ZOETIS: THE WORLD LEADER IN ANIMAL...

ZOETIS:

THE WORLD LEADER IN

ANIMAL HEALTH Investor Presentation

March 26, 2015

2

We use non-GAAP financial measures, such as adjusted net income and adjusted diluted earnings per share, to assess

and analyze our operational results and trends and to make financial and operational decisions. We believe these non-

GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating

performance. These non-GAAP financial measures should not be considered alternatives to measurements required by

GAAP, such as net income, operating income, and earnings per share, and should not be considered measures of

liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by

other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the

tables accompanying our earnings release and are posted on our website at www.zoetis.com.

FORWARD-LOOKING STATEMENTS

NON-GAAP FINANCIAL INFORMATION

This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to business

plans or prospects, future operating or financial performance, expectations regarding products, future use of cash and

dividend payments, and other future events. These statements are not guarantees of future performance or actions.

Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties

materialize, or if management's underlying assumptions prove to be incorrect, actual results may differ materially from

those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they

are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a

result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters

can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, including in the sections

thereof captioned “Forward-Looking Information and Factors That May Affect Future Results” and “Item 1A. Risk

Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. These filings and subsequent

filings are available online at www.sec.gov, www.zoetis.com, or on request from Zoetis.

http://www.zoetis.com/

http://www.sec.gov/

http://www.zoetis.com/

3

GROW REVENUE IN LINE WITH OR FASTER

THAN THE MARKET

GROW ADJUSTED NET INCOME1 FASTER

THAN REVENUE

TARGET VALUE-ADDED INVESTMENT

OPPORTUNITIES

OUR LONG-TERM VALUE PROPOSITION TO SHAREHOLDERS

RETURN CAPITAL TO SHAREHOLDERS

1 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income statement line item,

excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The adjusted net income measure is not, and should not be viewed as, a

substitute for U.S. GAAP reported net income attributable to Zoetis.

4

HOW WE ARE CREATING SHAREHOLDER VALUE

1 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income statement line item, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The adjusted net income measure is not, and should not be viewed as, a substitute for U.S. GAAP reported net income attributable to Zoetis.

• Leveraging competitive advantages – industry-leading sales force,

R&D and manufacturing quality – to generate operational revenue

growth faster than animal health market growth

• Growing adjusted net income1 significantly faster than revenue

• Demonstrating high level of R&D productivity, delivering approximately

180 product approvals in 2014

• Putting in place capital allocation priorities – increased dividends by

15%, targeted business development and a $500M share repurchase

program in 2014

• Injecting an ownership mindset to our existing culture, focused on

customers, speed and financial discipline to create value for our

shareholders

5

WHAT YOU SHOULD EXPECT FROM US

• Continue to deliver revenue growth in line with or faster than

overall market

• Drive adjusted net income1 growth faster than revenue by

improving gross margin and continuing expense discipline

• Invest in enhancing our competitive advantages

• Improve working capital efficiency through technology initiatives

and management incentives

• Return capital to shareholders while targeting value-added

opportunities to enhance and complement our core business

Multiple drivers of shareholder value

1 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income statement line item, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The adjusted net income measure is not, and should not be viewed as, a substitute for U.S. GAAP reported net income attributable to Zoetis.

