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2020

ANNUAL
REPORT
2020 FINANCIAL HIGHLIGHTS

REVENUE BY REVENUE BY REVENUE BY


SPECIES ‡ PRODUCT CATEGORY ‡ TOP MARKETS ‡

2% 1% 2% 1% 1%
2% 2%
2%
5% 3%
8% 7% 22% 3%
3%

10% 3%
3%
13% 4%
55% 18% 4% 54%
24% 14% 6%
X% 18% 10%

   Companion Animal 55%    Vaccines 22%    United States 54%    France 2%


   Cattle 24%    Anti-Infectives 18%    China 4%    Mexico 2%
   Swine 10%    Parasiticides 18%    Brazil 4%    Spain 2%
   Poultry 8%    Dermatology 14%    Canada 3%    Chile 1%
   Fish 2%    Other Pharmaceuticals 13%    Australia 3%   Italy 1%
   Sheep and other 1%    Medicated Feed Additives 7%    United Kingdom 3%    Other emerging markets 10%
   Animal Health Diagnostics 5%    Japan 3%    Other developed markets 6%
   Other Non-Pharmaceuticals 3%    Germany 2%

REVENUE BY PRODUCT REVENUE GROWTH AND


CONCENTRATION  ADJUSTED EBIT MARGIN
*  Adjusted EBIT (a non-GAAP financial measure)

Top Five
9%† excludes interest expense net of capitalized

Products 10% † interest, interest income and adjusted income taxes.


31% 10%† **  Adjusted net income and its components and
$6,675

adjusted diluted earnings per share (non-GAAP


$6,260

financial measures) are defined as reported


$5,825

net income attributable to Zoetis and reported


diluted earnings per share, excluding
purchase accounting adjustments, acquisition-
related costs and certain significant items.

44% †  Represents operational revenue growth


(a non-GAAP financial measure), which is defined 
56% as revenue growth excluding the impact of
foreign exchange. Reported revenue growth,
35% 37% 37% including the impact of foreign exchange, was
10% for 2018, 7% for 2019 and 7% for 2020.

‡  Revenue charts exclude revenue associated with
Client Supply Services and Human Health, which
represented 1% of total 2020 revenue.
2018 2019 2020
   All Other 56%
   Top Ten Product Lines 44%    Adjusted EBIT* Margin


$Millions (except per share data) 2018 2019 2020

Revenue $ 5,825 $ 6,260 $ 6,675


Net Income Attributable to Zoetis $ 1,428 $ 1,500 $ 1,638
Adjusted Net Income Attributable to Zoetis** $ 1,525 $ 1,755 $ 1,844
Diluted Earnings Per Share $ 2.93 $ 3.11 $ 3.42
Adjusted Diluted Earnings Per Share** $ 3.13 $ 3.64 $ 3.85
Net Cash Provided by Operating Activities $ 1,790 $ 1,795 $ 2,126
Research & Development Expense $ 432 $ 457 $ 463
DEAR SHAREHOLDERS,
While 2020 will be remembered as the year of COVID-19, it also revealed
the perseverance of our Zoetis colleagues and the resilience of our business
in extraordinary ways. What’s more, it reaffirmed our company’s purpose
and connection to nurturing our world and humankind by advancing care
for animals.

Throughout the pandemic, our primary maintain stability in our workforce and
concerns were to ensure the safety operations, and gave us flexibility to
of our colleagues, customers and address colleague safety, logistics
communities, while safeguarding a and supply chain changes, and increased
reliable supply of high-quality products inventory for customers.
around the world. Thanks to the
agility and ingenuity of our teams, CAPITAL ALLOCATIONS
we continued serving customers and
sustained our growth and profitability— In 2020, our overall investment
all through new product innovations, plans stayed in place. We invested
recently acquired businesses and approximately $1 billion internally and
adaptability to customer needs. externally to support future growth
with our R&D, capital expenditures,
During 2020, our strong financial and business development activities,
position and strategic focus enabled us and in our commitment to reallocate
to stay profitable despite the impacts excess capital to shareholders
of COVID-19. We grew revenue 9% throughout the year, we… KRISTIN PECK
operationally, which is once again above Chief Executive Officer
market growth in a competitive, global • paid $380 million in dividends
sector, and we also grew our adjusted • bought back about $250 million
net income faster than revenue, at 10% in shares
operationally. Importantly, our strong • announced a 25% dividend increase
cash flow helped us avoid dramatic cuts, this past December

SUPPORTING While continuing to navigate the novel benefits. Colleague safety will remain

OUR COLLEAGUES coronavirus (COVID-19) pandemic,


ensuring the safety of our colleagues
a top priority as countries continue
to navigate the roll-out of vaccines.

