Zoetis Inc. (ZTS): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear-eyed view of Zoetis Inc. (ZTS) right now, and the picture is one of resilient innovation facing near-term macroeconomic headwinds. The company is leaning on its companion animal portfolio, but the livestock side and new product launches are seeing some softness. We need to map these external forces-Political, Economic, Sociological, Technological, Legal, and Environmental-to understand the true risk and opportunity for your investment. It's a classic innovator's dilemma, but with strong fundamentals. Let's break down the PESTLE factors driving Zoetis's 2025 performance.

Political Factors: Trade, Telemedicine, and Food Security

Political winds are a constant factor in a global business like Zoetis Inc. (ZTS). Right now, the biggest tangible risk is the cost structure impact from global trade tariffs, which we estimate exposes the company to about $7 to $8 million. That's not a crippling number, but it's a direct hit to the bottom line.

Also, varying US state and international regulations on the veterinary-client-patient relationship (VCPR) are slowing down the adoption of telemedicine. Honestly, VCPR rules need to catch up with technology. Still, government focus on food security and preventing zoonotic diseases (those that jump from animals to humans) is a long-term tailwind, driving steady demand for livestock diagnostics and vaccines.

• Tariffs create a direct cost exposure.
• VCPR rules slow digital health adoption.
• Food security drives vaccine demand.

Economic Factors: Headwinds and Disciplined Margins

The economy is the most immediate concern. Zoetis Inc. (ZTS) recently revised its full-year 2025 revenue guidance down to between $9.4 billion and $9.475 billion. Here's the quick math: that revision reflects softer demand, especially in the latter half of 2025, due to broader macroeconomic conditions slowing down both livestock and pet medicine purchases. It's a clear signal that even premium pet care isn't recession-proof.

But here's the good news: the company is maintaining strong profitability. They're projecting an impressive operating margin of 37.51% and reaffirming their 2025 adjusted diluted EPS guidance of $6.30 to $6.40. That shows defintely disciplined cost management. The big caveat, though, is veterinary inflation; if price increases continue above historical norms, we risk an affordability crisis for pet owners, which would eventually hurt volume.

• Revenue guidance is down, but margins hold.
• EPS guidance remains strong.
• Inflation risks pet owner affordability.

Sociological Factors: The Human-Animal Bond and Misinformation

The strengthening human-animal bond is perhaps the most powerful, long-term driver for Zoetis Inc. (ZTS). People are increasingly 'medicalizing' their pets, treating them like family members. This expands the market for complex, high-cost treatments, like oncology and chronic disease management.

Still, this trend comes with a risk: social media. Misinformation has negatively impacted the sales cadence of new, innovative products, such as Librela for dog osteoarthritis. Also, global population growth, expected to hit 10 billion by 2050, means a massive, sustained need for sustainably and safely raised animal protein. Plus, we can't ignore the high stress and burnout in the veterinary profession itself, creating an opportunity for Zoetis to sell practice management and staff retention solutions.

• Pet medicalization boosts high-cost treatments.
• Social media misinformation is a sales headwind.
• Vet burnout creates a new service market.

Technological Factors: AI, Monoclonal Antibodies, and Gene Editing

Zoetis Inc. (ZTS) is making smart bets on technology. Their significant investment in Artificial Intelligence (AI) for diagnostics, particularly with the Vetscan Imagyst platform, is a game-changer for speed and accuracy in vet clinics. This is where the future of animal health is headed.

Continued innovation in monoclonal antibodies (mAbs)-highly targeted drugs-for chronic conditions like pain (Librela, Solensia) is expanding their market into renal and oncology. Also, the rise of telemedicine and wearable technology offers greater convenience for pet owners, but it needs clear regulatory support to really take off. Longer-term, advancements in gene editing offer a path to creating disease-resistant livestock, which would reduce the need for traditional chemical treatments.

• AI is transforming diagnostics.
• mAbs are expanding treatment markets.
• Gene editing offers long-term disruption.

Legal Factors: IP Protection and Antimicrobial Scrutiny

The legal landscape is defined by competition and regulation. Competition is intensifying in core franchises, especially dermatology (Apoquel) and parasiticides, which puts pressure on market share and pricing power. Intellectual property (IP) protection for key franchises remains critical, as generic competition for blockbusters like Apoquel is approaching.