6

STRATEGIC FOCUS & CORE BELIEFS PROVIDE ROADMAP FOR SUCCESS PATH FOR CONTINUED LEADERSHIP

LEVERAGE OUR CAPABILITES

1. Leverage our local presence and

customer relationships

2. Invest in innovation to extend our

product portfolio

3. Provide high-quality products and

improve margins

EXTEND OUR REACH

4. Further penetrate emerging markets

5. Remain the partner of choice for external development

6. Expand complementary businesses

7

AT THE CORE OF A $100+ BILLION INDUSTRY

COMPANION ANIMAL

LIVESTOCK

1 Vetnosis Review 2014 2 Vetnosis STORM FORECASTS: 2014-2023

• Pet Supplies

• Vet Services

• Diagnostics

• OTC Health

• Nutrition

• Genetics

• Food Safety

• Herd Health

Management

• Diagnostics

~$24 Billion1

• Medicines

• Vaccines

• Medicated Feed Additives

• Parasiticides

~$24B GLOBAL ANIMAL HEALTH MARKET EXPECTED TO EXCEED $33B BY 20202

ANIMAL HEALTH

8

POWERFUL TRENDS CREATING DEMAND

POPULATION GROWTH

A GROWING MIDDLE CLASS

INCREASING URBANIZATION

PREDICTABLE, SUSTAINABLE AND FUNDAMENTAL ECONOMIC DRIVERS

9

DIFFERENCES BETWEEN HUMAN HEALTH & ANIMAL HEALTH DRIVE SELLING APPROACH

VS

HUMAN HEALTH ANIMAL HEALTH

• DIRECT ACCESS TO

DECISION MAKER

• TIME FOR

CONSULTATION

• HIGHLY FRAGMENTED

CUSTOMER BASE

• PRODUCTS + EXPERTISE

+ SERVICES

• GATEKEEPER

• LIMITED TIME

• GOVERNMENT

AND THIRD

PARTY PAYERS

• ONLY PRODUCT

FOCUSED

10

HIGH-QUALITY PRODUCTS DIRECT SALES INNOVATION

COMPETITIVE ADVANTAGE THREE INTERCONNECTED CAPABILITIES UNDERPIN BUSINESS MODEL

11

LIMITS ON POPULATION & PRODUCTION DRIVE ANIMAL HEALTH SPEND PROTEIN NEEDS FUEL ANIMAL HEALTH

# OF ANIMALS1 PROTEIN

PRODUCTION1

ANIMAL HEALTH

Beef Cattle

1.4% 1.5% CAGR CAGR

Dairy Cattle

1.2% 1.8% CAGR CAGR

Pigs

1.3% 1.7% CAGR CAGR

Poultry

2.1% 2.5% CAGR CAGR

1-2% 2-3%

6%

TOTAL RANGE

PROJECTED GROWTH BY 2023

CAGR2

GLOBAL

LIVESTOCK

1 OECD-FAO Agricultural Outlook 2014-2023 2 Vetnosis STORM from 2013-2018

12

DRIVERS OF PET CARE GROWTH DISTINCT TRENDS IN EMERGING VS. DEVELOPED MARKETS

INCREASED PET OWNERSHIP

HIGHER MEDICALIZATION (ROUTINE CARE)

SPECIALTY CARE

PRICE

EMERGING MARKETS

DEVELOPED MARKETS

5%

CAGR1 GLOBAL COMPANION ANIMAL HEALTH

1 Vetnosis STORM from 2013-2018

13

MARKET POSITION BY PRODUCT CATEGORY

Anti-Infectives #1

Other Pharma1 #1

Medicated Feed Additives (MFA) #2

Vaccines (Biologicals) #2

Parasiticides #3

MARKET POSITION BY GEOGRAPHY

North America #1

Latin America #1

Asia #1

Rest of World #2

Western Europe #2

Eastern Europe #2

WORLDWIDE MARKET LEADER

MARKET POSITION BY SPECIES

Cattle #1

Swine #1

Companion Animal #2

Poultry #3

WELL POSITIONED ACROSS MULTIPLE GEOGRAPHIES, CATEGORIES & SPECIES

#1 WORLDWIDE

Source: Vetnosis Executive’s Guide 2015 1 Includes pain, sedation, internal medicine, etc.

14

2014 reported performance is the total sales revenue and growth reported by each AH company, which might include Non-Animal Health sales and merger/acquisition activity.

$4,785

$3,454

$2,754

$2,347

$1,748 $1,499

$1,174 $1,026 $1,016

$418

20

14

Re

po

rte

d S

ale

s (

US

$M

)

4.9%

2.7%

4.5%

9.1%

0.8% 5.5%

0.3% 4.9% 22.6%

5.1%

ZOETIS LEADS ANIMAL HEALTH INDUSTRY

SINGULAR FOCUS HELPS DELIVER GROWTH, STABILITY AND STRONG RETURNS

Source: Vetnosis Executive’s Guide 2015

2014 AH REPORTED SALES AND % GROWTH (INCLUDING NON-AH SALES)

15

BUSINESS MODEL DRIVES OUTPERFORMANCE

OVER THE LAST THREE YEARS, ZOETIS HAS GROWN IN LINE WITH OR FASTER THAN THE MARKET

4.4%

5.1%

REVENUE CAGR 2010 – 2014

ZOETIS1

Source: IFAH; Vetnosis; Company Filings

1 Zoetis reported revenue growth, excluding the acquisition of King Animal Health, acquired by Pfizer on January 31, 2011. 2 Proforma Sales of AH products (as defined by Vetnosis), which excludes Poultry Devices, Agribusiness, Nutritional Feed Additives, Environmental Health, Diagnostics, Genetics, Contract Manufacturing, E-Learning and Consulting Services. 3 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is calculated before the impact of purchase accounting adjustments, acquisition-related costs

and certain significant items and is a non-GAAP financial measure. Adjusted EBITDA excludes interest expense net of capitalized interest, adjusted income taxes, and adjusted

depreciation and amortization.