IN COVID-19 and helping them feel supported has


been a primary focus from the start.
Consistent with our approach during
2020, we will reflect and reference the
This includes providing a flexible policies and recommendations that
work environment and preserving countries and businesses adopt. As we
employment during these difficult look toward a return to more normal
times. In addition, we enhanced many work environments, we will consider
benefits and well-being resources our learnings from the many months of
for colleagues, including back-up remote and hybrid working and look to
assistance and family support programs integrate the successful principles we
for child and elder care; online/mobile adopted during the pandemic.
emotional well-being and resiliency
programs, and enhanced mental health

1
SHIFTING CUSTOMER NEEDS Against that backdrop, we set five
strategic priorities for Zoetis at the
OUR LONG-TERM As we look at the trends shaping the beginning of 2020 and have continued

VALUE PROPOSITION future of animal health, we continue


seeing innovation and the increased
on that course ever since. While we
adjusted some resources and timing
humanization of pets driving the largest to address COVID-related needs, our
share of growth in our industry. Pet priorities remain our long-term focus:
owners are playing a more influential
role—demanding more convenience, 1. DRIVING INNOVATIVE GROWTH
transparency, specialty and chronic care
for their four-legged family members. Through our commitment to continuous
These bonds have only deepened during innovation, we showed our unique
Grow revenue in line with COVID-19 as we spend more time at strengths across the continuum of
or faster than the market home with our pets. animal care—from prediction and
prevention to detection and treatment
While veterinarians remain central to of disease. During the pandemic,
the care and treatment of pets, the we have kept major R&D programs
consolidation of veterinary clinics and regulatory reviews on track and
and growth of e-commerce and furthered our research advancements
retail channels may only continue as in areas like monoclonal antibodies for
Grow adjusted net income small businesses come under greater osteoarthritis pain in cats and dogs and
faster than revenue economic pressures. Many of these vector vaccines for poultry. We stayed
global veterinary operations are looking the course on our most critical projects
for partners like Zoetis who can serve for the future and achieved major
them around the world and provide milestones for major products in 2020:
added value in terms of technical
services, support, innovation and • The launch of Simparica Trio®
expertise across the continuum of care. our triple combination parasiticide
Invest in innovation and for dogs, in the U.S., Canada and
targeted growth opportunities In livestock, COVID-19 underscored EU with expansions underway in
the essential role of farmers in feeding additional markets.
a growing world population and the • The first regulatory approvals of
need for more efficient production Librela® and Solensia®—our first
methods in the face of limited natural injectable monoclonal antibody
resources, climate change, and labor therapy to treat osteoarthritis pain in
shortages. Technology and data dogs and cats—and the approval of
analytics, while still in the early stages of CircoMax® Myco trivalent vaccine in
Return excess capital broad adoption, will play an increasingly the EU, which protects pigs against
to shareholders important and undeniable role in the porcine circovirus and mycoplasma
long-term future of livestock farming. hyopneumonia.
Increased use of sensors and related • The launch of Vetscan Imagyst™,
data applications will help improve a diagnostic platform that debuted
productivity on farms and ranches, in Australia, Ireland, New Zealand,
address more prevalent sustainability the UK, and the U.S. Imagyst
concerns and traceability opportunities, uses a combination of image
and provide more efficient use of limited recognition technology, algorithms
skilled labor in livestock production. and cloud-based artificial intelligence
Through our investments in digital to deliver rapid testing results
capabilities, Zoetis is building greater to veterinary clinics.
connectivity and cloud-based solutions
across our portfolio—all designed
to bring greater value to livestock
producers and help them define the
digital future of animal agriculture.

2
BEING A FORCE The racial injustices and social unrest in the U.S. and cities across the globe during

FOR CHANGE 2020 were a sobering reminder that we must continually work together to ensure
Zoetis is a place where colleagues feel valued and cared for. After understanding the
state of diversity at Zoetis, we developed the following aspirations to increase diverse
representation within our company by the end of 2025. These aspirations are part of
our overall talent strategy as we strive to attract and retain the best and brightest.

