $ 5,074 $ 4,555 — 11 International 4,254 4,102 3,911 4 5 Total operating segments 9,351 9,176 8,466 2 8 Contract manufacturing & human health 116 80 78 45 3 Total Revenue $ 9,467 $ 9,256 $ 8,544 2 8 On a global basis, the mix of revenue between companion animal and livestock products was as follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Companion animal $ 6,587 $ 6,278 $ 5,576 5 13 Livestock 2,764 2,898 2,890 (5) — Contract manufacturing & human health 116 80 78 45 3 Total Revenue $ 9,467 $ 9,256 $ 8,544 2 8 2025 vs. 2024 Total revenue increased by $211 million, or 2%, in 2025 compared with 2024 reflecting operational revenue growth of $247 million, or 3%.
International segment earnings increased by $81 million, or 4%, in 2024 compared with 2023. Operational earnings growth was $230 million, or 11%, primarily due to higher revenue, partially offset by higher cost of sales and operating expenses.
International segment earnings increased by $146 million, or 7%, in 2025 compared with 2024. Operational earnings growth was $106 million, or 5%, primarily due to higher revenue, partially offset by higher cost of sales and operating expenses.
GAAP, to adjusted net income follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 GAAP reported net income attributable to Zoetis $ 2,486 $ 2,344 $ 2,114 6 11 Purchase accounting adjustments—net of tax 109 127 120 (14) 6 Acquisition and divestiture-related costs—net of tax 14 7 4 * 75 Certain significant items—net of tax 84 (21) 59 * * Non-GAAP adjusted net income (a) $ 2,693 $ 2,457 $ 2,297 10 7 * Calculation not meaningful.
GAAP, to adjusted net income follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 GAAP reported net income attributable to Zoetis $ 2,673 $ 2,486 $ 2,344 8 6 Purchase accounting adjustments—net of tax 99 109 127 (9) (14) Acquisition and divestiture-related costs—net of tax 2 14 7 (86) * Certain significant items—net of tax 73 84 (21) (13) * Non-GAAP adjusted net income (a) $ 2,847 $ 2,693 $ 2,457 6 10 * Calculation not meaningful.
We expect to contribute a total of $6 million to these plans in 2025. As of December 31, 2024, the supplemental savings plan liability was $48 million. For additional information, see Notes to Consolidated Financial Statements— Note 14. Benefit Plans. Share repurchase program In December 2021, our Board of Directors authorized a $3.5 billion multi-year share repurchase program.
As of December 31, 2025, the supplemental savings plan liability was $47 million. For additional information, see Notes to Consolidated Financial Statements— Note 14. Benefit Plans. Share repurchase program In August 2024, our Board of Directors authorized a multi-year share repurchase program of up to $6 billion of our outstanding common stock.
The following table provides the current ratings assigned by these rating agencies to our commercial paper and senior unsecured non-credit-enhanced long-term debt: Commercial Paper Long-term Debt Date of Last Action Name of Rating Agency Rating Rating Outlook Moody’s P-2 A3 Stable January 2025 S&P A-2 BBB Stable December 2016 Pension obligations As part of the separation from Pfizer, Pfizer transferred to us the net pension obligations associated with certain international defined benefit plans.
The following table provides the current ratings assigned by these rating agencies to our commercial paper and senior unsecured non-credit-enhanced long-term debt: Commercial Paper Long-term Debt Date of Last Action Name of Rating Agency Rating Rating Outlook Moody’s P-2 A3 Stable January 2025 S&P A-2 BBB+ Stable April 2025 Pension obligations We maintain pension obligations associated with certain international defined benefit plans and expect to contribute a total of $8 million to these plans in 2026.
Interest expense, net of capitalized interest Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Interest expense, net of capitalized interest $ 225 $ 239 $ 221 (6) 8 2024 vs. 2023 Interest expense, net of capitalized interest, decreased by $14 million, or 6%, in 2024 compared with 2023, primarily as a result of higher capitalized interest in the current period associated with capital projects to support our future growth and a higher debt balance during a portion of the prior year.
Interest expense, net of capitalized interest Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Interest expense, net of capitalized interest $ 222 $ 225 $ 239 (1) (6) 2025 vs. 2024 Interest expense, net of capitalized interest, decreased by $3 million, or 1%, in 2025 compared with 2024, primarily as a result of higher capitalized interest in the current period associated with capital projects to support our future growth and higher gains on foreign exchange derivative instruments, partially offset by a higher average debt balance during a portion of the current year.
U.S. segment earnings increased by $473 million, or 17%, in 2024 compared with 2023, primarily due to higher revenue, partially offset by higher cost of sales and operating expenses. International operating segment International segment revenue increased by $191 million, or 5%, in 2024 compared with 2023.
U.S. segment earnings increased by $102 million, or 3%, in 2025 compared with 2024, primarily due to higher revenue and lower cost of sales, partially offset by higher operating expenses. International operating segment International segment revenue increased by $152 million, or 4%, in 2025 compared with 2024.
These costs also include certain compensation costs, certain procurement costs, and other miscellaneous operating expenses that are not charged to our operating segments, as well as interest income and expense; 41 | Table of Contents • Certain transactions and events such as Purchase accounting adjustments , Acquisition and divestiture-related activities and Certain significant items , which are defined below; and • Other unallocated , which includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) certain procurement costs. 2024 vs. 2023 Corporate expenses increased by $171 million, or 16%, in 2024 compared with 2023, primarily due to higher compensation-related costs, a settlement received from a third-party for underpayment of royalties in the prior year period, investments in information technology and unfavorable foreign exchange.
These costs also include certain compensation costs, certain procurement costs, and other miscellaneous operating expenses that are not charged to our operating segments, as well as interest income and expense; • Certain transactions and events such as Purchase accounting adjustments , Acquisition and divestiture-related activities and Certain significant items , which are defined below; and • Other unallocated , which includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) certain procurement costs. 2025 vs. 2024 Corporate expenses increased by $27 million, or 2%, in 2025 compared with 2024, primarily due to an increase in compensation-related costs, partially offset by favorable foreign exchange.
The increase in operating cash flows was primarily attributable to higher inventory build-up of certain products in the prior period for increased demand and to mitigate potential supply constraints and the timing of receipts and payments in the ordinary course of business, as well as higher net income adjusted by non-cash items.
The decrease in operating cash flows was primarily attributable to the timing of receipts and payments in the ordinary course of business and higher inventory build-up of certain products due to increased demand, partially offset by higher net income adjusted by non-cash items and the timing of income taxes paid.
The lower effective tax rate for 2023, as compared to 2022, was primarily attributable to a higher benefit in the U.S. related to foreign-derived intangible income, a more favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs), partially offset by a higher net discrete tax expense in 2023, mainly related to changes to prior years’ tax positions.
The higher effective tax rate on adjusted pretax income for 2025, as compared to 2024, was primarily attributable to a lower benefit in the U.S related to foreign-derived intangible income and a less favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation activity), partially offset by higher net discrete benefits.
Operational revenue growth was $401 million, or 10%, reflecting growth of $257 million in companion animal products and $144 million in livestock products. • Companion animal operational revenue growth was driven primarily by the growth in sales of our key dermatology products, mAb products for OA pain, Librela and Solensia, small animal parasiticides and vaccine products. • Livestock operational revenue growth was due to increased sales of cattle, poultry and fish products, partially offset by a decline in sales of sheep products.
Operational revenue growth was $188 million, or 5%, reflecting growth of $145 million in companion animal products and $43 million in livestock products. • Companion animal operational revenue growth was driven primarily by increased sales of our Simparica franchise products, key dermatology products and our mAb products for OA pain, Librela and Solensia. 43 | Table of Contents • Livestock operational revenue growth was due to increased sales in our cattle and fish products, partially offset by lower sales of poultry products.
Tax Matters . Global economic conditions Global financial markets may be impacted by macroeconomic, business and financial volatility. Challenging economic conditions in recent years have not had, nor do we anticipate that it will have, a significant impact on our liquidity.
Challenging economic conditions in recent years have not had, nor do we anticipate that it will have, a significant impact on our liquidity.
(e) For 2024, represents a net loss related to the sale of our medicated feed additive product portfolio, certain water soluble products and related assets.
For 2023, primarily represents certain asset impairment charges related to our precision animal health and diagnostics businesses. (f) For 2025 and 2024, represents a net loss related to the sale of our medicated feed additive product portfolio, certain water soluble products and related assets in 2024.
Pursuant to the indenture, we are able to redeem the senior notes of any series, in whole or in part, at any time by paying a “make whole” premium, plus accrued and unpaid interest to, but excluding, the date of redemption.
In addition, the indenture contains other customary terms, including certain events of default, upon the occurrence of which the senior notes may be declared immediately due and payable. 50 | Table of Contents Pursuant to the indenture, we are able to redeem the senior notes of any series, in whole or in part, at any time by paying a “make whole” premium, plus accrued and unpaid interest to, but excluding, the date of redemption.
As of December 31, 2024, we had access to $50 million of lines of credit which expire at various times and are generally renewed annually. There were no borrowings outstanding related to these facilities as of December 31, 2024 and $3 million of borrowings outstanding related to these facilities as of December 31, 2023.
As of December 31, 2025, we had access to $51 million of lines of credit which expire at various times and are generally renewed annually. There were no borrowings outstanding related to these facilities as of December 31, 2025 or December 31, 2024. Domestic and international short-term funds Many of our operations are conducted outside the U.S.
Selling, general and administrative expenses Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Selling, general and administrative expenses $ 2,318 $ 2,151 $ 2,009 8 7 % of revenue 25 % 25 % 25 % 2024 vs. 2023 SG&A expenses increased by $167 million, or 8%, in 2024 compared with 2023, primarily as a result of: • an increase in certain compensation-related costs; • higher selling and distribution costs; • higher advertising and promotion expenses; • higher professional and consulting fees; and • higher travel and entertainment expenses, partially offset by: • favorable foreign exchange; • the reduced impact of purchase accounting adjustments; and • lower other general and administrative expenses. 38 | Table of Contents Research and development expenses Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Research and development expenses $ 686 $ 614 $ 539 12 14 % of revenue 7 % 7 % 7 % 2024 vs. 2023 R&D expenses increased by $72 million, or 12%, in 2024 compared with 2023, primarily as a result of: • an increase in certain compensation-related costs to support innovation and portfolio progression; • higher spend in project investments; and • higher depreciation expense.
Research and development expenses Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Research and development expenses $ 698 $ 686 $ 614 2 12 % of revenue 7 % 7 % 7 % 2025 vs. 2024 R&D expenses increased by $12 million, or 2%, in 2025 compared with 2024, primarily as a result of: • higher depreciation expense; • an increase in certain compensation-related costs to support innovation and portfolio progression; and • unfavorable impact from foreign exchange, partially offset by: • lower professional and consulting services.
Costs and Expenses Cost of sales Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Cost of sales $ 2,719 $ 2,561 $ 2,454 6 4 % of revenue 29.4 % 30.0 % 30.4 % 2024 vs. 2023 Cost of sales as a percentage of revenue was 29.4% in 2024, compared with 30.0% in 2023.