$940

$1,078

$1,266 $1,339

22%

25%

28% 28%

2011 2012 2013 2014

Adjusted EBITDA ($M) % of Revenue3

AH MARKET2

16

WORLD LEADER2

10,000+ COLLEAGUES AROUND THE WORLD

300+ PRODUCT LINES 120+

COUNTRIES

MARKET PRESENCE IN

In discovery, development and

manufacture of veterinary vaccines

and medicines

WE PROVIDE

MEDICINES VACCINES DIAGNOSTICS GENETICS

OUR FOCUS

34%

65%

COMPANION ANIMAL HEALTH*

LIVESTOCK HEALTH*

17

• 43% U.S.

• 24% EuAfME

• 17% CLAR

• 15% APAC

FURTHER PENETRATE EMERGING MARKETS

Zoetis combines the local presence and knowledge necessary to serve

the unique needs of individual customers with the global reach and

resources essential to help advance animal health globally.

• 1,300 APAC

• 900 U.S.

• 800 EuAfME

• 600 CLAR

FIELD FORCE COLLEAGUES BY REGION

2

REVENUE BY REGION1

CLAR

US

EUAFME

APAC

GLOBAL LEADERSHIP, SCALE AND SCOPE

1 Based on 2014 revenue, and excludes CSS which represented approximately 1% 2 As of December 31, 2014

18

WE CALL UPON THREE TIERS OF CUSTOMERS ACROSS ALL MARKETS

DIRECT & TELESALES SALES REPRESENTATIVES,

TECHNICAL SERVICES, DISTRIBUTORS

DISTRIBUTORS

STRATEGIC ACCOUNTS & VETERINARIANS

MIDDLE TIER CUSTOMERS

SMALL PRODUCERS / DEALERS / VETERINARIANS

19

DIVERSIFIED REGIONAL REVENUE TARGETS KEY SPECIES AN INTRODUCTION TO THE U.S. MARKET

2014 U.S. SEGMENT REVENUE – BY SPECIES

39%

37%

11%

8% 5%

Other

Poultry

Swine

Cattle

Equine

Dogs/Cats

2014 Revenue: $2,059M

Livestock

Companion Animal

20

OUR BUSINESS IN THE U.S. MARKET HISTORICALS AND OUTLOOK

1 Defined as income before provision for taxes on income 2 Vetnosis

* Represents Operational/Base revenue growth, which reflects changes in Reported growth excluding the impact of incremental revenues from: the acquisition of King Animal

Health, acquired by Pfizer on January 31, 2011, and Fort Dodge Animal Health (FDAH), acquired by Pfizer on October 15, 2009; government–mandated divestitures of legacy

FDAH and our legacy products in connection with the FDAH acquisition

• Steady, consistent revenue

performance

• 2014 US Revenue

• Livestock: 12% growth

• Companion Animal: 3%

growth

• Continued growth in profitability

• Expected long-term average

revenue growth:

• Mid single digits 13%* 7%* 6%* 7%* 8%*

47% 49%

52%

55%

57%

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2010 2011 2012 2013 2014

Re

ve

nu

e (

$M

)

US Segment Revenue & Earnings1

Reported Revenue ($) Segment Earnings as % of Revenue

21

AN INTRODUCTION TO THE EUAFME MARKET DIVERSE REGION ACROSS COUNTRIES AND SPECIES

2014 EUAFME SEGMENT REVENUE

BY COUNTRY BY SPECIES

40%

28%

13%

12%

5%

Cattle

Equine

Poultry

Swine

Dogs / Cats

Other

18%

15%

13%

13%

9%

8%

24%

Italy

France

UK

Emerging*

Other Developed**

2014 Revenue: $1,141M

Companion Animal

Livestock

* Emerging includes Russia and Commonwealth of Independent States, Africa, Turkey and Egypt, the Middle East, Iran and Caucasus, and Israel.

**Other Developed includes key markets such as Netherlands, Poland and Ireland.

Spain

2%

Germany

22

OUR BUSINESS IN THE EUAFME MARKET HISTORICALS AND OUTLOOK



Health, acquired by Pfizer on January 31, 2011, and Fort Dodge Animal Health (FDAH), acquired by Pfizer on October 15, 2009; government–mandated divestitures of legacy

FDAH and our legacy products in connection with the FDAH acquisition; and foreign exchange

† Effective in the first quarter of 2014, revenue and earnings associated with our Client Supply Services (CSS) organization are reported within Other business activities, separate

from our four reportable segments. Reported Revenue for 2013 and 2012 has been restated to exclude the impact of these activities. Prior to 2012, CSS revenue and earnings

were not captured separately, therefore, 2011 and 2010 Reported Revenue has not been restated.