Also, ongoing scrutiny and regulation of antimicrobial usage (AMU) in livestock production is pushing demand toward preventative health products, like vaccines. This is a net positive for Zoetis Inc. (ZTS) as a leader in preventative care. Regulatory requirements for new product approvals, such as the conditional license for the bird flu vaccine in chickens, manage disease outbreak risks but also dictate market entry speed.

• IP protection is a near-term battle.
• Competition pressures flagship products.
• AMU rules favor preventative vaccines.

Environmental Factors: Sustainability and Stewardship

Environmental, Social, and Governance (ESG) factors are no longer optional-they are a core part of the business model. Zoetis Inc. (ZTS) is making real progress on its carbon footprint, reporting a 36.1% reduction in Scope 1 and 2 emissions in its 2024 progress update. Plus, they are sourcing 80.6% of their global electricity from renewable sources, moving toward their 2030 target.

This focus on sustainability is strategic. It supports their goal of mitigating the environmental presence of pharmaceuticals through active work on pharmaceutical stewardship. Also, strategic partnerships support sustainable livestock farming, aiming to reduce the overall environmental impact of food production. It's a good look for investors and a necessary step for future-proofing the business.

• Emissions are down over 36%.
• Renewable electricity is over 80%.
• Stewardship addresses pharma waste.

Zoetis Inc. (ZTS) - PESTLE Analysis: Political factors

The political landscape for Zoetis Inc. is a double-edged sword: government action creates significant market opportunity, but trade policy and a patchwork of veterinary regulations act as clear headwinds. The core takeaway is that while global health policy is driving demand for Zoetis's livestock products, the fragmented US regulatory environment is slowing the adoption of its companion animal digital solutions.

Global trade tariffs impact the cost structure, with an estimated $7 to $8 million exposure.

Honestly, the tariff exposure is now larger than earlier estimates. For the first quarter of 2025, Zoetis reported that the impact of enacted tariffs resulted in a $20 million headwind to its financial results. This is a direct cost pressure that eats into gross margins, and it's a number we have to watch closely, especially with the fluidity of global trade policy. The company's resilience is notable, though, as they still raised their full-year 2025 adjusted net income guidance to a range of $2.825 billion to $2.875 billion. They are managing to offset this political risk through strong organic growth, but it's defintely a drag on profitability.

Here's the quick math on the tariff pressure against their revenue guidance:

Varying international and US state regulations on veterinary-client-patient relationship (VCPR) affect telemedicine adoption.

The biggest political risk to Zoetis's digital strategy isn't a tariff, but a legal term: the Veterinary-Client-Patient Relationship (VCPR). This is the legal foundation that must exist for a veterinarian to diagnose an animal and, crucially, to prescribe medication. The problem is the US regulatory environment is a patchwork quilt. Telemedicine (remote diagnosis and treatment) is a massive growth vector for Zoetis's companion animal products like Simparica Trio and Apoquel, but its full potential is capped by these state-level laws.

What this estimate hides is the sheer complexity for veterinarians who want to use Zoetis's connected care platforms:

• 19 US states still stipulate that a VCPR cannot be established via a virtual exam.
• 8 states expressly allow the establishment of a virtual VCPR.
• The remaining states have vague or conditional rules, creating legal uncertainty.

So, a vet in Florida might be able to prescribe a Zoetis drug after a video call, but a vet in a majority of other states cannot, forcing an in-person visit. This friction slows the adoption of telemedicine and, consequently, the remote sales of Zoetis's high-margin prescription drugs.

Government focus on food security and zoonotic disease prevention drives demand for livestock vaccines and diagnostics.

This is a major opportunity. Governments worldwide, particularly the US, are prioritizing animal health as a matter of public and food security, recognizing that approximately 75% of emerging infectious diseases are zoonotic (transferable from animals to humans). In January 2025, the U.S. government released the first-ever National One Health Framework to Address Zoonotic Diseases and Advance Public Health Preparedness in the United States (NOHF-Zoonoses). This kind of high-level political commitment translates directly into funding and demand for Zoetis's core livestock portfolio, including vaccines and diagnostics for diseases like African Swine Fever and Avian Influenza. The global Animal Therapeutics and Diagnostics Market size, which Zoetis leads, was valued at $38.12 billion in 2025, and this government focus is a key driver for its projected growth.