Foreign exchange decreased our reported revenue growth by approximately $36 million, or 1%. 40 | Table of Contents Costs and Expenses Cost of sales Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Cost of sales $ 2,666 $ 2,719 $ 2,561 (2) 6 % of revenue 28.2 % 29.4 % 30.0 % 2025 vs. 2024 Cost of sales as a percentage of revenue was 28.2% in 2025, compared with 29.4% in 2024.
We believe these financial measures are useful supplemental information to investors when considered together with our U.S. GAAP financial measures. We report adjusted net income to portray the results of our major operations, and the discovery, development, manufacture and commercialization of our products, prior to considering certain income statement elements.
We report adjusted net income to portray the results of our major operations, and the discovery, development, manufacture and commercialization of our products, prior to considering certain income statement elements.
Amortization of intangible assets Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Amortization of intangible assets $ 141 $ 149 $ 150 (5) (1) 2024 vs. 2023 Amortization of intangible assets decreased in 2024 compared with 2023 primarily due to asset impairments taken in 2024 and 2023, as well as assets that became fully amortized, partially offset by intangible assets placed in service in 2024 and 2023.
Amortization of intangible assets Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Amortization of intangible assets $ 128 $ 141 $ 149 (9) (5) 2025 vs. 2024 Amortization of intangible assets decreased by $13 million, or 9%, in 2025 compared with 2024 primarily due to asset impairments taken in 2025 and 2024, as well as assets that became fully amortized, partially offset by intangible assets placed in service in 2025 and 2024. 41 | Table of Contents Restructuring charges and certain acquisition and divestiture-related costs Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Restructuring charges and certain acquisition and divestiture-related costs $ 51 $ 53 $ 53 (4) — * Calculation not meaningful. 2025 vs. 2024 Restructuring charges and certain acquisition and divestiture-related costs were $51 million in 2025 and $53 million in 2024.
(b) Represents costs related to the sale of our medicated feed additive product portfolio, certain water soluble products and related assets. (c) For 2024, primarily consisted of employee termination costs related to organizational structure refinements, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative.
(b) Represents costs related to the sale of our medicated feed additive product portfolio, certain water soluble products and related assets. (c) For 2025, primarily consisted of employee termination costs related to organizational structure refinements, as well as costs related to a transition from internal to external innovation and manufacturing of certain products and the closure of a related site.
This measure provides information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a 36 | Table of Contents period-to-period comparison.
This measure provides information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a period-to-period comparison. We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S.
Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs. Share repurchases may be executed through various 48 | Table of Contents means, including open market or privately negotiated transactions.
Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs. Share repurchases may be executed through various means, including open market or privately negotiated transactions. During 2025, 23.9 million shares were repurchased for $3.2 billion, which excludes a $31 million accrual for excise tax on net share repurchases.
If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate.
If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value.
Credit facility and other lines of credit In December 2022, we entered into an amended and restated revolving credit agreement with a syndicate of banks providing for a multi-year $1.0 billion senior unsecured revolving credit facility (the credit facility), which expires in December 2027.
Credit facility and other lines of credit In August 2025, we entered into a new revolving credit agreement with a syndicate of banks providing for a multi-year $1.25 billion senior unsecured revolving credit facility (the credit facility), which expires in August 2030. Subject to certain conditions, we have the right to increase the credit facility up to $1.75 billion.
Domestic and international short-term funds Many of our operations are conducted outside the U.S. The amount of funds held in the U.S. will fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as business development activities.
The amount of funds held in the U.S. will fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as business development activities. As part of our ongoing liquidity assessments, we regularly monitor the mix of U.S. and international cash flows (both inflows and outflows).
Other current liabilities increased primarily due to collateral received related to derivative contracts, partially offset by the mark-to-market adjustment of derivative instruments. The decrease in Operating lease liabilities reflects lease amortization and payments, partially offset by assets acquired through new lease obligations. See Notes to Consolidated Financial Statements— Note 10. Leases .
The increase in Operating lease right-of-use assets reflects assets acquired through new and amended lease agreements, partially offset by lease amortization, while the increase in Operating lease liabilities primarily reflects an amended lease obligation in the current period, partially offset by lease payments. See Notes to Consolidated Financial Statements— Note 10. Leases .
We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S. GAAP reported growth. Adjusted Net Income and Adjusted Earnings Per Share Adjusted net income and the corresponding adjusted earnings per share (EPS) are non-GAAP financial measures of performance used by management.
GAAP reported growth. Adjusted Net Income and Adjusted Earnings Per Share Adjusted net income and the corresponding adjusted earnings per share (EPS) are non-GAAP financial measures of performance used by management. We believe these financial measures are useful supplemental information to investors when considered together with our U.S. GAAP financial measures.
Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the International segment. 2024 vs. 2023 Other business activities net loss increased by $66 million, or 13%, in 2024 compared with 2023, reflecting an increase in R&D costs due to an increase in higher project investments, certain compensation-related costs to support innovation, acquisitions and other operating costs.
Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the International segment. 2025 vs. 2024 Other business activities net loss was flat in 2025 compared with 2024, reflecting a decrease in R&D costs primarily due to timing of spend related to projects and other strategic investments, as well as contract manufacturing results, offset by an increase in certain compensation-related costs and depreciation expense.
As part of our ongoing liquidity assessments, we regularly monitor the mix of U.S. and international cash flows (both inflows and outflows). Actual repatriation of overseas funds can result in additional U.S. and local income taxes, such as U.S. state income taxes, local withholding taxes, and taxes on currency gains and losses. See Notes to Consolidated Financial Statements— Note 8.
Actual repatriation of overseas funds can result in additional U.S. and local income taxes, such as U.S. state income taxes, local withholding taxes, and taxes on currency gains and losses. See Notes to Consolidated Financial Statements— Note 8. Tax Matters . Global economic conditions Global financial markets may be impacted by macroeconomic, business and financial volatility.
Analysis of the Consolidated Statements of Income The following discussion and analysis of our Consolidated Statements of Income should be read along with our consolidated financial statements, and the notes thereto.
In addition, processing of certain customer orders from December 2025 was delayed to calendar year 2026. 39 | Table of Contents Analysis of the Consolidated Statements of Income The following discussion and analysis of our Consolidated Statements of Income should be read along with our consolidated financial statements, and the notes thereto.
Restructuring charges and certain acquisition and divestiture-related costs in 2023 primarily consisted of employee termination and exit costs related to organizational structure refinements and other cost-reduction and productivity initiatives, as well as costs related to recent acquisitions. For additional information regarding restructuring charges and acquisition and divestiture-related costs, see Notes to Consolidated Financial Statements— Note 6.
For additional information regarding restructuring charges and acquisition and divestiture-related costs, see Notes to Consolidated Financial Statements— Note 6. Restructuring Charges and Other Costs Associated with Acquisitions and Divestitures .
Other (income)/deductions—net Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Other (income)/deductions—net $ (19) $ (159) $ 40 (88) * * Calculation not meaningful. 2024 vs. 2023 The change in Other (income)/deductions—net is primarily as a result of a gain on the sale of a majority interest in our pet insurance business in the prior period, royalty-related income in the prior period that was predominantly associated with a settlement received from a third-party for underpayment of royalties related to prior periods and a loss on the sale of our medicated feed additive product portfolio, certain water soluble products and related assets in the current period, partially offset by lower asset impairment charges in the current period. 39 | Table of Contents Provision for taxes on income Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Provision for taxes on income $ 637 $ 596 $ 545 7 9 Effective tax rate 20.3 % 20.3 % 20.5 % The income tax provision in the Consolidated Statements of Income includes tax costs and benefits, such as uncertain tax positions, repatriation decisions and audit settlements, among others. 2024 vs. 2023 Our effective tax rate was 20.3% for 2024 and 2023.
Other (income)/deductions—net Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Other (income)/deductions—net $ (36) $ (19) $ (159) 89 (88) * Calculation not meaningful. 2025 vs. 2024 The change in Other (income)/deductions—net is primarily as a result of the net loss on the sale of our medicated feed additive product portfolio, certain water soluble products and related assets in 2024, as well as lower asset impairment charges in the current period, partially offset by lower interest income in the current period.
The net cash used in financing activities for 2023 was primarily attributable to the repayment of the $1.35 billion aggregate principal amount of our 2013 senior notes due 2023 in February 2023, the purchase of treasury shares, the payment of dividends and taxes paid on withholding shares, partially offset by proceeds in connection with the issuance of common stock under our equity incentive plan. 46 | Table of Contents Analysis of financial condition, liquidity and capital resources While we believe our cash and cash equivalents on hand, our operating cash flows and our existing financing arrangements will be sufficient to support our cash needs for the next twelve months and beyond, this may be subject to the environment in which we operate.
Analysis of financial condition, liquidity and capital resources While we believe our cash and cash equivalents on hand, our operating cash flows and our existing financing arrangements will be sufficient to support our cash needs for the next twelve months and beyond, this may be subject to the environment in which we operate.
For information about the risks associated with estimates and assumptions, see Notes to Consolidated Financial Statements— Note 3. Significant Accounting Policies: Estimates and Assumptions .
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions which can materially impact our results of operations. For information about the risks associated with estimates and assumptions, see Notes to Consolidated Financial Statements— Note 3. Significant Accounting Policies: Estimates and Assumptions .
Operating Segment Results The mix of revenue between companion animal and livestock products was as follows: % Change 24/23 23/22 Related to Related to Year Ended December 31, Foreign Exchange Foreign Exchange (MILLIONS OF DOLLARS) 2024 2023 2022 Total Operational Total Operational U.S.
The higher effective tax rate for 2025, as compared to 2024, was primarily attributable to a lower benefit in the U.S. related to foreign-derived intangible income, partially offset by a more favorable jurisdictional mix of earnings (which includes the impact of the location of pre-tax earnings, tax impact of permanent differences and repatriation activity) and higher net discrete tax benefits. 42 | Table of Contents Operating Segment Results The mix of revenue between companion animal and livestock products was as follows: % Change 25/24 24/23 Related to Related to Year Ended December 31, Foreign Exchange Foreign Exchange (MILLIONS OF DOLLARS) 2025 2024 2023 Total Operational Total Operational U.S.
These notes are comprised of $600 million aggregate principal amount of 5.400% senior notes due 2025 and $750 million aggregate principal amount of 5.600% senior notes due 2032. On February 1, 2023, the net proceeds were used to redeem in full, upon maturity, the $1.35 billion aggregate principal amount of our 3.250% 2013 senior notes due 2023.
The net proceeds were used to redeem in full the $600 million aggregate principal amount of our 5.400% 2022 senior notes due 2025 and the $750 million aggregate principal amount of our 4.500% 2015 senior notes due 2025 on August 28, 2025 and September 17, 2025, respectively, and the remainder is being used for general corporate purposes.
The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets. In addition, the indenture contains other customary terms, including certain events of default, upon the occurrence of which, the senior notes may be declared immediately due and payable.
