Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's switch gears here and talk about bird flu because
Speaker 2: Zoettas has been granted a conditional license from the USDA
Speaker 2: for its avian flu vaccine. Since February twenty twenty two,
Speaker 2: more than one hundred and fifty million birds have been
Speaker 2: affected in the US, causing egg prices to surge to
Speaker 2: all time highs. Joining us now is the CEO of Zoettis,
Speaker 2: Kristen pak Christen, It's great to see you in studio.
Speaker 1: First of all, Oh, it's very nice to be back
Speaker 1: in studio with you all.
Speaker 2: So let's talk about your vaccine. When might we expect
Speaker 2: to see it roll out and how quickly would you
Speaker 2: expect that to actually show up in the price of eggs?
Speaker 1: Sure, I mean what I want to start with is
Speaker 1: just really that my heart goes out to all these
Speaker 1: you know, producers, you know, both for boilers and egg layers.
Speaker 1: You know, they've been on the front lines at this
Speaker 1: crisis for a while now, and they've been doing everything
Speaker 1: they can, through biosecurity and many other strategies to try
Speaker 1: to control this, and Zoettas has been standing by and
Speaker 1: supporting them. As we think about bio security as well
Speaker 1: as diagnostics you know on farm with them align with
Speaker 1: our purpose. So we were thrilled to get the conditional
Speaker 1: license of our AI the product for poultry specifically, And
Speaker 1: just to be clear, this is a conditional license that
Speaker 1: is up to regulatory authorities in partnership with producers to
Speaker 1: decide how and when to use, So the sole decision
Speaker 1: on the use of the vaccine is up to the
Speaker 1: US authorities.
Speaker 2: Interesting, and I'm curious, you know what this means for
Speaker 2: your business because, as we've spoken about before, you're more
Speaker 2: heavily weighted to pets towards animals that we have in
Speaker 2: our houses versus livestock. So with that in mind, I mean,
Speaker 2: depending on the uptake, what could this mean for zoetas you.
Speaker 1: Know for starters. But I think this is a great
Speaker 1: example is what you and I spoke about at JP
Speaker 1: Morgan just a few weeks ago, which is the strength
Speaker 1: of our innovation pipeline across species. Well, we're expecting, you know,
Speaker 1: a major approval every year for the next few years,
Speaker 1: many of which will really be blockbusters in important categories
Speaker 1: and animal health such as chronic kidney disease, on cology, cardiology,
Speaker 1: you know, and antibiotic alternatives for life stuck, et cetera.
Speaker 1: So we're really excited about that pipeline. We think this
Speaker 1: is a great demonstration of that.
Speaker 3: I don't want to get too far away from the
Speaker 3: AV and flu. We spoke with the NEC director Kevin
Speaker 3: Hassett about what's happened recently.
Speaker 1: Listen to what he had to say.
Speaker 4: What are we going to do about the fact that
Speaker 4: Joe Biden last year killed one hundred and thirty million
Speaker 4: chickens and that's why egg prices are so high? You know,
Speaker 4: were putting together a plan to manage the AV and
Speaker 4: flu in a much wiser way.
Speaker 3: So he says, they were putting together a plan to
Speaker 3: manage the AV and flu in a much wiser way.
Speaker 3: Obviously a vaccine would be great for those animals who
Speaker 3: haven't gotten it yet. But you also make drax in, right,
Speaker 3: which is a drug that I'm not a doctor or
Speaker 3: a vet, but somehow helps cows and swines with respiratory illnesses.
Speaker 3: Are there other ways to deal with this problem or
Speaker 3: do you really have to, you know, nip it in
Speaker 3: the bud.
Speaker 1: Sure, there's many ways to deal with this problem, and
Speaker 1: I think you know, what Zoetis is focused on is
Speaker 1: supporting our customers with a whole set of tools in
Speaker 1: order to do this. What else talking about before is
Speaker 1: really partnering with our producers to first start around biosecurity,
Speaker 1: which they're focusing, you know, very intently on. But it
Speaker 1: is a challenge when a lot of the new spread
Speaker 1: you're seeing is spread by wild birds, and so you
Speaker 1: can't really stop the wild birds from flying over your farm,
Speaker 1: and that is really what is spreading some of the
Speaker 1: new We can also focus on better diagnostics to better
Speaker 1: understand that. There's lots of different tools in the toolbox,
Speaker 1: you know. Obviously the vaccine is one additional one and
Speaker 1: it's aligned with our purpose at Zoeti is to nurture
Speaker 1: the world in humankind by advancing care for animals. And
Speaker 1: that's a one health focus, which is I think what
Speaker 1: the White House and the Congress and the USDA has
Speaker 1: been really focused on.
Speaker 5: And not to put the cart before the horror said
Speaker 5: to speak. But you know, when you think about the
Speaker 5: expansion of the vaccine, I recognize that you still need
Speaker 5: regulatory approval, But what about other animals? Do you see
Speaker 5: yourself making one for cattle?