• Consistent operational growth;

in line, or faster than the market2

• 2014 EuAfME Revenue

• Livestock: 2%* growth

• Companion Animal: 4%*

growth

• Progressive and strong

profitability improvements


operational revenue growth:

• Low to mid single digits (1%)* 3%* 3%*† 3%*† 2%*

32% 32%

35%

37% 38%

0

150

300

450

600

750

900

1,050

1,200

2010 2011 2012 2013 2014

Re

ve

nu

e (

$M

)

EuAfME Segment Revenue & Earnings1


23

45%

20%

16%

16%

2%

AN INTRODUCTION TO THE CLAR MARKET

2014 CLAR SEGMENT REVENUE


2014 Revenue: $815M

38%

24%

10%

9%

4%

15%

Argentina

Other*

Venezuela

Canada

Mexico

Brazil

* Includes key markets such as Chile, Colombia and Peru

Other

Swine

Poultry

Cattle

Equine

Dogs/Cats

Livestock

Companion Animal 2%

1%

24

OUR BUSINESS IN THE CLAR MARKET HISTORICALS AND OUTLOOK


* Represents Operational/Base revenue growth, which reflects changes in Reported growth excluding the impact of incremental revenues from: the acquisition of King

Animal Health, acquired by Pfizer on January 31, 2011, and Fort Dodge Animal Health (FDAH), acquired by Pfizer on October 15, 2009; government–mandated

divestitures of legacy FDAH and our legacy products in connection with the FDAH acquisition; and foreign exchange

• Recent acceleration in revenue

growth

• 2014 CLAR Revenue:


• Companion Animal: 13%*

growth

• Significant improvement in

profitability


operational revenue growth:

• High single digits 5%* 9%* 4%* 6%* 13%*

31%

35%

33% 34%

38%

0

100

200

300

400

500

600

700

800

2010 2011 2012 2013 2014

Re

ve

nu

e (

$M

)

CLAR Segment Revenue & Earnings1


25

2014 APAC SEGMENT REVENUE


AN INTRODUCTION TO THE APAC MARKET

Swine

Equine

Poultry

Cattle

Dogs/Cats

Other

24%

15%

15% 9%

8%

29%

India

Thailand

Japan

China

Australia

DIVERSITY AND BALANCE IN GROWTH MARKETS

*Includes markets such as Korea, New Zealand, Taiwan, etc.

2014 Revenue: $720M

Companion Animal

Livestock

Other*

26%

24% 23%

18%

2%

7%

26

OUR BUSINESS IN APAC HISTORICALS AND OUTLOOK



Health, acquired by Pfizer on January 31, 2011, and Fort Dodge Animal Health (FDAH), acquired by Pfizer on October 15, 2009; government–mandated divestitures of

legacy FDAH and our legacy products in connection with the FDAH acquisition; and foreign exchange

• Fast growth supported by

emerging markets, tempered by

slower growth in developed

markets

• 2014 APAC Revenue:


• Companion Animal: (2%)*

decline

• Significant improvement in

profitability

• Long-term average operational

revenue growth expected:

• High single digits

15%* 12%* 8%* 7%* 5%*

28%

31%

34%

38% 39%

0

100

200

300

400

500

600

700

800

2010 2011 2012 2013 2014

Re

ve

nu

e (

$M

)

APAC Segment Revenue & Earnings1


27

ANIMAL HEALTH R&D HAS DISTINCT ADVANTAGES VERSUS HUMAN HEALTH R&D

More predictable results Higher success rate Shorter cycle time Lower overall cost