The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets.
Other current assets decreased primarily due to lower value-added tax receivables for our international markets and the deferral of a prepaid tax benefit in connection with a prepayment from a related foreign entity in Belgium, partially offset by the mark-to-market adjustment of derivative instruments and the jurisdictional netting of income taxes receivable and income taxes payable. 45 | Table of Contents Property, plant and equipment less accumulated depreciation increased primarily as a result of capital spending, partially offset by depreciation expense, as well as the divestiture of our medicated feed additive product portfolio, certain water soluble products and related assets.
Other current assets increased primarily due to an increase in collateral posted related to derivative contracts, the deferral of a prepaid tax benefit in connection with a prepayment from a related foreign entity in Belgium, as well as higher value-added tax receivables, partially offset by the mark-to-market adjustments of derivative instruments.
Investing activities 2024 vs. 2023 Net cash used in investing activities was $315 million in 2024 compared with $777 million in 2023.
Investing activities 2025 vs. 2024 Net cash used in investing activities was $748 million in 2025 compared with $315 million in 2024. The net cash used in investing activities for 2025 was primarily due to capital expenditures and net payments of derivative instrument activity.
The net cash used in investing activities for 2023 was primarily due to capital expenditures and acquisitions, partially offset by net proceeds on the sale of a majority interest in our pet insurance business and net proceeds from derivative instrument activity.
For 2023, primarily represents a net gain on the sale of a majority interest in our pet insurance business.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks related to our relationship with Pfizer Pfizer's rights as licensor under the patent and know-how license could limit our ability to develop and commercialize certain products. Under the Patent and Know-How License Agreement (Pfizer as licensor) Pfizer licenses to us certain of its intellectual property.
Biggest changeIn addition, the existence of the convertible senior notes may encourage short selling by market participants because the conversion of the convertible senior notes could be used to satisfy short positions, or anticipated conversion of the convertible senior notes into shares of our common stock could depress the price of our common stock. 28 | Table of Contents Risks related to our relationship with Pfizer Pfizer's rights as licensor under the patent and know-how license could limit our ability to develop and commercialize certain products.
In addition, despite our efforts to protect sensitive, confidential or personal data or information, we (or our third party partners) may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromise of sensitive, confidential or personal data or information, improper use of our systems or networks, unauthorized access, use, disclosure, modification or destruction of information (including confidential business information, trade secrets, intellectual property and corporate strategic plans), defective products, production downtimes and operational disruptions.
In addition, despite our efforts to protect sensitive, confidential or personal data or information, we (or our third-party partners) may be vulnerable to material security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the compromise of sensitive, proprietary, confidential or personal data or information, improper use of our systems or networks, unauthorized access, theft, use, disclosure, modification or destruction of information (including confidential business information, proprietary information, trade secrets, intellectual property and corporate strategic plans), defective products, production downtimes and operational disruptions.
Our failure, or the failure of third parties we rely on, including CMOs, to comply with these regulatory requirements, allegations of such non-compliance or the discovery of previously unknown problems with a product or manufacturer could result in, among other things, inspectional observation notices, label changes, untitled or warning letters or other public regulatory communications or correspondence, fines, a partial or total shutdown of production in one or more of our facilities while an alleged violation is remediated, withdrawals or suspensions of current products from the market, product seizures, injunctions and civil or criminal prosecution, as well as decreased sales as a result of negative publicity and product liability claims.
Our failure, or the failure of third parties we rely on, including CMOs, to comply with these regulatory requirements, allegations of such non-compliance or the discovery of previously unknown problems with a product or manufacturer could result in, among other things, inspectional observation notices, label changes, untitled or warning letters or other public regulatory communications or correspondence, including "Dear Veterinarian" letters, fines, a partial or total shutdown of production in one or more of our facilities while an alleged violation is remediated, withdrawals or suspensions of current products from the market, product seizures, injunctions and civil or criminal prosecution, as well as decreased sales as a result of negative publicity and product liability claims.
Federal and state governments and regulatory agencies, like the European Chemicals Agency, are in various stages of considering and/or implementing laws and regulations requiring the reporting, restriction and/or phase-out of PFAS products (subject to applicable product exceptions).
Federal and state governments and regulatory agencies, like the European Chemicals Agency, are in various stages of considering and/or implementing laws and regulations requiring the reporting, restriction and/or phase-out of PFAS-containing products (subject to applicable product exceptions).
Bribery Act of 2010 and similar anti-bribery and corruption-related laws globally; • political and social instability, including crime, civil disturbance, terrorist activities and armed conflicts; • trade restrictions and restrictions on direct investments by foreign entities, including restrictions administered by OFAC and the EU, in relation to our products or the products of farmers and other customers (e.g., restrictions on the importation of agricultural products from the EU to Russia); • government limitations on foreign ownership or government takeover or nationalization of our business; • imposition of anti-dumping and countervailing duties or other trade-related sanctions; • costs and difficulties and compliance risks in staffing, managing and monitoring international operations, including the use of overseas third-party goods and service providers; • longer payment cycles and increased exposure to counterparty risk; and • additional limitations on transferring personal information between countries or other restrictions on the processing of personal information.
Bribery Act of 2010 and similar anti-bribery and corruption-related laws globally; • political and social instability, including crime, civil disturbance, terrorist activities and armed conflicts; • trade restrictions and restrictions on direct investments by foreign entities, including restrictions administered by OFAC and the EU, in relation to our products or the products of farmers and other customers (e.g., restrictions on the importation of agricultural products from the EU to Russia); • government limitations on foreign ownership or government takeover or nationalization of our business; • imposition of anti-dumping and countervailing duties or other trade-related sanctions; 25 | Table of Contents • costs and difficulties and compliance risks in staffing, managing and monitoring international operations, including the use of overseas third-party goods and service providers; • longer payment cycles and increased exposure to counterparty risk; and • additional limitations on transferring personal information between countries or other restrictions on the processing of personal information.
Our processes and controls may not always align with evolving standards for identifying, measuring and reporting ESG metrics, our interpretation of reporting standards that may be required by the SEC, EU and other regulators may differ from those of others and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
Our processes and controls may not always align with evolving standards for identifying, measuring and reporting sustainability metrics, our interpretation of reporting standards that may be required by the SEC, EU and other regulators may differ from those of others and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
Furthermore, our exposure to credit and collectability risk and cybersecurity risk is higher in certain international markets, our ability to mitigate such risks may be limited.
Furthermore, our exposure to credit and collectability risk is higher in certain international markets, our ability to mitigate such risks may be limited.
The resulting decrease in our prices could have a material adverse effect on our operating results and financial condition. Changes in distribution channels for companion animal products could negatively impact our market share, margins and distribution of our products. In most markets, companion animal owners typically purchase their animal health products directly from veterinarians.
The resulting decrease in our prices could have a material adverse effect on our operating results and financial condition. Changes in distribution channels for companion animal products could negatively impact our market share, margins and distribution of our products. In most markets, companion animal owners frequently purchase their animal health products directly from veterinarians.
Even after a product reaches market, it may be subject to re-review and may lose its approvals. We have changed, and may in the future change, the locations of where certain of our products are manufactured and, because of these changes, we may be required to obtain new regulatory approvals.
Even after a product reaches market, it may be subject to re-review and may lose its registrations or approvals. We have changed, and may in the future change, the locations of where certain of our products are manufactured and, because of these changes, we may be required to obtain new regulatory approvals.
While our evaluation of any 17 | Table of Contents potential transaction includes business, legal and financial due diligence with the goal of identifying and evaluating the material risks involved, our due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential loss contingencies of a particular transaction, including potential exposure to regulatory sanctions or fines resulting from an acquisition target's previous activities, inadequate controls, or costs associated with any quality issues with an acquisition target’s legacy products.
While our evaluation of any potential transaction includes business, legal and financial due diligence with the goal of identifying and evaluating the material risks involved, our due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential loss contingencies of a particular transaction, including potential exposure to regulatory sanctions or fines resulting from an acquisition target's previous activities, inadequate controls, or costs associated with any quality issues with an acquisition target’s legacy products.
Our lack of experience or knowledge, as well as external factors, such as compliance with new or evolving regulations, legislative changes, competitive alternatives and shifting market preferences, may also impact the success of an acquisition or the implementation of a new line of business or a new product or service.
Our lack of experience or knowledge, as well as external factors, such as compliance with new or evolving regulations, legislative changes, regulatory interactions, competitive alternatives and shifting market preferences, may also impact the success of an acquisition or the implementation of a new line of business or a new product or service.
In addition, a number of factors could cause production interruptions, including: • the failure of us or any of our vendors or suppliers, including logistical service providers, to comply with applicable regulations and quality assurance guidelines, including any changes to Good Manufacturing Practices (GMP); • the failure to accurately forecast demand for our products; • mislabeling; • construction delays; • equipment malfunctions; • shortages of materials; • labor problems, including any pandemic-related impacts; • delays in receiving any required governmental authorizations or regulatory approvals, including as a result of any prolonged shutdown of the U.S. government; • natural disasters and adverse weather conditions; • power outages; • criminal and terrorist activities; • changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in types of products produced, shipping distributions or physical limitations; and • the outbreak of any highly contagious diseases at or near our production sites.
In addition, a number of factors could cause production interruptions, including: • the failure of us or any of our vendors or suppliers, including logistical service providers, to comply with applicable regulations and quality assurance guidelines, including any changes to Good Manufacturing Practices (GMPs); • the failure to accurately forecast demand for our products; • mislabeling; • construction delays; • equipment malfunctions; • shortages of materials; • labor problems, including any pandemic-related impacts; • delays in receiving any required governmental authorizations or regulatory approvals, including as a result of any prolonged shutdown of the U.S. government; • natural disasters and adverse weather conditions; • power outages; • criminal and terrorist activities; 20 | Table of Contents • changes in manufacturing production sites and limits to manufacturing capacity due to regulatory requirements, changes in types of products produced, shipping distributions or physical limitations; and • the outbreak of any highly contagious diseases at or near our production sites.
Item 1A. Risk Factors. In addition to the other information set forth in this 2024 Annual Report, any of the factors described below could materially adversely affect our operating results, financial condition and liquidity, which could cause the trading price of our securities to decline.
Item 1A. Risk Factors. In addition to the other information set forth in this 2025 Annual Report, any of the factors described below could materially adversely affect our operating results, financial condition and liquidity, which could cause the trading price of our securities to decline.
A failure to comply with the environmental, health and safety laws and regulations to which we are subject, including any permits issued thereunder, may result in environmental remediation costs, loss of permits, fines, penalties or other adverse governmental or private actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment or remedial measures.
A failure to comply with the environmental, health and safety laws and regulations to which we are subject, including any permits issued thereunder, may result in environmental remediation costs, loss of permits, public regulatory communications or announcements, fines, penalties or other adverse governmental or private actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment or remedial measures.
Our business may be harmed if we are unable to retain and hire executive officers or other key personnel. We depend on the efforts of our executive officers and certain key personnel, including research, technical, sales, security, marketing, manufacturing and administrative personnel.
