A maker of medicines, vaccines, and diagnostics for animals, Zoetis sells well-known products like the dog itch-relief drugs Apoquel and Cytopoint and Simparica parasite preventives to veterinarians worldwide. Born in the 1950s as the animal health arm of Pfizer, it became a fully independent company in 2013. Its name comes from the Greek word "zoe," meaning life—a fitting nod to its mission of keeping animals healthy.
U.S. companion animal revenue fell 11% for a second straight quarter, turning Zoetis's core growth engine into a drag.
Zoetis's U.S. companion animal business, the growth engine for years, fell 11% for a second straight quarter. Total was flat at $2.47 billion as international growth offset the U.S. decline, while adjusted fell 1% and rose to $77 million. The company is cutting costs and leaning on international launches, but its largest and most profitable franchise is shrinking.
Key takeaways
U.S. companion animal fell 11% in Q2, matching the Q1 decline, as and the dermatology franchise faced heightened competition and generic pressure on and intensified.
Total was flat at $2,468 million, as an 8% increase in International revenue to $1,173 million fully offset a 7% decline in the U.S. to $1,266 million.
narrowed 0.4 points to 72.7%, as cost of sales rose to 27.3% of from 26.8% a year ago on unfavorable product mix and foreign exchange, partially offset by price increases.
Section summaries
Management's Discussion and Analysis
Zoetis Q2 2026 revenue was flat at $2.47B as U.S. companion animal declines offset International growth; adjusted net income fell 1%.
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Total Q2 was $2,468M, flat , as a 7% U.S. decline to $1,266M was offset by 8% International growth to $1,173M.
rose to $77 million from $30 million a year ago, primarily for employee termination costs under a new comprehensive cost and productivity program.
fell 5.0% to $866 million and narrowed 1.8 points to 35.1%, as the gross-margin decline and higher restructuring costs more than offset a 4% reduction in SG&A.
The company repurchased 11.0 million shares for $1,159 million in the first half under its $6 billion authorization, while remained at $9.05 billion and fell to $3.15 billion.
What changed
The Q1 2026 flag asked whether the 11% U.S. companion animal operational decline would widen or stabilize. It held at 11% — the same rate — confirming the decline is sustained rather than accelerating or reversing.
The Q1 2026 flag asked whether International companion animal would hold at 7%. It slowed to 5% operational growth in Q2, as the Fiscal Year Alignment benefit annualized.
The Q1 2026 flag asked whether could approach the $2.28 billion 2025 level. First-half free cash flow was $829 million, down from $919 million a year earlier, making that target harder to reach.
The Q1 2026 flag asked about the pace of share repurchases against the $6 billion authorization given the leveraged balance sheet. The company repurchased $1,159 million in the first half, a pace that exceeds the $781 million repurchased in the first half of 2025.
What to watch
Q3 2026 U.S. companion animal to see whether the 11% decline rate holds for a third quarter or whether the new cost and productivity program begins to offset competitive and generic pressure.
Q3 2026 International companion animal rate to see whether the 5% Q2 pace stabilizes as Lenivia and Portela launches scale outside the U.S.
Q3 2026 to see whether the 72.7% level holds or whether unfavorable product mix and foreign exchange push it lower, given the 73.2% peak in Q2 2025.
Pace of share repurchases against the $6 billion authorization as fell to $3.15 billion and remains at $9.05 billion — the balance sheet is materially leveraged.
U.S. companion animal fell 11% due to softer demand, heightened competition for and the dermatology franchise, and generic pressure on and .
International grew 5%, driven by parasiticides, small animal diagnostics, and the launch of monoclonal antibody pain products Lenivia and Portela.
Q2 cost of sales rose to 27.3% of from 26.8% on unfavorable product mix and foreign exchange, while fell 4% on lower compensation and charitable contributions.
Restructuring charges surged to $77M from $30M, primarily for employee termination costs under a comprehensive cost and productivity program.
for the first half was $1,056M, down from $1,120M, while the company repurchased 11.0M shares for $1,159M under its $6B authorization.
Quantitative and Qualitative Disclosures About Market Risk
A significant portion of our revenue and costs are exposed to changes in foreign exchange rates. In addition, our outstanding borrowings may be subject to risk from changes in interest rates and foreign exchange rates. The overall objective of our financial risk management progr…
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A significant portion of our revenue and costs are exposed to changes in foreign exchange rates. In addition, our outstanding borrowings may be subject to risk from changes in interest rates and foreign exchange rates. The overall objective of our financial risk management program is to seek to manage the impact of foreign exchange rate movements and interest rate movements on our earnings. We manage these financial exposures through operational means and by using certain financial instruments. These practices may change as economic conditions change.
For a complete discussion of our exposure to interest rate and foreign exchange risk, refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes from the information discussed therein.
The information required by this Item is incorporated herein by reference to Notes to Condensed Consolidated Financial Statements—Note 15. Commitments and Contingencies in Part I— Item 1, of this Quarterly Report on Form 10-Q.
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The information required by this Item is incorporated herein by reference to Notes to Condensed Consolidated Financial Statements—Note 15. Commitments and Contingencies in Part I— Item 1, of this Quarterly Report on Form 10-Q.
In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in the "Our operating environment" and "Forward-looking statements and factors that may affect future results" sections of the MD&A and in Part I, Item 1A. "Risk…
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In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in the "Our operating environment" and "Forward-looking statements and factors that may affect future results" sections of the MD&A and in Part I, Item 1A. "Risk Factors," of our 2025 Annual Report on Form 10-K, which could materially affect our business, financial condition, or future results and which are incorporated by reference herein. There have been no material changes from the risk factors disclosed in our 2025 Annual Report on Form 10-K.