1. business and industrial

2015 Annual Meeting of Shareholders
Remarks from Juan Ramón Alaix, CEO, Zoetis
Friday, May 1, 2015
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Thank you Mike, and good morning, everyone.
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I am very pleased to be here with you today and to represent our colleagues at Zoetis. They work
hard every day to serve our customers at the highest level … and to deliver results for you, our
shareholders. I am very proud of what they have accomplished.

As shareholders in Zoetis, you are all familiar with our business,… our launch as a public company
in 2013,… and our position as the Global Leader in animal health.

The world depends on animals for both nutrition and companionship,… Zoetis remains committed
to helping our customers improve the care of animals … and to creating long-term value.
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Today, I’d like to take a few minutes to update you on our 2014 results,… discuss how we are
working to meet investor expectations,… and talk about the strategies that will strengthen our
company for the future.

In our second full year as a public company, we generated strong profitable growth … built on the
core strengths of our business model … and continued to create value for our customers and
shareholders.
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Our value proposition for shareholders is:
o
First, to grow our revenue in line with or faster than the market
o
Second, to grow adjusted net income faster than revenue
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Third, to invest our resources internally and externally to seize growth opportunities
o
And, fourth, to return excess capital to our shareholders.
In terms of revenue, we generated $4.8 billion dollars in 2014. This was a 5% increase on a
reported basis – 7% excluding the impact of foreign currencies -- in an industry that has been
growing about 4% annually on a reported basis, according to industry sources.
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When you look at our revenue growth in the last four years, you see that we have delivered
consistent performance, outpacing the market.

We are also focused on delivering profitable growth that can maximize Zoetis’ value.

In 2014, our adjusted net income grew 13% operationally,… significantly faster than revenue.

We have historically focused on quality earnings growth. In fact, we have increased our adjusted
EBIT – or earnings before interest and tax -- as a percent of revenue from 19% in 2011 to 25% in
2014.

Separating from Pfizer has been a significant undertaking as we have been building our corporate
infrastructure, IT platforms, as well taking ownership of more than two dozen manufacturing plants.

We are close to completing the build-out of our own infrastructure and systems, which will allow
Zoetis to stand firmly on our own.

Our Enterprise Resource Planning system – or ERP -- should be completed early next year. It will
provide a common database, transactions, and reporting tools for the entire business,… and it will
also drive standardization and more efficient operations.

We also continue to exercise expense discipline across our operations. It is part of our Run It Like
You Own It culture. And we continue to look for ways to expand our margins as we make progress
on a comprehensive strategy to re-shape our manufacturing network.

The third piece of our value proposition is investing in growth through internal R&D and external
business development opportunities.

In 2014, the Zoetis R&D team received more than 180 product approvals.

These ranged from new products like APOQUEL, which helps control itchiness in dogs with
allergic skin conditions, to lifecycle extensions of our existing portfolio across additional species,
indications and markets.
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We also remain excited about two regulatory filings for innovative products – Sarolaner and the IL31 antibody therapy. Sarolaner will strengthen our presence in the companion animal flea and tick
market – the largest single area of the animal health industry. Meanwhile, our IL-31 antibody
therapy will complement Apoquel and strengthen our leadership in the dermatology space.

On the external side, we also continue to deploy capital on value-creating business development
that will add to,… or complement,… our existing business.

In 2014, we announced our largest acquisition to-date as an independent company by purchasing
the animal health assets of Abbott. We completed this purchase in February this year and view
this as an important addition to our companion animal product portfolio… meeting all the criteria to
create value through business development opportunities.

The final piece of our value proposition is returning capital to our shareholders and following a
clear set of capital allocation priorities.

Specifically, we returned capital to our shareholders through quarterly dividend payments, which
we have increased by 15% for 2015,… and we announced a $500 million share repurchase
program last year.

Since our IPO in 2013, we have delivered a Total Shareholder Return on par with the S&P 500
Index and the S&P 500 Pharmaceutical Index, and we saw significant outperformance in 2014.

We delivered our results in 2014… with consistent growth,… value creation … and market
leadership because of our singular focus on animal health … and three interconnected capabilities
that have become the foundation of our business model:
o
We have an industry-leading sales force that works directly with our customers to
understand their needs and provide solutions from our diverse portfolio of products and
services.
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Our R&D team continues to discover and develop remarkable breakthroughs that make
us a leader and partner of choice in the industry.
o
And, our high quality manufacturing and supply draws its strength from a mix of internal
sites, external partners and various technologies that can support the diverse, global
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needs of our customers.
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As we look ahead, we remain committed to this business model as a formula for our success.
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In addition to our business model, we are building a culture rooted in our Core Beliefs, which are
demonstrated by our colleagues every day.
o
We recognize that our Colleagues Make the Difference and are the face to our
customers.
o
We strive to Always Do the Right Thing in our interactions and business practices.
o
We are Obsessed with the needs of our Customers and providing them with relevant
solutions.
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We have built an ownership culture, with each colleague Running Zoetis like it was their
own business.
o
And, finally, we pull together as One Zoetis to achieve our vision of being the most
valued company in animal health.
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We also have three major growth strategies that define our path forward for continued
leadership and value creation:
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First, we are leveraging our core capabilities and building on our strengths.
o
This means continuing to invest in and gain from our customer relationships, R&D and
high-quality manufacturing and supply.
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Second, we are extending our reach to find new, profitable growth opportunities
o
This means further penetrating emerging markets with the right approach and
commercial model.
o
Remaining a recognized leader and partner of choice for external development
opportunities.
o
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And, expanding into complementary businesses that enhance our core offerings
Third, we are planning on ways to optimize our operations as we see opportunities for greater
efficiency and stand firmly on our own.
o
This means increasing margins through our manufacturing network strategy, and
implementing efficiency initiatives across the business.
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
I want to thank you for your interest and ownership of Zoetis.

This year, we will continue to enhance and protect our competitive advantages,… improve our
working capital efficiency,… achieve margin improvements,… and return excess capital to our
shareholders.

We are committed to making Zoetis a stronger and more efficient market leader, maximizing the
value we can deliver to shareholders.

I look forward to reporting to you on our progress throughout the year.

And with that, let me thank you for your interest and attention. And now, I’d be happy to take
your questions. Thank you.
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