Our business may be harmed if we are unable to retain and hire executive officers or other key personnel. We depend on the efforts of our executive officers and certain key personnel, including research, technical, legal and regulatory, sales, security, marketing, manufacturing and administrative personnel.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
If our sustainability practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees and our attractiveness as an investment, business partner or acquirer could be negatively impacted.
If we fail to obtain and maintain adequate intellectual property protection, we may not be able to prevent third parties from using our proprietary technologies or from marketing products that are very similar or identical to ours.
If we are unable to obtain and maintain adequate intellectual property protection, we may not be able to prevent third parties from using our proprietary technologies or from marketing products that are very similar or identical to ours.
In recent years, outbreaks of various diseases, including African Swine Fever, avian influenza and highly pathogenic avian influenza, foot-and-mouth disease, bovine spongiform encephalopathy (otherwise known as BSE or mad cow disease) and porcine epidemic diarrhea virus (otherwise known as PEDv), have impacted the animal health business.
In recent years, outbreaks of various diseases, including African Swine Fever, avian influenza and highly pathogenic avian influenza, foot-and-mouth disease, bovine spongiform encephalopathy (otherwise known as BSE or mad cow disease), New World screwworm, and porcine epidemic diarrhea virus (otherwise known as PEDv), have impacted the animal health business.
In addition, because our financial statements are reported in U.S. dollars, changes in currency exchange rates, 23 | Table of Contents including changes in countries with highly inflationary economies, between the U.S. dollar and other currencies have had, and will continue to have, an impact on our results of operations.
In addition, because our financial statements are reported in U.S. dollars, changes in currency exchange rates, including changes in countries with highly inflationary economies, between the U.S. dollar and other currencies have had, and will continue to have, an impact on our results of operations.
The discovery of additional or more severe cases of any of these, or new diseases may 16 | Table of Contents result in additional restrictions on animal proteins, reduced herd sizes, or reduced demand for animal protein, which may have a material adverse effect on our operating results and financial condition.
The discovery of additional or more severe cases of any of these, or new diseases may result in additional restrictions on animal proteins, reduced herd sizes, or reduced demand for animal protein, which may have a material adverse effect on our operating results and financial condition.
We are also subject to chemical regulation in the United States and internationally. For example, governmental authorities in the EU and the United States are increasingly focused on preventing environmental contamination from per and polyfluoroalkyl substances (PFAS), which may be contained in certain of our products.
We are also subject to chemical regulation in the United States and internationally. For example, governmental authorities in the EU and the United States are increasingly focused on preventing environmental contamination from per- and polyfluoroalkyl substances (PFAS), which may be contained in certain of our products or product packaging.
This includes substantial fines and penalties, regulatory investigations, and civil lawsuits with damages, all of which could have a material adverse effect on our reputation and our business.
This could include substantial fines and penalties, regulatory investigations, and civil lawsuits with damages, all of which could have a material adverse effect on our reputation and our business.
We rely and expect to continue to rely on a combination of intellectual property, including patent, trademark, trade dress, copyright, trade secret, data protection, and domain name protection 24 | Table of Contents laws, as well as confidentiality and license agreements with our employees and others, to protect our intellectual property and proprietary rights.
We rely and expect to continue to rely on a combination of intellectual property, including patent, trademark, trade dress, copyright, trade secret, data protection, and domain name protection laws, as well as confidentiality and license agreements with our employees and others, to protect our intellectual property and proprietary rights.
We may not be able to pass all or a material portion of any higher product, material, transportation or labor costs on to our customers, which could materially adversely affect our operating results and financial condition. 19 | Table of Contents Certain third-party suppliers are the sole or exclusive source of certain products, materials and services necessary for production of our products.
We may not be able to pass all or a material portion of any higher product, material, transportation or labor costs on to our customers, which could materially adversely affect our operating results and financial condition. Certain third-party suppliers may be the sole or exclusive source of certain products, materials and services necessary for production of our products.
In the years since the start of generic and other competition, sales of our Rimadyl chewable and Draxxin products have declined in the U.S., the largest market for these products, by 40% and 49%, respectively. If animal health customers increase their use of new or existing generic products, our operating results and financial condition could be materially adversely affected.
In the years since the start of generic and other competition, sales of our Rimadyl chewable and Draxxin products have declined in the U.S., the largest market for these products, by 39% and 66%, respectively. If animal health customers increase their use of new or existing generic products, our operating results and financial condition could be materially adversely affected.
If Pfizer fails to fulfill its obligations or chooses to not enforce the licensed patents under this agreement, we may not be able to prevent competitors from making, using and selling competitive products, which could have an adverse effect on our business. 26 | Table of Contents Item 1B. Unresolved Staff Comments. None.
If Pfizer fails to fulfill its obligations or chooses to not enforce the licensed patents under this agreement, we may not be able to prevent competitors from making, using and selling competitive products, which could have an adverse effect on our business. Item 1B. Unresolved Staff Comments. None.
For example, our five top-selling products and product lines, Simparica/Simparica Trio, Apoquel/Apoquel Chewable, Cytopoint, Librela and our ceftiofur line, contributed approximately 41% of our revenue in 2024, and certain issues with these top-selling products and product lines could have a more significant impact to our results of operations. Our products are subject to unanticipated safety, quality or efficacy concerns.
For example, our five top-selling products and product lines, Simparica/Simparica Trio, Apoquel/Apoquel Chewable, Cytopoint, Librela and our ceftiofur line, contributed approximately 42% of our revenue in 2025, and certain issues with these top-selling products and product lines could have a more significant impact to our results of operations. Our products are subject to unanticipated safety, quality or efficacy concerns.
Treasury Department and the Bureau of Industry and Security at the U.S.
The OFAC at the U.S. Treasury Department and the Bureau of Industry and Security at the U.S.
For example, ample amounts of clean water are needed to produce our products, and the effects from climate change could result in water supply interruptions and low water quality. In addition, increased frequency of natural disasters and adverse weather conditions as a result of climate change may disrupt our manufacturing processes or our supply chain.
For example, clean water is needed to produce our products, and the effects from climate change could result in water supply interruptions and low water quality. In addition, increased frequency of natural disasters and adverse weather conditions as a result of climate change may disrupt our manufacturing processes or our supply chain.
In 2024, we generated approximately 41% of our revenue in currencies other than the U.S. dollar, principally the euro, Brazilian real, Australian dollar, British pound, Canadian dollar and Chinese renminbi. We are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenue.
In 2025, we generated approximately 42% of our revenue in currencies other than the U.S. dollar, principally the euro, Brazilian real, Australian dollar, British pound, Canadian dollar and Chinese renminbi. We are subject to currency exchange rate risk to the extent that our costs are denominated in currencies other than those in which we earn revenue.
Under accounting principles generally accepted in the United States of America (U.S. GAAP), if we determine goodwill or identifiable intangible assets are impaired, we will be required to write down these assets and record a non-cash impairment charge. As of December 31, 2024, we had goodwill of $2.7 billion and identifiable intangible assets, less accumulated amortization, of $1.1 billion.
Under accounting principles generally accepted in the United States of America (U.S. GAAP), if we determine goodwill or identifiable intangible assets are impaired, we will be required to write down these assets and record a non-cash impairment charge. As of December 31, 2025, we had goodwill of $2.8 billion and identifiable intangible assets, less accumulated amortization, of $1.0 billion.
These restrictions are more prevalent in countries where animal protein is plentiful and governments are willing to take action even when there is scientific uncertainty. Our total revenue attributable to antibacterials for livestock was approximately $950 million for the year ended December 31, 2024.
These restrictions are more prevalent in countries where animal protein is plentiful and governments are willing to take action even when there is scientific uncertainty. Our total revenue attributable to antibacterials for livestock was approximately $713 million for the year ended December 31, 2025.
Such climate driven changes could have a material adverse impact on the financial performance of our business, and on our customers. The impacts from climate change may also impact Zoetis’ and our suppliers’ manufacturing processes.
Such climate driven changes could have a material adverse impact on the financial performance of our business, and on our customers. 19 | Table of Contents The impacts from climate change may also impact Zoetis’ and our suppliers’ manufacturing processes.
Similarly, the State of California passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that imposes broad climate-related disclosure obligations on certain companies doing business in California, including us.
Similarly, the State of California passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that imposes broad climate-related disclosure obligations on certain 22 | Table of Contents companies doing business in California, including us.
As a result, we face competition from lower-priced generic alternatives to many of our products that no longer have patent protection. In certain circumstances, we have been forced to lower our prices and provide discounts or rebates in order to compete with generic products.
As a result, we face competition from lower-priced generic alternatives to many of our products that no longer have patent protection. In certain circumstances, our products have become subject to decreased sales and we have been forced to lower our prices and provide discounts or rebates in order to compete with generic products.
Department of Commerce (BIS), and similar agencies in other countries and territories outside the U.S., administer certain laws and regulations that restrict its persons and, in some instances, extraterritorial persons, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to economic sanctions.
Department of Commerce (BIS), The Council of the EU and similar agencies in other countries and territories, administer certain laws and regulations that restrict its persons and, in some instances, extraterritorial persons, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to economic sanctions.
We are regularly party to patent litigation and other intellectual property rights claims that are expensive and time consuming, and if resolved adversely, could have a significant impact on our business and financial condition. Risks related to our indebtedness We have substantial indebtedness.
We are regularly party to patent litigation and other intellectual property rights claims that are expensive and time consuming, and if resolved adversely, could have a significant impact on our business and financial condition.
Among others, such costs could include increased expenditures on cybersecurity measures, litigation, regulatory investigations, fines, and sanctions, lost revenues from business interruption, damage to the public’s perception regarding our ability to keep our information secure and significant remediation costs.
Among others, such costs could include increased expenditures on cybersecurity measures, insurance premiums, litigation, regulatory investigations, ransomware payments, penalties, fines, and sanctions, lost revenues from business interruption, damage to the public’s perception regarding our ability to keep our information secure and significant remediation costs.
Our international operations subject us to these laws and regulations, which are complex, restrict our business dealings with certain countries, governments, entities, and individuals, and are constantly changing. For example, we sell limited humanitarian animal health products, including medicines, diagnostics and vaccines, to Russia and Iran, in compliance with economic sanctions affecting these countries.
Our international operations subject us to these laws and regulations, which are complex, restrict our business dealings with certain countries, governments, entities, and individuals, and are constantly changing. For example, we sell limited humanitarian animal health products, including medicines and vaccines, to Russia and Iran.
We could experience a disruption of our operations or higher ongoing labor costs, which 18 | Table of Contents could have a material adverse effect on our operating results and financial condition, potentially resulting in canceled orders by customers, unanticipated inventory accumulation or shortages and reduced revenue and net income.
We could experience a disruption of our operations or higher ongoing labor and other operational costs, which could have a material adverse effect on our operating results and financial condition, potentially resulting in canceled orders by customers, delays in fulfilling orders, unanticipated inventory accumulation or shortages and reduced revenue and net income.