WOMEN PEOPLE OF COLOR


Increase women, director- Increase overall Increase representation Increase representation
level and above, globally representation among of Black colleagues in the of Latinx colleagues in the
from 32% to 40% people of color in the U.S. from 4% to 5% U.S. from 5% to 6%
U.S. from 21% to 25%

32% 21% 4% 5%
2025 GOAL: 40% 2025 GOAL: 25% 2025 GOAL: 5% 2025 GOAL: 6%

• We also expanded our market reach content tailored to them. Strengthening
of products such as... engagement with pet owners, we are
continuing to invest more in direct- OUR CORE
– Simparica® (sarolaner) Chewable
Tablets, approved in China.
to-consumer marketing and on-line
channels for major brands like Apoquel
BELIEFS
– Cytopoint® (lokivetmab) and and Simparica. Our focus on reliable
Revolution® Plus (selamectin supply to customers was never more
and sarolaner topical solution), important than it was in the pandemic
which gained approvals in Asia and through an agile supply chain we’ve
and Latin America. been able to maintain quality, on time
– Fostera® Gold PCV MH swine vaccine delivery of products and continuous
approvals in Japan and Australia. operation of our manufacturing plants
– Additional preventive vaccines like around the world.
Vanguard® B Oral for dogs and an
anti-infective treatment Excenel® 3. LEADING IN DIGITAL AND DATA
RTU EZ for cattle and swine in Brazil.
Technology and data analytics are two
2. E
 NHANCING CUSTOMER forces transforming the animal health
EXPERIENCE industry and the way we do business at
Zoetis. We are enabling more veterinary
From the onset of the pandemic, our clinic systems to “talk” with our growing
field force has been adaptive and set of Zoetis diagnostic analyzers and
creative in staying engaged with update patient medical records, which
customers and addressing their needs makes the lives of our customers easier
in various markets—from remote and their work more efficient. With
installations to virtual trainings and livestock producers under pressure
technical consultations. In addition, our
sales and marketing teams are using
advanced analytics to interpret customer
needs and deliver more personalized

3
to improve profitability, productivity sustainability frameworks. In addition,
and sustainability, our acquisition of we recently shared our long-term
Performance Livestock Analytics is one targets for key ESG metrics and continue
way we help address those challenges to build out these programs (see
by bringing powerful analytics to the sidebar).
DRIVEN TO CARE farm—empowering our cattle customers

THROUGH to analyze trends in feed efficiencies,


evaluate costs and performance, and
BUILDING ON RESILIENCY

SUSTAINABILITY maintain health protocols for each I am convinced the priorities we’ve
individual animal. set will firmly position Zoetis for future
Our purpose and obligation growth and realizing our purpose.
to society has never been more 4. CULTIVATING A HIGH-PERFORMING Looking ahead, we see the major
important. Our sustainability CULTURE catalysts for growth in 2021 being
strategy builds on the progress continued strength in petcare; ongoing
we’ve made since the beginning The remarkable resilience and agility expansion in markets outside the US,
of Zoetis, with commitments of our colleagues in 2020 were a most notably China; and acceleration
and measurable goals across testament to the strong culture we have of our diagnostics portfolio penetration
three areas: built at Zoetis, founded on Our Core with reference labs, increased
Beliefs. Despite the headwinds of connectivity and new products.
a global pandemic, we maintained a
high level of colleague engagement, While we are mindful of the uncertainty
and an unwavering commitment around the global recovery from the
to customers and to each other. pandemic in 2021, we remain confident
COMMUNITIES Collectively this has earned Zoetis in the health of our business based
Care and Collaboration recognitions around the world as a on the resiliency we demonstrated in
Supporting and partnering with top business performer and employer. 2020, the passion and perseverance
colleagues, communities and the With talent being critical to a high- of our colleagues, and our continued
people who care for animals performing organization, we formally investments and innovations.
communicated our plans in 2020 to
make Zoetis and the animal health In closing, I am extremely proud
industry more inclusive, with specific to be part of a company that’s a
aspirations to increase diverse strong market leader in an essential
representation within our company industry—with the portfolio, focus and
ANIMALS by the end of 2025 (see sidebar, financials to endure and excel, even
Innovation in Animal Health top of p. 3). in challenging times.
Solving sustainability challenges
facing animals and people, based 5. C
 HAMPIONING A HEALTHIER, Thank you for your continued support
on our belief that healthier MORE SUSTAINABLE FUTURE and investment in Zoetis.
animals build a healthier future
Reporting our progress against key
sustainability goals goes hand-in-hand
with sharing our business results. While
sustainability has always been part
PLANET of our work, in 2020 we formalized Kristin Peck
our strategy and became the first Chief Executive Officer
The Drive to Protect Our Planet
animal health company to issue an
Stewarding our resources
Environmental, Social and Governance
responsibly and minimizing
(ESG) Review, based on leading
our impact, as we deliver
products and services that
advance the health of animals