28

OUR R&D MODEL IS DIFFERENTIATED BY STRENGTHS IN MULTIPLE AREAS

EXTENSIVE INTERNAL

EXPERTISE & CAPABILITIES GLOBAL GRASP OF

CUSTOMER NEEDS

REGULATORY EXPERTISE

WORLDWIDE

PARTNER OF CHOICE FOR

EXTERNAL ALLIANCES

29

A STRUCTURED PROCESS GUIDES PORTFOLIO PRIORITIZATION AND EXECUTION

Led by

decision-makers

from R&D, marketing,

commercial and

alliances CUSTOMER NEEDS

OPPORTUNITY IDENTIFICATION

OPPORTUNITY SELECTION

ANNUAL PROJECT PRIORITIZATION

ZOETIS MARKET GROWTH

30

INVESTMENT DECISIONS ARE BASED ON FOUR KEY CRITERIA

Customer Importance

Technical Feasibility

Return on Investment

Commercial Value

31

LIFECYCLE IMPROVEMENTS ARE DIVERSE AND IMPERATIVE TO MARKET LEADERSHIP

Geographic

Expansion

Claims

Routes/Schedule

of Administration

LIFECYCLE ENHANCEMENTS

Formulations

Combinations

Additional

Species

INNOVATION INTENSITY INNOVATION INTENSITY

32

THE CEFTIOFUR FRANCHISE A REMARKABLE BRAND LIFECYCLE SUCCESS STORY FOR 25 YEARS

MOST RECENT APPROVAL 3Q 2013

FIRST APPROVAL 1988 Naxcel/Excenel

• Sterile Powder

RTU (ready to use)

• Convenient Ready-to-Use

• Longer shelf life

Spectramast

• Broad spectrum for today's mastitis

RTU-EZ

• Reformulated to come out easier

CCFA

• Sustained release; one treatment

33

CROSS SPECIES Parasiticides

Infectious Disease

• Prevention

• Treatment

Pain/Inflammation

DEPTH AND BREADTH OF PORTFOLIO ENSURES SUSTAINED DELIVERY OF VALUE

Companion Animal

Allergy/Dermatology

Sedation/Anesthesia

Renal/Cardiovascular

Livestock

Reproduction

Food Safety

Performance

Complementary

Solutions

Genetics

Diagnostics

Biodevices

SPECIES SPECIFIC

137

TIME TO MARKET1

>7 Years 4-7 Years <4 Years

31 275

BIOPHARMACEUTICALS PHARMACEUTICALS VACCINES

Research Programs

Early Development Projects

Development Projects

1 As of November 2014

34

1 Based on 2014 Adjusted Cost of Goods Sold (COGS), which excludes the impact of purchase accounting adjustments, acquisition- related costs

and certain significant items and is a non-GAAP financial measure. 2 Regulatory inspections from January 2013 through December 2014

KEY FEATURES OF ZOETIS MANUFACTURING

21 TECHNOLOGIES 8 MAJOR MANUFACTURING TECHNOLOGIES AND PLATFORMS

DELIVERING QUALITY, RELIABLE SUPPLY AT A COMPETITIVE COST

3,800 COLLEAGUES

55 INSPECTIONS2

0 CRITICAL

DEFICIENCIES

$1.68 BILLION

Adjusted Cost of goods sold1

200 THIRD-PARTY MANUFACTURERS IN

30 COUNTRIES

300+ PRODUCT LINES

27 MANUFACTURING FACILITIES

35

PROVIDE HIGH-QUALITY PRODUCTS

1. Provides high-quality, trusted products

2. Delivers products with consistent performance

3. Delivers products on time

4. Always has products available when needed

5. Responds quickly to my needs

6. Provides me with good customer service

7. Helps me secure fair and competitive prices

8. Is easy to do business with

92% 86% 80% 80% 80% 79% 76% 75%

CUSTOMERS’ TOP PRIORITIES FOCUS ON SUPPLY

Q: HOW IMPORTANT ARE THESE ATTRIBUTES IN YOUR SELECTION OF AN ANIMAL HEALTH PROVIDER?

➔ Top 5 provider attributes related to dimensions of manufacturing and supply

➔ Zoetis outranked ALL competitors on performance in these areas

2012 Internal Customer Research, Pfizer Animal Health

36

DIVERSE NETWORK OF SITES, TECHNOLOGIES AND EXPERTISE

DIAGNOSTICS/

DEVICES

LONGMONT VAN

BUREN

SALISBURY EAGLE

GROVE

DESIGNED FOR GLOBAL CUSTOMER BASE

BIOLOGICALS STERILES & PHARMAS APIs1 & MFAs2

LAURINBURG

CAMPINAS

MEDOLLA

SHENZHOU YANTAI HSINCHU5

CHARLES

CITY

LINCOLN

KALAMAZOO

GUARULHOS3

WILLOW

ISLAND

CHICAGO

HEIGHTS

OLOT LOUVAIN

LA NEUVE CATANIA

HARIDWAR SUZHOU

WHITEHALL

JILIN4

MELBOURNE

WELLINGTON

SAN DIEGO

DURHAM

Anchor Site Satellite Work Centers

1Active Pharmaceutical Ingredients 2 Medicated Feed Additives 3 Guarulhos is leased back to Pfizer 4 Jilin is a Chinese joint venture

U.S.