The standards for tracking and reporting on ESG matters and continue to evolve.
The standards for tracking and reporting on sustainability matters and continue to evolve.
Our reputation as a global leader in animal health and our reliance on complex information systems and digital solutions make us inherently vulnerable to malicious cyber intrusion and attack.
Our reputation as a global leader in animal health and our reliance on complex information systems and digital solutions make us inherently vulnerable to malicious cyber intrusion and attack, which have evolved in frequency and sophistication.
In addition, with the growing number of new privacy laws and regulatory requirement, the costs associated with compliance with these legal and regulatory requirements are significant and likely to increase in the future. Our aspirations, goals and disclosures related to environmental, social and governance (“ESG”) matters expose us to numerous risks, including risks to our reputation.
In addition, with the growing number of new privacy, cybersecurity and AI laws and regulatory requirements, the costs associated with compliance with these legal and regulatory requirements are significant and likely to increase in the future. Our aspirations, goals and disclosures related to sustainability matters expose us to numerous risks, including risks to our reputation.
In particular, forward-looking statements include statements relating to our future actions, business plans or prospects, prospective products, product approvals or products under development, product and supply chain disruptions, R&D costs, timing and likelihood of success, future operating or financial performance, future results of current and anticipated products and services, strategies, sales efforts, expenses, production efficiencies, production margins, anticipated timing of generic market entries, integration of acquired businesses, anticipated impact or timing of divestitures, interest rates, tax rates, tariffs, changes in tax regimes and laws, foreign exchange rates, growth in emerging markets, the outcome of contingencies, such as legal proceedings, plans related to share repurchases and dividends, government regulation, taxes and financial results.
In particular, forward-looking statements include statements relating to our future actions, business plans or prospects, prospective products, product approvals or products under development, product and supply chain disruptions, R&D costs, timing and likelihood of success, future operating or financial performance, future results of current and anticipated products and services, strategies, sales efforts, expenses, production efficiencies, production margins, anticipated timing of generic market entries, integration of acquired businesses, anticipated impact or timing of divestitures, interest rates, tax rates, tariffs, changes in tax regime s and laws, impacts of the timing and processing of sales in the International segment, possible impacts of the expected fiscal year alignment o f our subsidiaries operating outside the U.S., foreign exchange rates, growth in emerging markets, the outcome of contingencies, such as legal proceedings, plans related to share repurchases an d dividends, government regulation, taxes and financial results.
In order to sell our products, we must be able to produce and ship our products in sufficient quantities. On December 31, 2024, we had a global manufacturing network consisting of 22 manufacturing sites located in 11 countries. We also employ a network of over 110 third-party CMOs.
In order to sell our products, we must be able to produce and ship our products in sufficient quantities. On December 31, 2025, we had a global manufacturing network consisting of 21 manufacturing sites located in 10 countries. We also employ a network of over 90 third-party CMOs.
In addition, we have been investing in data and digital capabilities and have expanded our diagnostics portfolio. Our customers, employees and suppliers expect that we will adequately protect their data.
In addition, we continue to invest in data and digital capabilities and have expanded our diagnostics portfolio. Our customers, employees and suppliers expect that we will adequately protect their data.
See "--Generic and other products may be viewed as more cost-effective than our products." To the extent that any of our competitors are more successful with respect to any key competitive factor or we are forced to reduce, or are unable to raise, the price of any of our products in order to remain competitive, our operating results and financial condition could be materially adversely affected.
To the extent that any of our competitors are more successful with respect to any key competitive factor or we are forced to reduce, or are unable to raise, the price of any of our products in order to remain competitive, our operating results and financial condition could be materially adversely affected.
The materials used to manufacture our products may be subject to availability constraints and price volatility caused by changes in demand, weather conditions, supply conditions, government regulations, economic climate and other factors. In addition, labor costs may be subject to volatility caused by the supply of labor, governmental regulations, economic climate and other factors.
Labor costs and the materials used to manufacture our products may be subject to availability constraints and price volatility caused by changes in demand, weather conditions, supply conditions, government regulations, evolving trade policies (including the imposition of tariffs), economic climate and other factors.
Our operations and reputation may be impacted if we do not comply with continually changing laws and regulations regarding data privacy. We collect and use personal data of our customers, employees and suppliers, including health information in our human health business, in a variety of ways.
Our operations and reputation may be impacted if we do not comply with complex and continually evolving laws and regulations regarding data privacy information and the use of AI. We collect, store and use personal data of our customers, employees and suppliers, including sensitive personal data, such as health information in our human health business, in a variety of ways.
Once necessary regulatory approvals are obtained, the commercial success of any new product depends upon, among other things, its acceptance by veterinarians and end customers, and on our ability to successfully manufacture, market, and distribute products in sufficient quantities to meet actual demand. The inability to successfully bring a product to market could negatively impact our revenues and earnings.
Once necessary regulatory approvals are obtained, the commercial success of any new product depends upon, among other things, its acceptance by veterinarians and end customers, and on our ability to successfully manufacture, market, 21 | Table of Contents and distribute products in sufficient quantities to meet actual demand.
As a global company, we are faced with the challenge of how to manage a patchwork of laws, rules, regulations and industry standards, including, but not limited to, a growing number of U.S state privacy laws, the EU's General Data Protection Regulation, the U.K.'s General Data Protection Regulation, the Brazilian General Data Protection Law, China’s Personal Information Protection Law and India's Digital Personal data Protection (DPDP) Act.
As a global company, we are faced with the challenge of how to manage a patchwork of laws, rules, regulations and industry standards, including, but not limited to, a growing number of U.S state privacy laws, the EU's General Data Protection Regulation, the U.K.'s General Data Protection Regulation, the Brazilian General Data Protection Law, China’s Personal Information Protection Law and India's Digital Personal data Protection (DPDP) Act. 23 | Table of Contents These laws and regulations vary across countries, are complex and can be subject to significant change.
Risks related to intellectual property The alleged intellectual property rights of third parties may negatively affect our business. A third party may sue us, our distributors or licensors, or otherwise make a claim, alleging infringement or other violation of the third-party's patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights.
A third party may sue us, our distributors or licensors, or otherwise make a claim, alleging infringement, misappropriation or other violation of the third-party's patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights.
Violations of sanctions regulations may be punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment, which could adversely affect our reputation, business, financial condition, results of operations and cash flows.
Although we believe such activities are in compliance with economic sanctions affecting these countries, violations of sanctions regulations may be punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment, which could adversely affect our reputation, business, financial condition, results of operations and cash flows.
Our Driven to Care sustainability program includes various ESG aspirations and goals. These goal statements reflect our current plans and aspirations and are not guarantees that we will be able to achieve them.
Our Driven to Care sustainability program includes various aspirations and goals. These goal statements reflect our current plans and aspirations and are not guarantees that we, or third parties we rely on, including CMOs, will be able to achieve them.
System failures or outages could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business, hurt our relationships with our customers, or delay our financial reporting. Such failures could materially adversely affect our operating results and financial condition.
System failures or outages could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business, hurt our relationships with our customers, or delay our financial reporting.
If any of our top-selling products or product lines experience issues, such as loss of patent protection, material product liability litigation, new or unexpected side effects (or an increased frequency of serious, expected adverse events), manufacturing or supply chain disruptions, regulatory proceedings or enforcement, labeling changes, public regulatory communications, negative publicity or social media attention, changes to veterinarian or customer preferences, and/or disruptive innovations or the introduction of competing and/or more effective products, our revenues could be negatively impacted, perhaps significantly.
Some of our top-selling products or product lines have in the past or may in the future experience issues, such as loss of patent protection, material product liability litigation, new or unexpected side effects (or an increased frequency of serious, expected adverse events), manufacturing or supply chain disruptions, regulatory proceedings or enforcement, labeling changes, public regulatory communications, other regulatory correspondence, including “Dear Veterinarian” Letters, negative publicity or social media attention, changes to veterinarian or customer preferences, or ineffectiveness in connecting with veterinarians and customers and/or disruptive innovations or the introduction of competing and/or more effective products, our revenues could be negatively impacted, perhaps significantly.
Any new regulation could take several forms that could result in additional costs in the form of investments of capital to maintain compliance with laws and regulations and taxes. Climate change regulation continues to evolve, and it is not possible to accurately estimate either a timetable for implementation or our future compliance costs relating to implementation.
Any new regulation could result in additional costs in the form of investments of capital to maintain compliance with laws and regulations and taxes. Climate change regulation continues to evolve, and it is not possible to accurately estimate the timing for the emergence of new regulation, their scope or our future costs relating to implementation and compliance.
If we fail to comply with our obligations under this license agreement and Pfizer exercises its right to terminate it, our ability to continue to research, develop and commercialize products incorporating that intellectual property will be limited.
Under the Patent and Know-How License Agreement (Pfizer as licensor) Pfizer licenses to us certain of its intellectual property. If we fail to comply with our obligations under this license agreement and Pfizer exercises its right to terminate it, our ability to continue to research, develop and commercialize products incorporating that intellectual property will be limited.
In addition, since we depend on positive perceptions of the safety, quality and efficacy of our products, and animal health products generally, by our customers, veterinarians and end-users, any concerns as to the safety, quality or efficacy of our products, whether actual or perceived, may harm our reputation or materially adversely affect our operating results and financial condition, regardless of whether such concerns are accurate. 15 | Table of Contents Our business is subject to risk based on global economic and political conditions.
Since we depend on positive perceptions of the safety, quality and efficacy of our products, and animal health products generally, by our customers, veterinarians and end-users, any concerns as to the safety, quality or efficacy of our products, whether actual or perceived, has and in the future may harm our reputation or materially adversely affect our operating results and financial condition, regardless of whether such concerns are accurate.
Macroeconomic, business, political and financial disruptions, including public health crises or pandemics, could have a material adverse effect on our operating results, financial condition and liquidity.
Our business is subject to risk based on global economic and political conditions. Macroeconomic, business, political and financial disruptions, including public health crises or pandemics, could have a material adverse effect on our operating results, financial condition and liquidity.
Cash repatriation restrictions and exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing restrictions or controls.
Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation. Cash repatriation restrictions and exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing restrictions or controls.
Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, the deployment of harmful malware, ransomware, denial-of-service attacks, and other means to 22 | Table of Contents threaten data confidentiality, integrity and availability.
Cyberattacks, ransomware attacks, phishing attempts, social engineering schemes and other technology enabled threats are increasing in their frequency, sophistication and intensity, including through the use of AI and have become increasingly difficult to detect; and could include wrongful conduct by hostile foreign governments, industrial espionage, the deployment of harmful malware, ransomware, denial-of-service attacks, and other means to threaten data confidentiality, integrity and availability.
Examples of such risks include: (i) the availability and cost of low- or non-carbon-based energy sources and technologies, (ii) evolving regulatory requirements and rulings affecting ESG and diversity standards or disclosures, (iii) our ability to recruit, develop and retain talent in our labor markets, (iv) the impact of our organic growth and acquisitions or dispositions of businesses or operations and (v) potential negative publicity from diversity and inclusion matters.