4
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SHAREHOLDER INFORMATION
ZOETIS GLOBAL HEADQUARTERS CORPORATE GOVERNANCE SHAREHOLDER SERVICES
10 Sylvan Way Copies of our 2020 Annual Report on If you have a question for us and
Parsippany, NJ 07054 Form 10-K, Quarterly Reports cannot find an answer on our
1 (973) 822-7000 on Form 10-Q, and Current Reports website, please write to us at Zoetis
on Form 8-K filed with Securities and Shareholder Services, 10 Sylvan Way,
STOCK LISTING Exchange Commission, 2021 Proxy Parsippany, NJ 07054, or email us at
Zoetis common stock is listed on Statement, and this Annual Report are shareholderservices@zoetis.com.
the New York Stock Exchange under available online at investor.zoetis.com.
the ticker symbol ZTS. FORWARD-LOOKING STATEMENTS
In addition, shareholders can view
Please refer to our 2020 Form 10-K
our Corporate Governance Principles;
ANNUAL MEETING OF for a description of the substantial
Director Qualification Standards;
SHAREHOLDERS risks and uncertainties related to the
Code of Business Conduct and
The Zoetis Annual Meeting of forward-looking statements included
Ethics for Directors; Charters of the
Shareholders will be held on in this Annual Report. Our Form 10-K
Audit Committee, Human Resources
May 20, 2021, 9:00 a.m. ET only is available on our website at investor.
Committee, Corporate Governance
online via webcast at (www. zoetis.com/sec-filings and on the
Committee, and Quality and
virtualshareholdermeeting.com/ Securities and Exchange Commission’s
Innovation Committee; and other
ZTS2021). website at www.sec.gov.
corporate governance materials
at www.zoetis.com/about/corporate-
TRANSFER AGENT NON-GAAP FINANCIAL INFORMATION
governance.
Questions and communications We use non-GAAP financial measures,
regarding transfer of stock, dividends, Copies of our SEC filings and corporate such as adjusted net income, adjusted
cost-basis information, and address governance documents are available diluted earnings per share, adjusted
changes should be directed to to shareholders without charge upon EBIT margin and operational results
our transfer agent and registrar, written request to the Corporate (which exclude the impact of foreign
Computershare Trust Company, Secretary at our global headquarters. exchange), to assess and analyze our
N.A., as follows: operational results and trends and
ZOETIS ON THE WEB to make financial and operational
Shareholder correspondence
You can find more information about decisions. We believe these non-GAAP
should be mailed to:
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press releases, career opportunities, to investors because they provide
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news on Zoetis products and services, greater transparency regarding our
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and other activities, at our website operating performance. The non-GAAP
Overnight correspondence www.zoetis.com. financial measures included herein
should be mailed to: should not be considered alternatives
Real-time information about Zoetis
Computershare to measurements required by GAAP,
can be found on our Facebook and
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Louisville, KY 40202 and earnings per share, and should not
zoetis and www.twitter.com/zoetis),
be considered measures of liquidity.
Telephone: on our YouTube channel (www.youtube.
These non-GAAP financial measures are
Within the U.S. and Canada: com/ZoetisInc), and on LinkedIn
unlikely to be comparable with non-
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GAAP information provided by other
Outside the U.S. and Canada:
companies. Reconciliation of non-GAAP
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financial measures and GAAP financial
Website: measures are included in the tables
www.computershare.com/investor accompanying our earnings release and
in the related presentation posted on
our website at www.zoetis.com.
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whether or not appearing with a trademark symbol, are owned and licensed
by Zoetis Inc. or its affiliates.

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