Regulatory approval processes, like the European Commission's nod for Portela (feline osteoarthritis mAb), dictate market entry timelines.

Regulatory bodies act as gatekeepers, and their timelines are a political factor that directly impacts revenue projections. Zoetis had a major win in October 2025 when the European Commission granted marketing authorization for Portela (relfovetmab), a long-acting monoclonal antibody therapy for feline osteoarthritis pain. This approval is a crucial step for a potential blockbuster product, as it is the first monoclonal antibody therapy with a three-month dosing interval approved for this indication in the EU. However, the commercial availability in the EU is not expected until 2026, showing how the regulatory process itself dictates the pace of market penetration and revenue realization, regardless of the product's quality.

Zoetis Inc. (ZTS) - PESTLE Analysis: Economic factors

Full-year 2025 revenue guidance was revised down to $9.4 billion to $9.475 billion due to softer demand.

You need to know that Zoetis Inc. is seeing a clear deceleration in its top-line growth, which is a direct signal from the broader economic environment. The company revised its full-year 2025 revenue guidance down to a range of $9.400 billion to $9.475 billion, a notable reduction from its prior forecast. This adjustment reflects a more cautious outlook for the second half of the year, a shift from the strong momentum seen earlier in 2025. The initial expectation for organic operational revenue growth was higher, but the revised guidance now points to a more modest range of 5.5% to 6.5%. This is a material change, and it tells you that even market leaders are not immune to macroeconomic headwinds.

Macroeconomic conditions are causing a slowdown in demand for livestock (pigs, chickens) and pet medicines in the latter half of 2025.

The core issue is that consumer and producer spending is tightening, impacting both sides of Zoetis Inc.'s business-companion animals (pets) and production animals (livestock). For livestock, the slowdown is particularly evident in products for pigs and chickens, which are sensitive to global meat commodity prices and production cycles. On the companion animal side, which makes up about 65% of the company's total revenue, the impact is less acute but still concerning. The company noted a trend of declining veterinary visits across all major therapeutic areas in the third quarter of 2025, which directly affects new patient starts for their key medicines. Less traffic at the vet means less prescription volume. It's that simple.

• Slower demand for livestock products (pigs, chickens).
• Pet owners are tightening spending due to economic uncertainty.
• Distributor hesitancy around product restocking is weighing on sales.

Strong profitability is maintained with an impressive operating margin of 37.51%.

Despite the revenue slowdown, Zoetis Inc. has maintained a strong grip on profitability, which is a testament to its disciplined cost management (cost control) and high-margin product mix. The company's operating margin stands at an impressive 37.51%, demonstrating its efficient operations and pricing power within the animal health sector. This financial strength is a significant buffer against the softening demand trends. Here's the quick math: generating a profit margin this high means their core business model remains highly effective, even if the volume growth is temporarily constrained.

The company reaffirms its 2025 adjusted diluted EPS guidance of $6.30 to $6.40, showing disciplined cost management.

The fact that Zoetis Inc. reaffirmed its full-year 2025 adjusted diluted Earnings Per Share (EPS) guidance of $6.30 to $6.40 is a critical signal. This maintenance of the EPS target, even with a trimmed revenue outlook, shows a clear focus on disciplined cost management and operational efficiency. They are controlling what they can-the expenses-to offset the external pressure on sales. This ability to convert revenue into profit, even in a challenging environment, highlights the durability of their business model and the high-value nature of their products.

Veterinary inflation, with price increases above historical norms, risks an affordability crisis for pet owners.

A major long-term economic risk is the soaring cost of veterinary care, which directly impacts the end-consumer for Zoetis Inc.'s companion animal products. Veterinary services inflation is running hot in 2025, with prices for services like veterinary care and grooming up an alarming 42% versus 2019. This is a much higher rate than the 22% rise seen in pet food and treats over the same period. This sustained, above-historical-norm price increase is creating a pet care affordability crisis, forcing pet owners to delay or forgo necessary care. You see the fallout already: over a fifth of pet owners, 22%, now have at least $2,000 in pet-related debt. This financial strain on the customer base is a significant headwind that could cap future volume growth for all animal health companies.