Examples of such risks include: (i) the availability and cost of low- or non-carbon-based energy sources and technologies, (ii) evolving regulatory requirements and rulings affecting sustainability standards or disclosures, (iii) our ability to recruit, develop and retain talent in our labor markets, (iv) our ability to rely on third-party CMOs to incorporate appropriate sustainability actions, and (v) the impact of our organic growth and acquisitions or dispositions of businesses or operations.
Our failure to obtain approvals, delays in the approval process, including any delays resulting from any prolonged shutdown of the U.S. government, or our failure to maintain approvals in any jurisdiction, may prevent us from selling products in that jurisdiction until approval or reapproval is obtained, if ever. The OFAC at the U.S.
Our failure to obtain approvals, delays in the approval process, including any delays in the United States resulting from federal workforce reductions or hiring freezes, federal agency reorganizations or deregulatory efforts, or any prolonged shutdown of the U.S. government, or our failure to maintain approvals in any jurisdiction, may prevent us from selling products in that jurisdiction until approval or reapproval is obtained, if ever.
Risks related to legal matters and regulation Our business is subject to substantial regulation. As a global company, we are subject to various state, federal and international laws and regulations, including regulations relating to the research, development, quality assurance, manufacturing, importation, exportation, distribution, marketing and sale of our products, including our in vitro diagnostic products used in human health.
As a global company, we are subject to various state, federal and international laws and regulations, including but not limited to, regulations relating to the research, development, quality assurance, manufacturing, data protection, environmental protection, importation, exportation, distribution, marketing and sale of our products, including our in vitro diagnostic products used in human health.
Risks related to information technology We may be unable to adequately protect our information technology systems from cyberattacks, breaches of security or misappropriation of data, which could result in the disclosure of confidential information, damage our reputation, and subject us to significant financial and legal exposure.
Risks related to information technology We may be unable to adequately protect our information technology systems from cyberattacks, ransomware attacks, phishing attempts, social engineering schemes and other technology enabled threats, breaches of security, data loss or misappropriation of data, which could result in the disclosure of sensitive, personal, confidential or proprietary information, damage our reputation, and subject us to significant financial and legal exposure.
In addition, we have been investing in data and digital capabilities, including incorporating the use of certain AI capabilities into the development of new technologies and products, and have expanded our diagnostics portfolio, and as a result, there could be an increased likelihood of a cyberattack or breach of security that could negatively impact us or our customers.
In addition, we have been investing in data and digital capabilities, including incorporating the use of certain AI capabilities into the development of new technologies and products, and have expanded our diagnostics portfolio, and as a result, there could be an increased likelihood of a cyberattack, ransomware attacks, phishing attempts, social engineering schemes and other technology enabled threats, that could negatively impact us, our third-party partners or our customers.
In support of our flexible work environment, many of our workforce work either part-time or full-time remotely, which could increase risks associated with cybersecurity, information technology and systems which could have a material adverse effect on our business. The costs imposed on us as a result of a cyberattack or network disruption could be significant.
In support of our flexible work environment, many of our workforce work either part-time or full-time remotely, which could increase risks associated with cybersecurity, phishing attempts, information technology and systems which could have a material adverse effect on our business.
Also, many food-producing companies, including livestock producers, benefit from governmental subsidies, and if such subsidies were to be reduced or eliminated, these companies may become less profitable and, as a result, may reduce their use of our products. Furthermore, new or more stringent regulations could, directly or indirectly, impact the use of one or more of our products.
Also, many food-producing companies, including livestock producers, benefit from governmental subsidies, and if such subsidies were to be reduced or eliminated, these companies may become less 18 | Table of Contents profitable and, as a result, may reduce their use of our products.
If the company’s effective tax rates were to increase, particularly in the U.S. or other material foreign jurisdictions, or if the company's tax positions are either not sustained upon examination or only partially sustained, the company’s operating results, cash flows and financial condition could be adversely affected.
If the company’s effective tax rates were to increase, particularly in the U.S. or other material foreign jurisdictions, or if the company's tax positions are either not sustained upon examination or only partially sustained, the company’s operating results, cash flows and financial condition could be adversely affected. 26 | Table of Contents Risks related to intellectual property The alleged intellectual property rights of third parties may negatively affect our business.
In the U.S. and certain other markets, these and other competitive conditions have increased, and may continue to increase, our reliance on internet-based retailers, “big-box” retail stores or other over-the-counter distribution channels to sell our companion animal products.
In addition, companion animal owners may substitute human health products for animal health products if human health products are deemed to be lower-cost alternatives. 17 | Table of Contents In the U.S. and certain other markets, these and other competitive conditions have increased, and may continue to increase, our reliance on internet-based retailers, “big-box” retail stores or other over-the-counter distribution channels to sell our companion animal products.
As a result, a cyberattack or network disruption could have a material adverse effect on our business, financial condition, and operating results. We depend on sophisticated information technology and infrastructure.
As a result, cyberattacks, ransomware attacks, phishing attempts, social engineering schemes, and other technology enabled threats, or network disruption could have a material adverse effect on our business, financial condition, and operating results. We depend on sophisticated information technology and infrastructure.
We pursue acquisitions, technology licensing arrangements, strategic alliances or divestitures of some of our businesses as part of our business strategy. We may not complete these transactions in a timely manner, on a cost-effective basis, or at all, due to regulatory constraints or limitations or other unforeseen factors that prevent us from realizing the expected benefits.
We may not complete these transactions in a timely manner, on a cost-effective basis, or at all, due to regulatory constraints or limitations or other unforeseen factors that prevent us from realizing the expected benefits.
Russia’s invasion of Ukraine, the regional conflict in the Middle East, economic weakness in China, the COVID-19 pandemic, as well as inflation, are examples of recent global economic conditions that could have an adverse effect on our operating results, financial condition and liquidity.
Russia’s invasion of Ukraine, ongoing conflicts and rising tensions in various parts of the world, economic weakness in China, future pandemics, as well as inflation, are examples of global economic conditions that could have an adverse effect on our operating results, financial condition and liquidity.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, may materially adversely affect our operating results, financial condition and liquidity and our ability to satisfy our obligations under our indebtedness or pay dividends on our common stock. 25 | Table of Contents We may not have the funds necessary to finance the change of control offer required by the indenture governing our senior notes.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, may materially adversely affect our operating results, financial condition and liquidity and our ability to satisfy our obligations under our indebtedness or pay dividends on our common stock.
While the scope and duration of these and any future tariffs remains uncertain, tariffs imposed by the U.S. or other governments on our products or the active pharmaceutical ingredients or other components thereof could negatively impact our financial condition and results of operations. Our business may be negatively affected by weather conditions, natural disasters and the availability of natural resources.
While the scope and duration of any existing trade policies remain uncertain, any new tariffs imposed by the U.S. or other governments on our products or the active pharmaceutical ingredients or other components thereof could negatively impact our financial condition and results of operations.
Problems in any one or more of these areas could have a material adverse effect on our operating results and financial condition and could damage our reputation.
The operation of our online business depends on our ability to maintain the efficient and uninterrupted operation of our online order-taking and fulfillment operations. Problems in any one or more of these areas could have a material adverse effect on our operating results and financial condition and could damage our reputation.
Unanticipated safety, quality or efficacy concerns can arise with respect to our products, whether or not scientifically or clinically supported, which can lead to product recalls, label changes, public regulatory communications, negative publicity or social media attention, withdrawals or suspended or declining sales, as well as product liability and other claims.
Unanticipated safety, quality or efficacy concerns have, and could in the future, arise with respect to our products, whether or not scientifically or clinically supported, which have in the past and could in the future lead to product recalls, label changes or other measures that could reduce the product’s market acceptance, public 16 | Table of Contents regulatory communications, negative publicity or social media attention, withdrawals from the market or suspended or declining sales.
In many markets around the world, such as the U.S. and Brazil, we provide online ordering sites to customers, often relying on third parties to host and support the application. The operation of our online business depends on our ability to maintain the efficient and uninterrupted operation of our online order-taking and fulfillment operations.
We may be unable to successfully manage our online ordering sites. In many markets around the world, such as the U.S. and Brazil, we provide online ordering sites to customers, often relying on third parties to host and support the application.
Failure by these providers to adequately support our operations or a change in control or insolvency of these providers could have an adverse effect on our business, which in turn may materially adversely affect our operating results and financial condition. We may be unable to successfully manage our online ordering sites.
These third parties include large established vendors, as well as many small, privately owned companies. Failure by these providers to adequately support our operations or a change in control or insolvency of these providers could have an adverse effect on our business, which in turn may materially adversely affect our operating results and financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Head of Technology Risk, Compliance and Chief Information Security Officer has 37 years of experience in Life Sciences Information Technology, including over 20 years of experience in information security and holds bachelor’s degrees in computer science and biology.
Biggest changeHe holds a bachelor's degree in information systems and a master of business administration degree. Our Chief Information Security Officer, has over 20 years of experience in Information Security, with a specialized focus on Life Sciences and expertise in aligning cybersecurity strategies with enterprise objectives. He holds a bachelor's degree in electronic commerce and a master's degree in information systems.
The Zoetis information security team also works closely with the Zoetis Legal team, including the Chief Privacy Officer, to further enhance incident response procedures. For example, we have a corporate crisis management plan in place to govern our response to corporate crises, which could include cyber incidents, and we conduct periodic simulated programs to ensure readiness.
The Zoetis information security team also works closely with the Zoetis Legal team, including the Chief Compliance Officer, to further enhance incident response procedures. For example, we have a corporate crisis management plan in place to govern our response to corporate crises, which could include cyber incidents, and we conduct periodic simulated programs to ensure readiness.
This plan also includes a standard framework for categorization of incidents based on risk level and severity, and requires escalation to Zoetis senior management and/or the Audit Committee of the Board of Directors if certain severity levels are met.
This plan also includes a standard 29 | Table of Contents framework for categorization of incidents based on risk level and severity, and requires escalation to Zoetis senior management and/or the Audit Committee of the Board of Directors if certain severity levels are met.
In addition, the Chief Information Security Officer presents updates at least annually to the Board of Directors with respect to the information security program, including the results of our independent, third-party assessment. The Board of Directors also participates in annual table-top exercises involving simulated data security incidents and the Company’s responses to those incidents. 27 | Table of Contents
In addition, the Chief Information Security Officer presents updates at least annually to the Board of Directors with respect to the information security program, including the results of our independent, third-party assessment. The Board of Directors also participates in periodic table-top exercises involving simulated data security incidents and the Company’s responses to those incidents.
Despite the presence of these risks, to date, the identified risks of cybersecurity threats (including as a result of any previous cybersecurity incidents) have not materially affected, and are not reasonably likely to materially affect, us or our business strategy, results of operations, or financial condition.
Despite the presence of these risks, to date, the identified risks of cybersecurity threats (including as a result of any previous cybersecurity incidents) have not materially affected us or our business strategy, results of operations, or financial condition.