CLAR

APAC

EUAFME

5 Hsinchu is a Taiwanese joint venture

37

NETWORK STRATEGY TO IMPROVE MARGINS

by 2017

FOCUSED EXCELLENCE AND SIMPLIFICATION ▪ Simplify internal plant network

▪ Focus investment on future platforms of growth

▪ Initiate first phase of Centers of Excellence creation

by 2020

INVESTING IN GROWTH ▪ Perform second phase of CoEs creation

▪ Continue investment in future growth platforms

▪ Focus on additional long-term biologics capacity

by 2023

1

2

3

LEAN, FIT AND AGILE ▪ Lean/Six Sigma quality improvement program

▪ Reduce inventory and waste

▪ Focus on speed-to-market improvements

MOVING FORWARD:

200 BASIS POINT IMPROVEMENT BY 2020

38

FOUR ELEMENTS OF VALUE CREATION

Revenue Growth

Operating Margin

Improvement

Value-Added

Business

Development

Return Capital

to Shareholders

• Market leader gaining share with diverse portfolio

• Sustain revenue growth through innovation and lifecycle

development

• Improve gross profit margin through price, mix, efficiency and

optimized manufacturing network

• Leverage existing sales and marketing resources; maintain

R&D productivity

• Minimize G&A costs while supporting global business

• Regular dividend, growing over time

• Share repurchase program

• Focus on supporting R&D portfolio and adding

complementary businesses

• Utilize mix of licensing, partnerships and acquisitions to

strengthen portfolio

39

CURRENCY FOOTPRINTS

28%

12%

7%

7%

7%

4%

4% 3%

28%

EUR BRL CAD AUD GBP

JPY CNY MXN Other

~53% NON-USD SALES

• Exposure to

more than 35

currencies across the globe

• Translation & other

risks

• We focus on

operational

results

2014 Non-USD Revenue by Currency

40

61%

39%

DIVERSE REVENUE STREAM BY MANY DIMENSIONS

REVENUE BY SPECIES1

REVENUE BY PRODUCT CATEGORY1 REVENUE BY SEGMENT2

REVENUE BY PRODUCT LINE

All other

product lines

Top 10

product lines

Note: Based on 2014 revenue

RESILIENT

DIVERSE

DURABLE 36%

34%

15%

12%

Other livestock

Poultry

Swine

Companion animal

Cattle

43%

24%

17%

15%

APAC

CLAR

EuAfME

US

29%

26%17%

15%

10%

Other non-pharma

Medicated feed

additives

Parasiticides

Other pharmaceuticals

Vaccines

Anti-infectives

2%

3%

1 Excludes revenue associated with our Client Supply Services (CSS), which represented 1% of total 2014 revenue

2 Revenue of 1% associated with CSS is included, but not labeled

41

Product Line Product

Category

Year

Introduced

Years on

Market

Ceftiofur injectable line Anti-infective 1988 26

Revolution/Stronghold Parasiticide 1999 15

Draxxin Anti-infective 2004 10

Rimadyl Other Pharma 1997 17

Convenia Anti-infective 2007 7

Clavamox/Synulox Anti-infective 1994 20

Lincomycin line MFA 1967 47

Dectomax Parasiticide 1993 21

Aureomycin MFA 1953 61

Terramycin MFA 1952 62

BMD MFA 1954 60

Vanguard line Vaccine 1978 36

Rispoval® line Vaccine 1982 32

Lasalocid line MFA 1976 38

Vanguard® L4 Vaccine 1978 36

Cydectin Parasiticide 1986 28

Embrex® devices Other 1988 26

Lutalyse Other 1972 42

Suvaxyn® PCV/Fostera™ PCV Vaccine 2006 / 2011 8 / 3

Cerenia Other 2007 7

Orbeseal/Teatseal Other 2001 13

Bovi-Shield® line Vaccine 1998 16

ProHeart Parasiticide 2001 13

Improvac/Improvest/Vivax Vaccine 1998 16

~20% of Revenue

Covered by Exclusive IP

Average Product

Duration of Top 25 =

27 Years

LONG-DURATION PRODUCT FRANCHISES

% of

2014 Sales

~6-8% each

~2-3% each

~1-2% each

Top 25 = 59%

RESILIENT

DIVERSE

DURABLE

42

STEADY REVENUE GROWTH WITH LOW VARIABILITY

2006 – 2014 Animal

Health Industry

Revenue Growth

2009 Animal Health

Industry Revenue

Growth

Low single digits

(excl. currency)