Zoetis Inc. (ZTS) - PESTLE Analysis: Social factors

The strengthening human-animal bond drives pet owners to 'medicalize' their pets, expanding the market for complex, high-cost treatments like oncology.

The human-animal bond is no longer just about companionship; it is a powerful economic driver for Zoetis's companion animal segment. You see this in the data: 95% of pet owners consider their pet a part of the family, and a staggering 86% indicate they would pay whatever it takes for extensive veterinary care. This emotional commitment translates directly into higher veterinary spending, pushing the market toward 'medicalization'-treating pets with advanced therapies once reserved for humans, like oncology and complex orthopedic procedures.

This trend is why Zoetis's Companion Animal revenue remains the core growth engine, despite recent hiccups. For the first quarter of 2025, Companion Animal revenue was $1.546 billion, marking a 7% increase over the prior year's first quarter. Highly bonded pet owners visit the veterinarian two or more times per year, which is a huge tailwind for diagnostic and preventive products. That's a clear path to high-margin, specialized product growth.

Social media sentiment and misinformation have negatively impacted the sales cadence of new products like Librela for dog osteoarthritis.

While the human-animal bond is a positive, it also creates a significant social risk: the power of collective online sentiment. You're seeing this play out right now with Zoetis's innovative osteoarthritis pain monoclonal antibody (mAb) products, Librela and Solensia. These products have faced persistent headwinds in 2025 due to significant social media criticism from pet owners regarding potential side effects.

This online misinformation and negative chatter has caused caution among veterinarians and contributed to a decline in U.S. sales for the mAb franchise in the third quarter of 2025. This is a critical risk because companion animal sales growth decelerated to just 2% organically in Q3 2025, partly due to this issue. It shows that in the age of instant, global communication, a product's success relies as much on its efficacy as on its public perception. We defintely need to factor in this digital risk.

Global population growth to 10 billion by 2050 increases the need for safe, affordable, and sustainably raised animal protein.

The long-term social challenge for the world, and a major opportunity for Zoetis, is feeding a growing population. The global population is projected to reach nearly 10 billion people by 2050. This growth, coupled with rising incomes in developing economies, is expected to drive demand for animal-based foods up by a projected 70% by 2050, with some estimates suggesting world meat production will need to double.

This creates an immense social pressure on livestock producers to deliver safe, affordable protein while minimizing environmental impact. Zoetis's Livestock segment-which accounted for 31% of total revenue in the 2023 10-K-is crucial here, as better animal health directly improves productivity and sustainability. However, the near-term picture is mixed, with Livestock revenue declining by 10% in Q1 2025, highlighting the cyclical and complex nature of this market.

High levels of burnout and stress in the veterinary profession create a need for practice management solutions and staff retention support.

The veterinary profession is under severe strain, and this is a direct social factor impacting Zoetis's ability to get its products to market. High turnover, burnout, and increasing workload are major operational challenges in 2025.

Here's the quick math on the problem:

• 30-40% of DVMs report high levels of burnout.
• 61% of veterinarians report higher exhaustion than the general U.S. population (32%).
• 70% of vet technicians experience burnout.

This shortage means fewer veterinarians are available to see patients, prescribe new medications, or adopt new technologies. Zoetis is addressing this by moving beyond just selling drugs to offering practice management and staff support solutions, like sponsoring free Human-Animal Bond Certification for veterinary students throughout 2025 to help build a stronger, more resilient workforce. If a clinic can't hire or retain staff, they can't sell your products. It's that simple.

Zoetis Inc. (ZTS) - PESTLE Analysis: Technological factors

Significant investment in Artificial Intelligence (AI) for diagnostics, exemplified by the Vetscan Imagyst platform.

You need to see where the R&D dollars are truly moving the needle, and for Zoetis, that's deep into Artificial Intelligence (AI) diagnostics. The company is aggressively transforming the veterinary clinic workflow from a manual process to a high-speed, AI-powered one. This isn't just a pilot program; it's a core growth engine.