Speaker 1: You know, We've really stepped in in multiple crises over
Speaker 1: the years. So we were helping the USDA with a
Speaker 1: vaccine that they used in their stockpile bon in twenty sixteen.
Speaker 1: As you think about the COVID crisis, we made vaccines
Speaker 1: that were used throughout wildlife and in zoos and things
Speaker 1: like that. So we will continue to partner with the
Speaker 1: USDA to meet whatever their needs are.
Speaker 2: I want to broaden out a little bit because you
Speaker 2: mentioned your pipeline that you have coming up. There's a
Speaker 2: lot of excitement over renal disease. For example, you think
Speaker 2: about cats. You know, kidney diseases are really fatal to cats.
Speaker 2: And like you said, I mean, you have big blockbusters
Speaker 2: expected for the next couple of years. But then you
Speaker 2: take a look at the stock price over a five
Speaker 2: year basis, you're up about thirteen percent on a total
Speaker 2: return basis. That compares to about fifty two percent for
Speaker 2: your peer group. So with that in mind, what do
Speaker 2: you think that shareholders are missing here about the story?
Speaker 1: Yeah, we were thrilled to deliver double digit top and
Speaker 1: bottom line performance for twenty twenty four and to give
Speaker 1: an operational guide for this year. At the top line,
Speaker 1: it's six to eight percent for organic operating growth. You know,
Speaker 1: I think there was a little bit of a disconnect
Speaker 1: with regards to foreign exchange for US, which was two
Speaker 1: hundred and fifty million on the top line for US
Speaker 1: in twenty twenty five fifty million on the bottom line,
Speaker 1: as well as a divestiture for US of medicated feed
Speaker 1: additives which is round three hundred and fifty five million
Speaker 1: that need to be taken out. So we're working through
Speaker 1: some of that, which we don't really believe was embedded
Speaker 1: in the consensus as we saw last week. But we're
Speaker 1: really confident that we've got multiple drivers of sustainable growth
Speaker 1: in what is just a phenomenal industry and animal help
Speaker 1: which has been incredibly resilient and durable.
Speaker 3: What does the product makes look like if I look
Speaker 3: over you know, just a list of your medicines. I
Speaker 3: see obviously, dealing with parasites is first and foremost. Then
Speaker 3: you've got like itchy skin problems, right, and then joint
Speaker 3: issues like arthritis. Are those the three biggest categories?
Speaker 1: Yeah, we've got multi billion dollar franchises and the biggest categories.
Speaker 1: We've been driving double digit growth again, you know, in
Speaker 1: categories such as paras and dermatology. They've been around for
Speaker 1: more than a decade. So all these are billion dollar
Speaker 1: franchises for US, the largest being parasiticides. You've got dermatology
Speaker 1: where we've been in that market for over eleven years,
Speaker 1: still last year driving seventeen percent growth. And then in
Speaker 1: oa pain where we're really excited about the recent launch
Speaker 1: in the US of Librella of cilensia, which has been
Speaker 1: on the market in international for many years, and adding
Speaker 1: to that over the coming years in renal, oncology, cardiology
Speaker 1: excepta But.
Speaker 3: By the way, do you produce all this stuff here?
Speaker 3: Do you have overseas labs? I mean, the strong dollar
Speaker 3: is that really an issue for you?
Speaker 1: So the good news is we have a global network,
Speaker 1: global supply chain. Our largest manufacturing sites are actually in
Speaker 1: the United States. We also have some significant sites in Europe,
Speaker 1: but the US is our primary manufacturing place for the
Speaker 1: for Everyso so the dollar first, right, Well, the dollar
Speaker 1: does well to that.
Speaker 5: In fact, you're a CEO of a company, you want
Speaker 5: to focus on your products, you want to focus on
Speaker 5: your competition, you want to focus on getting new things
Speaker 5: out there. How much do you have to think about
Speaker 5: the strong dollar? Dynamic, particularly with all the tariff threats
Speaker 5: out there, the riot higher in the dollar.
Speaker 1: Look, our focus is living our purpose and meeting our
Speaker 1: customer needs every day. We certainly are not experts in
Speaker 1: foreign exchange, so our goal is to deliver for our
Speaker 1: customers the products and solutions that they need. Obviously, we've
Speaker 1: got teams who manage scenarios as you think about, you know,
Speaker 1: for tariffs obviously, but we don't really make and day
Speaker 1: to day foreign exchange are. We focus on living our purpose, all.
Speaker 2: Right, Christin, that's a good place to leave it. Great
Speaker 2: to speak to you today in studio. That is the
Speaker 2: WEETA CEO Kristen Peck joining on the news that Zetas
Speaker 2: has been granted a conditional license for its avian flu
Speaker 2: vaccine from the USDA