Prior to Zoetis, he was the VP, Information Technology at Biogen, overseeing all aspects of Infrastructure, IT Operations, and Enterprise Architecture globally and held various corporate leadership roles at Eli Lilly and Company, including Head of IT Infrastructure and Enabling Functions. He holds a bachelor's degree in information systems and a master of business administration degree.
Our Executive Vice President, Chief Digital & Technology Officer has over 20 years of information technology experience. Prior to Zoetis, he was the VP, Information Technology at Biogen, overseeing all aspects of Infrastructure, IT Operations, and Enterprise Architecture globally and held various corporate leadership roles at Eli Lilly and Company, including Head of IT Infrastructure and Enabling Functions.
Training We have an information security training program that includes: monthly awareness articles, a phishing training program (with reports reviewed by the Executive Team), and required and optional training modules in our Learning Management System. Incident Response Procedure We have a 24/7 managed Security Operations Center (SOC) for escalation of any critical events, including cybersecurity incidents.
Training We have an information security training program that includes: monthly awareness articles, a phishing training program (with reports reviewed by the Executive Team), and both required and optional training modules for our employees and contractors in our Learning Management System.
In the event of an incident, we use an Incident Response procedure leveraging NIST Standard 800-61 standards that we have customized for Zoetis. Additionally, we have in place disaster recovery and business continuity practices designed to provide for continuous business operations for our customers in the event of a cybersecurity incident.
Additionally, we have in place disaster recovery and business continuity practices designed to provide for continuous business operations for our customers in the event of a cybersecurity incident. While we maintain cybersecurity insurance coverage, the costs related to cybersecurity threats or disruptions may not be fully insured.
While we maintain cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. Third Party Onboarding We depend on third parties and applications on virtualized (cloud) infrastructure to operate and support our information systems and have a third-party risk management program and assessment process for onboarding third parties.
Third Party Onboarding We depend on third parties and applications on virtualized (cloud) infrastructure to operate and support our information systems and have a third-party risk management program and assessment process for onboarding third parties. Management’s Role in Risk Oversight Our information security team includes our Executive Vice President, Chief Digital & Technology Officer and our Chief Information Security Officer.
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Management’s Role in Risk Oversight Our information security team includes our Executive Vice President, Chief Digital & Technology Officer and our Head of Technology Risk, Compliance and Chief Information Security Officer. Our Executive Vice President, Chief Digital and Technology Officer has over 20 years of information technology experience.
Added
Incident Response Procedure We have a 24/7 managed Security Operations Center (SOC) for escalation of any critical events, including cybersecurity incidents. In the event of an incident, we use an Incident Response procedure leveraging NIST Standard 800-61 standards that we have customized for Zoetis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur largest R&D and manufacturing facilities are located at our owned site located in Kalamazoo, Michigan, which represents approximately 1.6 million square feet. The site represents approximately 0.9 million square feet dedicated to R&D and approximately 0.7 million square feet for manufacturing. In addition, our global manufacturing network continues to be supplemented by over 110 CMOs.
Biggest changeOur largest R&D and manufacturing facilities are located at our owned sites located in the Kalamazoo, Michigan area, which represents approximately 1.6 million square feet and largely supports the production of products for U.S. and global markets. The site represents approximately 0.9 million square feet dedicated to R&D and approximately 0.7 million square feet for manufacturing.
Item 2. Properties. We have approximately 184 owned and leased properties, amounting to approximately 11.4 million square feet, around the world for sales and marketing, customer service, regulatory compliance, R&D, manufacturing and distribution, and administrative support functions. In many locations, operations are co-located to achieve synergies and operational efficiencies.
Item 2. Properties. We have approximately 173 owned and leased properties, amounting to approximately 11.5 million square feet, around the world for sales and marketing, customer service, regulatory compliance, R&D, manufacturing and distribution, and administrative support functions, which serve both our U.S. and International operating segments. In many locations, operations are co-located to achieve synergies and operational efficiencies.
Our corporate headquarters are located at 10 Sylvan Way, Parsippany, New Jersey 07054. Our operations extend internationally to 57 countries. We believe that our existing properties, as supplemented by sites operated by CMOs, are adequate for our current requirements and for our operations in the foreseeable future.
We believe that our existing properties, as supplemented by sites operated by CMOs, are adequate for our current requirements and for our operations in the foreseeable future.
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In addition, our global manufacturing network continues to be supplemented by over 90 CMOs, which our International operating segment mainly relies on. Our corporate headquarters are located at 10 Sylvan Way, Parsippany, New Jersey 07054. Our operations extend internationally to 56 countries.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeCertain legal proceedings in which we are involved are discussed in Notes to Consolidated Financial Statements— Note 18. Commitments and Contingencies , and are incorporated by reference from such discussion. Item 4. Mine Safety Disclosures. Not applicable. 28 | Table of Contents PART II
Biggest changeCertain legal proceedings in which we are involved are discussed in Notes to Consolidated Financial Statements— Note 18. Commitments and Contingencies , and are incorporated by reference from such discussion. Item 4. Mine Safety Disclosures. Not applicable. 30 | Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 28 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8. Financial Statements and Supplementary Data 52
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8. Financial Statements and Supplementary Data 54

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer purchases of equity securities for the three months ended December 31, 2024 were as follows: Issuer Purchases of Equity Securities (b) Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs October 1 - October 31, 2024 406,138 $187.74 404,610 $6,123,583,633 November 1 - November 30, 2024 1,235,190 $175.49 1,234,001 $5,907,016,961 December 1 - December 31, 2024 1,475,700 $175.85 1,475,445 $5,647,168,628 Total 3,117,028 $177.26 3,114,056 $5,647,168,628 (a) The company repurchased 2,972 shares during the three-month period ended December 31, 2024, that were not part of the publicly announced share repurchase authorization.
Biggest changeIssuer purchases of equity securities for the three months ended December 31, 2025 were as follows: Issuer Purchases of Equity Securities (b) Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs October 1 - October 31, 2025 775,688 $144.58 773,904 $4,377,338,376 November 1 - November 30, 2025 2,342,900 $121.99 2,342,306 $4,091,597,203 December 1 - December 31, 2025 13,450,458 $123.54 13,449,877 $2,428,938,090 Total 16,569,046 $124.31 16,566,087 $2,428,938,090 (a) The company repurchased 2,959 shares during the three-month period ended December 31, 2025, that were not part of the publicly announced share repurchase authorization.
The shareholder return shown on the graph is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future shareholder returns. The graph assumes an investment of $100 on December 31, 2019, in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index and assumes dividends, if any, were reinvested.
The shareholder return shown on the graph is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future shareholder returns. The graph assumes an investment of $100 on December 31, 2020, in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index and assumes dividends, if any, were reinvested.
Because we are a holding company, our ability to pay cash dividends on our common stock will depend on the receipt of dividends or other distributions from certain of our subsidiaries. 29 | Table of Contents Stock Performance Graph (a) The graph below compares the cumulative total shareholder return on an investment in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index for the five fiscal years beginning with the close of trading on December 31, 2019 and ending December 31, 2024.
Because we are a holding company, our ability to pay cash dividends on our common stock will depend on the receipt of dividends or other distributions from certain of our subsidiaries. 31 | Table of Contents Stock Performance Graph (a) The graph below compares the cumulative total shareholder return on an investment in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index for the five fiscal years beginning with the close of trading on December 31, 2020 and ending December 31, 2025.
In August 2024, our Board of Directors authorized a new multi-year share repurchase program of up to $6 billion of our outstanding common stock. As of December 31, 2024, there was $5.6 billion remaining under this authorization. The program does not have a stated expiration date.
Purchases of Equity Securities by the Issuer In August 2024, our Board of Directors authorized a multi-year share repurchase program of up to $6 billion of our outstanding common stock. As of December 31, 2025, there was $2.4 billion remaining under this authorization. The program does not have a stated expiration date.
As of February 7, 2025, there were 447,791,917 shares of our common stock outstanding, held by 1,468 shareholders of record. Additional information relating to our common stock is included in this Annual Report on Form 10-K in Notes to Consolidated Financial Statements— Note 16. Stockholders' Equity .
As of February 6, 2026, there were 422,127,709 shares of our common stock outstanding, held by 1,356 shareholders of record. Additional information relating to our common stock is included in this Annual Report on Form 10-K in Notes to Consolidated Financial Statements— Note 16. Stockholders' Equity .
COMPARISON OF CUMULATIVE TOTAL RETURN Among Zoetis Inc., the S&P 500 Index and the S&P 500 Pharmaceuticals Index December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Zoetis Inc. $100 $125.76 $186.46 $112.80 $153.30 $127.80 S&P 500 Index $100 $118.40 $152.39 $124.79 $157.59 $197.02 S&P 500 Pharmaceuticals Index $100 $107.53 $135.22 $146.65 $147.13 $159.21 (a) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Zoetis under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language contained in any such filing. 30 | Table of Contents
COMPARISON OF CUMULATIVE TOTAL RETURN Among Zoetis Inc., the S&P 500 Index and the S&P 500 Pharmaceuticals Index December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 Zoetis Inc. $100 $148.26 $89.69 $121.90 $101.62 $79.52 S&P 500 Index $100 $128.71 $105.40 $133.10 $166.40 $196.16 S&P 500 Pharmaceuticals Index $100 $125.75 $136.38 $136.84 $148.06 $188.27 (a) This section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Zoetis under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language contained in any such filing. 32 | Table of Contents
Removed
Purchases of Equity Securities by the Issuer On December 7, 2021, our Board of Directors authorized a multi-year share repurchase program of up to $3.5 billion of our outstanding common stock. This program was completed as of December 31, 2024.
Added
In connection with the December 18, 2025 private offering of 0.250% convertible senior notes, we used $248 million of the net proceeds from the offering to purchase approximately 2.1 million shares of Zoetis’ common stock.
Added
Following the date of the offering, we used the remaining $1,535 million of net proceeds for additional repurchases of common stock, which were substantially completed as of December 31, 2025.
Added
Our quarterly cash dividend was $0.50 per share of common stock in fiscal year 2025. We currently expect to continue paying dividends consistent with our historic dividend payments.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs a result of the divestiture of our medicated feed additive product portfolio, certain water soluble products and related assets, we anticipate our total revenues attributable to antibacterials for livestock will decrease. Similarly, concerns regarding greenhouse gas emissions and other potential environmental impacts of livestock production have led to some consumers opting to limit or avoid consuming animal products.
Biggest changeSimilarly, concerns regarding greenhouse gas emissions and other potential environmental impacts of livestock production have led to some consumers opting to limit or avoid consuming animal products.
Factors influencing growth in demand for livestock medicines and vaccines 31 | Table of Contents include: • human population growth and increasing standards of living, particularly in many emerging markets; • increasing demand for improved nutrition, particularly animal protein; • natural resource constraints, such as scarcity of arable land, fresh water and increased competition for cultivated land, resulting in fewer resources that will be available to meet an increasing demand for animal protein; • increasing urbanization; and • increased focus on food safety and food security.