The Vetscan Imagyst platform is the prime example, evolving rapidly in 2025 to become the most capable veterinary AI analyzer globally, offering seven unique testing applications. For instance, the new AI Masses capability, launched in Q2 2025, delivers rapid, in-clinic screening of lymph node and skin/subcutaneous lesions, which can be critical for early cancer detection. This speed matters because it cuts down the agonizing wait time for pet owners.

Additionally, Zoetis launched the Vetscan OptiCell in early 2025, which is an AI-powered hematology analyzer. This push into lab automation is significant, especially since the U.S. Veterinary Lab Automation Market was valued at approximately $0.38 billion in 2025E, and the global market at $1.34 billion in 2025E. Here's the quick math on how AI is expanding the platform's utility:

Telemedicine and wearable technology adoption is increasing, offering greater convenience but requiring clear regulatory frameworks.

The shift to remote care is defintely a major trend, driven by pet owners' desire for convenience and veterinarians' need to manage high caseloads. The global market for animal health monitoring wearable devices is projected to reach $753 million in 2025, showing the scale of this adoption. This technology allows for continuous, proactive monitoring.

Wearable devices, like smart collars and activity trackers, are now providing granular data on a pet's heart rate and activity. This data, when combined with AI, can detect patterns and provide early warnings of health issues, allowing for predictive analytics and proactive intervention. The challenge, still, is the regulatory side.

• Telemedicine is rapidly emerging as a convenient pet care approach.
• Remote consultations and telehealth apps are becoming more widely available.
• Regulatory clarity is needed, especially around the Veterinary-Client-Patient Relationship (VCPR) in the U.S. and internationally.

What this estimate hides is the fragmentation of state-by-state regulations, which slows down the widespread, uniform adoption of remote prescribing and diagnosis. Still, the trend is irreversible; connected care is the future of veterinary triage.

Continued innovation in monoclonal antibodies (mAbs) for chronic conditions like pain (Librela, Solensia) and expansion into renal and oncology markets.

Monoclonal antibodies (mAbs) are a revolutionary technology, offering targeted, non-NSAID relief for chronic pain. Zoetis's flagship mAb products, Librela (for dogs) and Solensia (for cats), are expected to become the company's next $1 billion+ franchise. Librela alone generated $581 million in 2024 and is expected to peak at over $1 billion. This is a massive market opportunity, but it's not without volatility; while mAbs were a growth driver in Q2 2025, the U.S. segment saw a decline in sales for these OA pain products in Q3 2025.

The real opportunity lies in expanding this platform technology to other chronic, underpenetrated conditions. Zoetis is actively targeting two huge new markets:

• Chronic Kidney Disease (CKD): A market that could generate an estimated $3 billion annually.
• Oncology: A market estimated at $2 billion annually.

This pipeline strategy is a clear action: use a proven, high-margin technology (mAbs) to capture new, large-scale therapeutic areas, diversifying revenue away from just pain and dermatology.

Advancement in gene editing technology offers a path to creating disease-resistant livestock, reducing the need for chemical treatments.

In livestock, the technological focus is on precision animal health, which is the practical application of advanced genetics and genomics to improve herd resilience. Zoetis is leveraging genomic testing solutions like CLARIFIDE Plus and INHERIT Select to help producers make data-driven decisions on breeding.

This genomic selection is the precursor to gene editing. The goal is to breed animals that are naturally resistant to common diseases, ultimately reducing the need for traditional chemical treatments like antibiotics. For example, a study using Zoetis's Dairy Wellness Profit Index® showed that genetically superior cows (top 25%) had 44% less antibiotic usage over their lifetime compared to the bottom 25%. They also produced 35% more milk and had 10% less enteric methane emissions. This shows the direct link between genetic technology and sustainability.

Gene editing technologies, especially CRISPR/Cas9, are the next frontier, enabling precise and inheritable modifications to enhance disease resistance in livestock. While Zoetis's current offerings focus on genetic selection, the underlying technology and data infrastructure are essential for moving into gene editing to create disease-resistant cattle and swine, which will be a major disruptor to the livestock health market.

Zoetis Inc. (ZTS) - PESTLE Analysis: Legal factors

The legal landscape for Zoetis Inc. is dominated by intellectual property defense, the regulatory burden of antimicrobial stewardship, and the complex, high-stakes process of new product approvals. You need to view these factors not just as compliance hurdles, but as direct drivers of future revenue and risk exposure. The near-term focus is managing the patent cliff for a key blockbuster while navigating a shifting livestock health mandate.

