The company completed the acquisition of PetMedix and adivo, expanding its biopharmaceutical capabilities for companion animals. Conversely, the divestiture of the medicated feed additive product portfolio allows for greater focus on core segments.

The company continues to invest in R&D, with expenses increasing to $686 million. This investment is aimed at developing new platforms of knowledge and broadening the value of existing products through new claims and formulations.

The company highlights its early and direct presence in emerging markets like Brazil, Chile, China, and Mexico. International operations accounted for 44% of total revenue, and the company continues to benefit from these efforts.

The company continues its efficiency improvement programs, including Six Sigma and Lean capabilities, to improve manufacturing efficiency. This is evidenced by the slight decrease in cost of sales as a percentage of revenue.

The company has implemented an enterprise-wide cybersecurity program aligned to the NIST Cybersecurity Framework. The program is a risk-based program designed to protect information systems through multiple defenses and layers of security.

The company employs a variety of career development, employee benefits, policies and compensation programs designed to attract, develop and retain colleagues. The global voluntary attrition rate remained stable at 8% in 2024.

The company faces increased competition from generic products and lower cost alternatives. Sales of Draxxin have been negatively affected by generic competition in the markets where the patents have expired.

The company's results of operations are dependent upon the success of its top-selling products. The five top-selling products and product lines contributed approximately 41% of revenue in 2024.

The company's reliance on complex information systems and digital solutions makes it vulnerable to malicious cyber intrusion and attack. A cyberattack or network disruption could have a material adverse effect on the company's business, financial condition, and operating results.

The animal health industry is highly competitive, with principal drivers including new product development, quality, price, service and promotion. Competitors include standalone animal health businesses and animal health divisions of large pharmaceutical companies.

Consolidation among veterinarians, livestock producers and distributors could lead to increased buying power and pressure on pricing, potentially impacting the company's operating results.

The importance of quality and safety concerns to veterinarians, pet owners and livestock producers also contributes to animal health brand loyalty. As a result, the company believes that significant brand loyalty to products often continues after the loss of patent-based and regulatory exclusivity.

The company intends to continue its efficiency improvement programs in its manufacturing and supply chain organization, including Six Sigma and Lean capabilities. These processes are intended to improve manufacturing efficiency.

The unpredictability of a product's regulatory or commercial success or failure, the lead time necessary to construct highly technical and complex manufacturing sites, and shifting customer demand increase the potential for capacity imbalances.

The company relies on third parties to provide it with products, materials and services, and is subject to increased labor and material costs and potential disruptions in supply. This reliance could materially adversely affect the operating results and financial condition.

R&D expenses increased to $686 million, reflecting the company's commitment to developing solutions for unmet needs and advancing current standards of care. This includes new platforms of knowledge and continuous innovation.

In 2023, the company enhanced its Vetscan Imagyst platform by adding artificial intelligence (AI) dermatology and AI fecal for equine, which uses a combination of image recognition technology, algorithms and cloud-based AI to deliver rapid testing results to veterinary clinics.

In 2024, the company started a collaboration with Blacksmith Medicines to discover and develop novel antibiotics for animal health and provide new options for customers to treat life-threatening infections in livestock.

The Board of Directors authorized a new multi-year share repurchase program of up to $6 billion, demonstrating confidence in the company's financial position and future prospects. The prior program was completed as of December 31, 2024.

Capital expenditures continue to be a significant use of cash, supporting the expansion of manufacturing capabilities and other infrastructure investments. Capital expenditures are expected to continue in the future.

The declaration and payment of dividends to holders of common stock will be at the discretion of the Board of Directors, taking into account various factors. No assurance is given that the company will pay any dividends.

Jeannette Ferran Astorga has served as our Executive Vice President, Corporate Affairs, Communications and Chief Sustainability Officer since January 2022 and also serves as President of the Zoetis Foundation.

We offer nine Colleague Resource Groups, which are an important catalyst to fostering an inclusive environment, while positively impacting our business and community.

We are committed to ensuring a safe working environment for our employees and our Global Environmental Health and Safety (EHS) Policy standards define EHS performance requirements for all sites, procedures and recommended practices.

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.

Consolidation of our customers and distributors could negatively affect the pricing of our products. Veterinarians and livestock producers are our primary customers. In recent years, there has been a trend towards the concentration of veterinarians in large clinics and hospitals.

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.