DIVERSE

RESILIENT

DURABLE

1 Data calculated from IFAH Annual Report 2006 and Vetnosis Review 2014

5.1% CAGR1

PROTEIN IS A

DIETARY STAPLE

OWNERS PRIORITIZE

THEIR PET SPENDING

43

PROJECTS

INITIATED

IMPROVING COGS & GROSS MARGINS MODEST IMPROVEMENTS IN NEAR TERM, ACCELERATION BEYOND 2017

2014 Guidance: XX%

2015 Guidance: YY%

Long-term Benefits:

Optimize Manufacturing • Diversity of portfolio

presents challenge to

COGS

• Long timelines to shift

manufacturing network

• Near-term opportunities are

inherent in the business

• Incremental 200 bps of

gross profit margin from

manufacturing network

strategy by 2020

2014 2017 2023

NETWORK

• Price +

• Mix + / -

Enduring Factors:

EFFICIENCY

44

4%*

8%*

20%*

2014

Field Sales,

Marketing,

A&P

G&A

Distribution

Growing to steady state

by year-end 2015

Key assets

with capabilities in place

LEVERAGING KEY ASSETS IN SG&A

Adjusted SG&A1

as % of Revenue

Growth with sales volume

2014 Adjusted

SG&A1: $1,507M

~$950M

~$375M

~$180M

1 Adjusted selling, general and administrative expenses (SG&A) is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted

accounting principles (GAAP) income statement line item, excluding purchase accounting adjustments, acquisition-related costs and certain significant items.

* Certain amounts and percentages may reflect rounding adjustments.

45

THE VALUE OF OUR R&D ENGINE

Maintaining the portfolio • Global effort to maintain

marketability of ~14,000 SKUs

1 Adjusted research and development expenses (R&D) is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting

principles (GAAP) income statement line item, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. 2 Zoetis internal data

* Certain amounts and percentages may reflect rounding adjustments.

Nurturing lifecycle development • More than 600 product approvals

over the last 5 years2

• Average duration of top 25 products

= 27 years

Track record of innovation • APOQUEL, CONVENIA, CERENIA,

DRAXXIN, FOSTERA, IMPROVAC

PEDV, RIMADYL

~40%*

~45%*

~15%*

2014

Regulatory &Maintenance

LifecycleInnovation

New ProductInnovation

% of Adjusted R&D1

46

STABILIZING OUR TAX STRUCTURE

40%*

34%*

41%*

29%

27%

~29%

25%

30%

35%

40%

45%

Effective Tax Rate

on Adjusted Income1

• Stabilized tax rate

• Elements driving down

2014 tax rate were not

structural

• Best-in-class operating model

• Incentive tax rulings in

Belgium and Singapore

• Modest improvement over time

• “Evolution” not “revolution”

1 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income

statement line item, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. The adjusted net income measure

is not, and should not be viewed as, a substitute for U.S. GAAP reported net income attributable to Zoetis.

* Calculated on a carve-out basis

47

INCREASING RETURN ON NET ASSETS

STRONG ADJUSTED NET INCOME GROWTH

ON A RELATIVELY FIXED NET ASSET BASE

Zoetis Adjusted Net Income2 Growth

Zoetis Revenue Growth

Market Growth

Zoetis Adjusted EBITDA1 Growth

1 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is calculated before the impact of purchase accounting adjustments, acquisition-related

costs and certain significant items and is a non-GAAP financial measure. Adjusted EBITDA excludes interest expense net of capitalized interest, adjusted income taxes, and

adjusted depreciation and amortization. 2 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income