Competition is intensifying in core franchises like dermatology (Apoquel) and parasiticides, pressuring market share and pricing power.

While Zoetis's companion animal portfolio continues its strong run, the legal factor here is the increasing competitive intensity that forces the company to defend its market leadership. The Key Dermatology portfolio, which includes Apoquel and Cytopoint, delivered 11% operational growth in the second quarter of 2025, but this growth is being challenged by rivals. This isn't just a market fight; it's a legal and strategic battle to maintain product differentiation against competitors like Elanco, which markets Zenrelia, and Merck, which markets Numelvi, both targeting the same lucrative allergic dermatitis space. You can't just rely on brand loyalty anymore.

Here's the quick math: Zoetis raised its full-year 2025 revenue guidance to a range of $9.450 billion to $9.600 billion, and a significant portion of that is tied up in these companion animal franchises. Any erosion in market share due to new, legally approved competing products directly threatens your top-line forecast. The company's strategy is to continually innovate, like launching Apoquel Chewable, to create a stronger legal and commercial moat around the core drug molecule.

Intellectual property (IP) protection for key franchises remains critical as generic competition for products like Apoquel approaches.

The biggest legal risk to Zoetis's companion animal revenue stream is the impending loss of exclusivity (LOE) for its blockbuster products. The compound patent for Apoquel (oclacitinib) is a prime example; while the timeline is complex due to various secondary patents and extensions (a patent thicket), the primary US patent is generally expected to expire around 2026. This date is defintely a flashing red light for analysts.

The legal team's job is to defend the remaining patents, including formulation and method-of-use patents, to delay the entry of generic oclacitinib products for as long as possible. A single successful patent defense can secure hundreds of millions of dollars in exclusive revenue. For example, the Apoquel brand has been prescribed to over 16 million dogs since its launch, representing a massive, recurring revenue base that generic entry will immediately start to erode. The company must also lean on its newer monoclonal antibody products, Cytopoint, Librela, and Solensia, whose patents extend further out, to cushion the inevitable LOE impact.

Ongoing scrutiny and regulation of antimicrobial usage (AMU) in livestock production pushes demand toward preventative health products like vaccines.

The global push for antimicrobial stewardship (AMU) is a major regulatory factor, driven by public health concerns over antimicrobial resistance (AMR). The FDA's judicious use policies, including the Veterinary Feed Directive (VFD) in the US, effectively restrict the use of medically important antimicrobials in food-producing animals to therapeutic use under veterinary oversight. This regulatory shift directly impacts Zoetis's livestock segment.

Zoetis has already responded to this by divesting its Medicated Feed Additive (MFA) product portfolio, which directly contributed to a 2% decline in reported livestock sales in the third quarter of 2025. This divestiture is a clear, proactive move to align with the evolving legal and regulatory environment. The opportunity lies in the shift in demand toward preventative solutions, which is why the livestock segment's organic operational sales still saw growth, primarily driven by vaccines.

Regulatory requirements for new product approvals, like the conditional license for the bird flu vaccine in chickens, manage disease outbreak risks.

Zoetis's ability to respond quickly to emerging animal health crises is tightly managed by regulatory bodies like the U.S. Department of Agriculture (USDA) Center for Veterinary Biologics (CVB). The highly pathogenic avian influenza (HPAI), or bird flu, outbreak, which has affected over 150 million birds in the U.S. since 2022, created an emergency condition that required a regulatory fast-track.

The USDA granted Zoetis a Conditional License for its Avian Influenza Vaccine, H5N2 Subtype, Killed Virus, for Chickens in February 2025. This conditional approval is a legal mechanism used to meet an emergency need, allowing the vaccine to be used based on a demonstration of safety, purity, and a reasonable expectation of efficacy, rather than the full data required for a standard license. This regulatory action is a clear example of how legal frameworks can enable rapid deployment of a product to manage a systemic disease risk, creating a new, albeit temporary, revenue stream for Zoetis in the biodefence space.