Factors influencing growth in demand for livestock medicines and vaccines include: • human population growth and increasing standards of living, particularly in many emerging markets; 33 | Table of Contents • increasing demand for improved nutrition, particularly animal protein; • natural resource constraints, such as scarcity of arable land, fresh water and increased competition for cultivated land, resulting in fewer resources that will be available to meet an increasing demand for animal protein; • increasing urbanization; and • increased focus on food safety and food security.
However, we believe the impact of this trend is limited as the livestock industry is still expected to continue to grow in order to feed a growing global population. 32 | Table of Contents Product development initiatives Our future success depends on both our existing products and our pipeline of new products, including new products that we may develop through joint ventures and products that we are able to obtain through license or acquisition.
However, we believe the impact of this trend is limited as the livestock industry is still expected to continue to grow in order to feed a growing global population. 34 | Table of Contents Product development initiatives Our future success depends on both our existing products and our pipeline of new products, including new products that we may develop through joint ventures and products that we are able to obtain through license or acquisition.
Our internal R&D capabilities are differentiators, but we also collaborate across both academia and industry partners to ensure we are bringing the best possible innovations to our customers; 33 | Table of Contents • Deliver an exceptional experience to delight our customers - We believe that our customers' success is our success and that the best way to realize that success is by enabling veterinarians, livestock producers and pet owners to provide the best possible care for animals.
Our internal R&D capabilities are differentiators, but we also collaborate across both academia and industry partners to ensure we are bringing the best possible innovations to our customers; 35 | Table of Contents • Deliver an exceptional experience to delight our customers - We believe that our customers' success is our success and that the best way to realize that success is by enabling veterinarians, livestock producers and pet owners to provide the best possible care for animals.
For example, Draxxin currently competes with generic products in key markets including the U.S., Europe, Canada, Mexico and Australia. Since 2021, the first year of generic competition, sales of Draxxin declined by 49% in the U.S., its largest market.
For example, Draxxin currently competes with generic products in key markets including the U.S., Europe, Canada, Mexico and Australia. Since 2021, the first year of generic competition, sales of Draxxin declined by 66% in the U.S., its largest market.
Risk Factors and Forward-looking statements and factors that may affect future results sections of this MD&A. A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented below.
Risk Factors and Forward-looking statements and factors that may affect future results sections of this MD&A. A discussion regarding our financial condition and results of operations for fiscal 2025 compared to fiscal 2024 is presented below.
Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the year ended December 31, 2024, approximately 59% of our total revenue was in U.S. dollars.
Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the year ended December 31, 2025, approximately 58% of our total revenue was in U.S. dollars.
Our year-over-year total revenue growth was unfavorably impacted by 3% from changes in foreign currency values relative to the U.S. dollar.
Our year-over-year total revenue growth was unfavorably impacted by 1% from changes in foreign currency values relative to the U.S. dollar.
Components of revenue and costs and expenses Our revenue, costs and expenses are reported for the year ended December 31 for each year presented, except for operations outside the U.S., for which the financial information is included in our consolidated financial statements for the fiscal year ended November 30 for each year presented.
Components of revenue and costs and expenses Our revenue, costs and expenses are reported for the year ended December 31 for each year presented, except for subsidiaries operating outside the U.S., for which the financial information is included in our consolidated financial statements for the fiscal year ended November 30 for each year presented.
Such restrictions and consumer preferences in some cases may negatively impact sales of our antibacterial products, but in other instances may increase sales of our products that can be used as antibacterial alternatives. Our total revenue attributable to antibacterials for livestock was approximately $950 million for the year ended December 31, 2024.
Such restrictions and consumer preferences in some cases may negatively impact sales of our antibacterial products, but in other instances may increase sales of our products that can be used as antibacterial alternatives. Our total revenue attributable to antibacterials for livestock was approximately $713 million for the year ended December 31, 2025.
Foreign exchange rates Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the year ended December 31, 2024, approximately 41% of our revenue was denominated in foreign currencies.
Foreign exchange rates Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the year ended December 31, 2025, approximately 42% of our revenue was denominated in foreign currencies.
A discussion regarding our financial condition and results of operations for fiscal 2023 compared to fiscal 2022 can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 14, 2024 (our “2023 Annual Report”), which is available free of charge on the SEC’s website at www.sec.gov.
A discussion regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 13, 2025 (our “2024 Annual Report”), which is available free of charge on the SEC’s website at www.sec.gov.
Our ten top-selling products and product lines contributed 55% of our revenue. For additional information regarding our products, including descriptions of our product lines that each represented approximately 1% or more of our revenue in 2024, see
Our ten top-selling products and product lines contributed 57% of our revenue. For additional information regarding our products, including descriptions of our product lines that each represented approximately 1% or more of our revenue in 2025, see
A summary of our 2024 performance compared with the comparable 2023 and 2022 periods follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2024 2023 2022 24/23 23/22 Revenue $ 9,256 $ 8,544 $ 8,080 8 6 Net income attributable to Zoetis 2,486 2,344 2,114 6 11 Adjusted net income (a) 2,693 2,457 2,297 10 7 (a) Adjusted net income is a non-GAAP financial measure.
A summary of our 2025 performance compared with the comparable 2024 and 2023 periods follows: Year Ended December 31, % Change (MILLIONS OF DOLLARS) 2025 2024 2023 25/24 24/23 Revenue $ 9,467 $ 9,256 $ 8,544 2 8 Net income attributable to Zoetis 2,673 2,486 2,344 8 6 Adjusted net income (a) 2,847 2,693 2,457 6 10 (a) Adjusted net income is a non-GAAP financial measure.
In 2024, our two top-selling products and product lines, Simparica/Simparica Trio and Apoquel/Apoquel Chewable, contributed approximately 15% and 11% of our revenue, respectively, and combined with our next three top-selling products and product lines, Cytopoint, Librela and our ceftiofur line, these five products and product lines contributed approximately 41% of our revenue.
In 2025, our two top-selling products and product lines, Simparica/Simparica Trio and Apoquel/Apoquel Chewable, contributed approximately 16% and 12% of our revenue, respectively, and combined with our next three top-selling products and product lines, Cytopoint, Librela and our ceftiofur line, these five products and product lines contributed approximately 42% of our revenue.
For over 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from veterinarians and pet owners to livestock producers. We manage our operations through two geographic operating segments: the United States (U.S.) and International.
With a legacy of nearly 75 years, we continue to pioneer ways to predict, prevent, detect, and treat animal illness, supporting those raising and caring for animals worldwide - from veterinarians and pet owners to livestock producers. We manage our operations through two geographic operating segments: the United States (U.S.) and International.
Removed
Through our efforts to establish an early and direct presence in many emerging markets, such as Brazil, Chile, China and Mexico, we believe we are one of the largest animal health medicines and vaccines businesses as measured by revenue across emerging markets as a whole.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest paid on such funds fluctuates with the prevailing interest rate. 51 | Table of Contents
Biggest changeAt December 31, 2025, our cash equivalents were primarily invested in money market funds. Interest paid on such funds fluctuates with the prevailing interest rate. 53 | Table of Contents
If the U.S. dollar were to strengthen or weaken against all other currencies by 10%, the fair value of these contracts would decrease or increase, respectively, by $33 million. The foreign currency gains and losses on the assets and liabilities are recorded in Other (income)/deductions-net . See Notes to Consolidated Financial Statements— Note 9. Financial Instruments: B.
If the U.S. dollar were to strengthen or weaken against all other currencies by 10%, the fair value of these contracts would decrease or increase, respectively, by $53 million. The foreign currency gains and losses on the assets and liabilities are recorded in Other (income)/deductions-net . See Notes to Consolidated Financial Statements— Note 9. Financial Instruments: B.
Additionally, as of December 31, 2024, because we held certain interest rate swap agreements that have the economic effect of modifying the fixed-interest obligations associated with our 3.900% Senior Notes due 2028 and our 2.00% Senior Notes due 2030, a portion of the fixed-rate interest payable on these senior notes effectively became variable based on SOFR.
Additionally, as of December 31, 2025, because we held certain interest rate swap agreements that have the economic effect of modifying the fixed-interest obligations associated with our 3.900% Senior Notes due 2028 and our 2.00% Senior Notes due 2030, a portion of the fixed-rate interest payable on these senior notes effectively became variable based on SOFR.
As of December 31, 2024, if SOFR-based interest rates would have been higher by 100 basis points, the change would have increased our interest expense annually by approximately $3 million, as it relates to our fixed to floating interest rate swap agreements. See Notes to Consolidated Financial Statements— Note 9. Financial Instruments .
As of December 31, 2025, if SOFR-based interest rates would have been higher by 100 basis points, the change would have increased our interest expense annually by approximately $3 million, as it relates to our fixed to floating interest rate swap agreements. See Notes to Consolidated Financial Statements— Note 9. Financial Instruments .
These contracts are used to offset the potential earnings effects from mostly intercompany short-term foreign currency assets and liabilities that arise from operations but are not designated as hedges. Our foreign currency forward-exchange contracts at December 31, 2024 were analyzed to determine their sensitivity to foreign exchange rate changes.
These contracts are used to offset the potential earnings effects from mostly intercompany short-term foreign currency assets and liabilities that arise from operations but are not designated as hedges. Our foreign currency forward-exchange contracts at December 31, 2025 were analyzed to determine their sensitivity to foreign exchange rate changes.
If the U.S. dollar were to strengthen or weaken against all other currencies by 10%, the amount recorded in cumulative translation adjustment (CTA) within Accumulated other comprehensive loss related to our net investment hedge would increase or decrease, respectively, by approximately $91 million.
If the U.S. dollar were to strengthen or weaken against all other currencies by 10%, the amount recorded in cumulative translation adjustment (CTA) within Accumulated other comprehensive loss related to our net investment hedge would increase or decrease, respectively, by approximately $112 million.
At December 31, 2024, there were no commercial paper borrowings outstanding and no outstanding principal balance under our revolving credit facility. By entering into the aforementioned swap arrangements, we have assumed risks associated with variable interest rates based upon SOFR.
At December 31, 2025, there were no commercial paper borrowings outstanding and no outstanding principal balance under our revolving credit facility. By entering into the aforementioned swap arrangements, we have assumed risks associated with variable interest rates based upon SOFR.
Our foreign exchange derivative instruments at December 31, 2024 were analyzed to determine their sensitivity to foreign exchange rate changes.
Our foreign exchange derivative instruments at December 31, 2025 were analyzed to determine their sensitivity to foreign exchange rate changes.
Removed
In anticipation of issuing fixed-rate debt, we may use forward-starting interest rate swaps that are designated as cash flow hedges to hedge against changes in interest rates that could impact expected future issuances of debt.
Removed
A 100-basis point increase or (decrease) in SOFR-based interest rates would have resulted in a increase or (decrease) in the fair value of our forward-starting interest rate swaps by $20 million and $(23) million, respectively at December 31, 2024. At December 31, 2024, our cash equivalents were primarily invested in money market funds.

Other ZTS 10-K year-over-year comparisons