Zoetis

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The future of animal health

When we think of healthcare, we usually picture hospitals or Big Pharma. But there’s a $140 billion market growing right alongside it - animal health. And leading that space is Zoetis.

Zoetis is the world’s largest animal health company, spun off from Pfizer in 2013. Since then, it’s quietly returned over 500% to shareholders. Today, it holds a 20% global market share and is number one in 90% of the markets it serves.

Dominating through scale, science and stability

So, what makes Zoetis stand out? Three words: scale, science, and stability.

First, scale. Zoetis operates in over 100 countries, with a diverse product range serving both pets and livestock. And with pet ownership booming post-pandemic, their exposure to the companion animal segment—which now makes up 68% of revenue—is a major advantage.

Second, science. Zoetis invests about $600 million annually in R&D—around 7% of revenue, far above industry norms. That fuels breakthroughs like Simparica Trio and new monoclonal antibody therapies for pet pain - meaning no opioids needed. Plus, with fewer competitors and lower patent risk in animal health, their innovation pays off longer and they still derive healthy revenues from off-patent drugs.

The firm has a durable portfolio of over 300 product lines, and the average market life of its top products is approximately 30 years – an amazing figure. And this is supported with a continuous innovation flow over last 10 years releasing  over 2,000 new products and lifecycle innovations.

Third, stability. Animal health isn’t a one-off business. It’s vaccines, diagnostics, and ongoing treatments, which helps to generate recurring revenue and high brand loyalty - especially among vets and pet owners. Over 60% of Zoetis’s revenue comes from this recurring companion animal care. And as pets live longer, the market keeps growing.

Zoetis also supports the full spectrum of veterinary care - from prevention to treatment - building deep, lasting relationships across the industry.

A compelling financial position

Financially, Zoetis is compelling. With gross margins around 70%, high returns on capital, and a conservative balance sheet - low debt, strong cash reserves - it’s well-positioned to keep growing while managing risk.

This isn’t just a growth story - it’s a quality compounder.

In a volatile world, Zoetis taps into something emotionally and economically stable: the bond between humans and animals. That connection drives spending and Zoetis is uniquely positioned to benefit.

For long-term investors like Franklin Global Trust, we appreciate the defensive growth, healthcare innovation, and exposure to the booming pet economy – and we believe Zoetis might just be the thoroughbred that looks extremely healthy to deliver for years to come.