• Conditional License granted: February 2025.
• Vaccine type: Avian Influenza Vaccine, H5N2 Subtype, Killed Virus.
• Purpose: Meet an emergency condition or limited market need.

Zoetis Inc. (ZTS) - PESTLE Analysis: Environmental factors

Company commitment to minimize carbon footprint with a 36.1% reduction in Scope 1 and 2 emissions (2024 progress)

You need to know how Zoetis is tackling its operational footprint, and the numbers are defintely moving in the right direction. The core of their environmental strategy is a clear, aggressive goal: achieving carbon neutrality in their own operations by 2030. This isn't just a distant aspiration; they've made significant progress right up to the end of the 2024 fiscal year.

Specifically, Zoetis has achieved a 36.1% reduction in their combined Scope 1 (direct) and Scope 2 (indirect from purchased energy) emissions, using a 2021 base year. This reduction is a result of focused efforts, including completing 28 energy-related carbon reduction projects across their sites in 2024 alone. That's a strong signal of capital expenditure being strategically deployed for environmental efficiency.

Here's the quick math on their progress toward their 2030 carbon neutrality target:

Sourcing 80.6% of global electricity from renewable sources, progressing toward the 2030 target

The company's shift to renewable energy is a major driver of their emissions reduction. Zoetis is a member of RE100, and they've accelerated their commitment to sourcing 100% renewable electricity by 2030. As of the end of 2024, they are already sourcing 80.6% of their global electricity from renewable sources. That's a huge step toward de-risking their operations from future carbon taxes and volatile energy prices.

This progress comes from a mix of strategies, including virtual power purchase agreements (VPPAs) and on-site generation. For instance, they have on-site solar arrays installed at eight of their facilities globally, with the Rutherford manufacturing site in Australia being the most recent addition with an 800kW solar array. More than one-third of their manufacturing sites, including major offices in Belgium and Ireland, already operate using 100% renewable electricity.

Focus on mitigating the environmental presence of pharmaceuticals, including active work on pharmaceutical stewardship

In the animal health sector, the environmental presence of pharmaceuticals (PiE) is a critical, complex risk. Zoetis is actively working to mitigate this through a dedicated PiE program established in 2019. The primary concern is the elimination of active pharmaceutical ingredients (APIs) from treated animals, but they also address manufacturing waste streams.

Their stewardship efforts are embedded directly into their product lifecycle:

• R&D Sustainability Hub: Established in 2022, this team focuses on evaluating green chemistry alternatives and formulation innovation to reduce product impact.
• Safe Emission Limits: They implement science-based safe emission limits for APIs that could pose an environmental risk.
• Waste Management: Robust risk assessments are performed at manufacturing sites and key suppliers to evaluate and optimize on-site wastewater treatment technology.

This proactive approach helps them comply with evolving legislative requirements and, more importantly, protects their reputation as environmental scrutiny on the pharmaceutical industry intensifies.

Strategic partnerships support sustainable livestock farming, aiming to reduce the environmental impact of food production

Zoetis understands that the biggest environmental impact in their value chain is often at the customer level-livestock farming. So, they've launched strategic partnerships focused on reducing the environmental impact of food production, particularly methane and greenhouse gas (GHG) emissions.

Key collaborations announced up to mid-2025 include:

• Danone: A global partnership leveraging Zoetis' genetics expertise to advance sustainable dairy breeding practices, focusing on animal well-being and reduced environmental impact.
• AgNext (Colorado State University): A collaboration to advance sustainable animal production in the cattle industry, aiming to close data gaps and establish baselines for GHG emissions in fed cattle.
• Dairy HERD Initiative: A $1.3 million research collaboration, announced in May 2025, with the Foundation for Food & Agriculture Research (FFAR) and Dairy Management Inc. (DMI) to advance animal health research, ensure U.S. dairy economic viability, and improve environmental outcomes.
• Methane Research: Ongoing research collaboration with the Pastoral Greenhouse Gas Research Consortium (PGgRC) and the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC) to explore mechanisms that may inhibit methane emissions from grazing ruminants.

These partnerships are crucial because they position Zoetis not just as a supplier, but as a strategic partner in the global food system's transition to a lower-carbon model. The action here is clear: continue to invest in these collaborations to turn animal health solutions into verifiable climate solutions.