2

48

CAPITAL ALLOCATION PRIORITIES FOR ZOETIS

ACTIVE MANAGEMENT OF CAPITAL STRUCTURE

BUSINESS DEVELOPMENT OPPORTUNITIES

RETURN CAPITAL TO SHAREHOLDERS

FR

EE

CA

SH

FL

OW

ALLOCATED AMONGST HIGH ROI ALTERNATIVES

49

ENHANCING OUR LONG-TERM VALUE PROPOSITION WITH BUSINESS DEVELOPMENT APPLYING DISCIPLINED PORTFOLIO MANAGEMENT FOR GROWTH

AREAS OF FOCUS

Support for R&D Portfolio

New chemical entities, biological

substrates & technologies

Complementary Areas

Devices, Diagnostics, Food Safety

Portfolio Gaps & Geographical

Opportunities

ASSESSMENT CRITERIA

Strategic Fit

Clear Synergies

Financial Value

Anti-trust Considerations

Position of Strength: Core Capabilities and Scale

Experienced in Licensing, Acquisitions, Integrations & Divestitures

Partner of Choice for Animal Health Community

BUSINESS DEVELOPMENT STRENGTHS AND EXPERIENCE

APPENDIX

51

RECONCILIATION OF GAAP REPORTED TO

NON-GAAP ADJUSTED INFORMATION 2014

in USD millions

GAAP

Reported

Purchase

Accounting

Acquisition

related costs

Certain

Significant

Items

Non-GAAP

Adjusted

Revenue $4,785 $0 $0 $0 $4,785

Cost of Sales 1,717 (4) 0 (33) 1,680

Gross Profit 3,068 4 0 33 3,105

Gross Profit as % of Revenue 64.1% 64.9%

Selling, general and administrative expenses 1,643 0 0 (136) 1,507

Research & Development Expenses 396 (2) 0 (1) 393

Amortization of intangible assets 60 (45) 0 0 15

Total Operating Expenses 2,099 (47) 0 (137) 1,915

Total Operating Expenses as % of Revenue 43.9% 40.0%

Restructuring charges and certain acquisition related costs 25 0 (8) (17) 0

Other (Income) / Expenses 7 0 0 (18) (11)

Income/(loss) before Interest and Taxes 937 51 8 205 1,201

Interest Expense 117 0 0 0 117

Income before provision for taxes on income 820 51 8 205 1,084

Provision for taxes on income 233 17 3 37 290

Income from continuing operations 587 34 5 168 794

Net income attributable to non-controlling interests 4 0 0 0 4

Net income attributable to Zoetis 583 34 5 168 790

52



in USD millions

GAAP

Reported

Purchase

Accounting

Acquisition

related costs

Certain

Significant

Items

Non-GAAP

Adjusted

Revenue $4,561 $0 $0 $0 $4,561

Cost of Sales 1,669 (2) 0 (42) 1,625

Gross Profit 2,892 $2 0 $42 2,936


Selling, general and administrative expenses 1,613 1 0 (188) 1,426



Total Operating Expenses 2,072 (46) 0 (195) 1,831



Other (Income) / Expenses (9) 0 0 1 (8)

Income/(loss) before Interest and Taxes 803 48 22 240 1,113


Income before provision for taxes on income 690 48 22 240 1,000



Net income attributable to non-controlling interests (1) 0 0 0 (1)


53



in USD millions

GAAP

Reported

Purchase

Accounting

Acquisition

related costs

Certain

Significant

Items

Non-GAAP

Adjusted

Revenue $4,336 $0 $0 $0 $4,336

Cost of Sales 1,563 (4) (9) (1) 1,549

Gross Profit 2,773 4 9 1 2,787


Selling, general and administrative expenses 1,470 1 (1) (18) 1,452

Research & Development Expenses 409 0 0 (10) 399


Total Operating Expenses 1,943 (48) (1) (28) 1,866



Other (Income) / Expenses (46) 0 0 25 (21)

Income/(loss) before Interest and Taxes 741 52 53 96 942


Income before provision for taxes on income 710 52 53 96 911





54



in USD millions

GAAP

Reported

Purchase

Accounting

Acquisition

related costs

Certain

Significant

Items

Non-GAAP

Adjusted

Revenue $4,233 $0 $0 $0 $4,233

Cost of Sales 1,652 (34) (6) (31) 1,581

Gross Profit 2,581 34 6 31 2,652


Selling, general and administrative expenses 1,453 2 (3) (5) 1,447



Total Operating Expenses 1,949 (48) (3) (24) 1,874



Other (Income) / Expenses 48 0 1 (77) (28)

Income/(loss) before Interest and Taxes 430 82 122 172 806


Income before provision for taxes on income 394 82 122 172 770





55

RECONCILIATION OF ADJUSTED NET INCOME

TO ADJUSTED EBITDA 2011 – 2014

in USD millions 2011 2012 2013 2014

Adjusted Net Income1 $503 $539 $709 $790

Interest Expense2 36 31 113 117

Interest Income2 0 (1) (3) (6)

Income Taxes2 264 372 292 290

Depreciation2 117 119 138 131

Amortization2 20 18 17 17

Adjusted EBITDA3 $940 $1,078 $1,266 $1,339

% of revenue 22.2% 24.9% 27.8% 28.0%

1 Adjusted Net Income is a non-GAAP measure and defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income



2 Interest Expense, Interest Income, Income Taxes, Depreciation and Amortization include charges as included in adjusted net income

3 Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is calculated before the impact of purchase accounting adjustments, acquisition-

related costs and certain significant items and is a non-GAAP financial measure. Adjusted EBITDA excludes interest expense net of capitalized interest, adjusted

income taxes, and adjusted depreciation and amortization.

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