Zoetis Pricing Spineometer: 5 of 5 Vertebrae

Zoetis, a global leader in the animal health industry, had a positive FY 2026. Revenue rose 2.3% to $9.5 Y billion, and operating profits rose 5.4% to $3.8 billion over last year.

A review of Zoetis’s 2 February 2026 earnings call and annual 10-K filing provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

Wetteny Joseph, CFO, said of pricing, “Our pricing has always been and remains an element that we take into consideration product-by-product, market-by-market and the value – the clinical value we bring both to vets and pet owners through those products.”

Wetteny Joseph, CFO, reported 6% organic growth with a revenue bridge in which 4% of the growth is attributed to price improvements and 2% of the growth is attributed to quantity improvements. Clearly, price is important to Zoetis. It is unclear how the mix impacted performance (was it included in volume or price), or whether Zoetis reports a biased revenue bridge or the unbiased one as published in recent academic papers.

Zoetis is a global company earning $5.1 billion in revenue in the States and $4.2 billion in revenue internationally, with significant operations in several of its 45 countries served.

Zoetis has roughly 300 product lines, and likely thousands of individual SKU products.

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 14,500 employees at Zoetis, industry benchmarks suggest 19 to 95 professionals would be dedicated to managing pricing decisions. Considering its business and market environment, our recommendation is to position the pricing team at the middle of this industry benchmark, with between 38 and 57 pricing professionals.

1. Zoetis provides animal health solutions for both pets and livestock. These market segments have significantly different market dynamics, purchasing drivers, and economics.
2. Channel dynamics, commercial policy, and prices themselves can be expected to vary widely across individual country geographies to address cultural, economic, and regulatory differences.
3. For pet products, Zoetis primarily sells to veterinarians and third-party distributors, who eventually sell to pet owners. In certain markets, Zoetis sells to pet owners through retail and e-commerce channels. For livestock products, they sell to livestock producers, veterinarians, and distributors. One veterinary distributor alone contributed 16% of revenue. The variety of channels to market, buyer power variations between customers, and suspected role of negotiation in settling transaction prices requires both a strategic commercial policy defining price differences between customer segments and tactical price guidance built from a narrow application of AI to guide negotiations. Each element of the price waterfall would benefit from annual review that defines the purpose, measurable outcome, requirements for granting that specific form of price discrimination, and appropriate calibration of each specific form of price variation.
4. Zoetis competes with large global companies such as Boehringer Ingelheim Animal Health, Merck Animal Health, Elanco Animal Health, and IDEXX Laboratories, and a variety of other mid-sized startup competitors throughout the world. Such market concentration is observed in many industries and can lead to significant price and commercial policy differences between countries.
5. Demand forecasting at Zoetis may benefit from studies of the impact of GDP per capita, climate events, disease rates, local tastes, and other factors. Their annual report lists ten economic factors that impact demand. An econometric model for demand prediction that incorporates these factors and is updated annually would meaningfully provide insight into demand, and therefore production requirements.
6. Research and development accounts for 7% of Zoetis revenue. 12 products are identified as “potential blockbusters” with over $100 million in annual revenue. For most products, an evaluation of the Economic Value to Customers with variation by geography and market segment would inform new product pricing. For some products and in some geographies, specifically the potential blockbusters, conjoint analysis that measures customer economic tradeoffs between animal health solutions would be beneficial.
7. Some products, specifically those related to pets, may benefit from being priced as luxury goods, where the income elasticity of demand is greater than one. Other products, both pet- and livestock-oriented, may benefit from being priced as consumer goods. And others, those specifically related to livestock, may benefit from being priced as industrial goods. A wide variety of pricing drivers between products and market segments would require deft pricing and price discrimination.
8. With 300 product lines and likely many products per product line, price changes related to changes in cost inflation, economic shocks, and market dynamics are suspected to be a major process to manage with product and commercial teams.
9. Zoetis reports launch promotions. Price variance management related to promotions benefits from a strong understanding of the product price elasticity of demand, cross-product elasticity of demand, and industry sector price elasticity of demand. These metrics can be used to define promotional depth, duration, and expectations prior to execution. Post execution, studies can be used to inform future promotions in a Deming Plan-Do-Study-Adjust constant improvement cycle.

OBSERVED PRICING CAPABILITY

Research into Zoetis’ investment in pricing yielded encouraging results.

1. The pricing team size is well within expectations.
2. Pricing roles range from analyst and manager to lead, director, and senior director. No vice president of pricing was identified.
3. Pricing functional responsibilities included data analytics, contracting, customer operations, promotions, digital pricing, rebates, international pricing, pricing and commercial excellence, monetization, and strategy.
4. Pricing experts were identifiable in countries across the globe.
5. At least two of the pricing professionals at Zoetis have achieved the Professional Pricing Society’s Certified Pricing Professional (CPP) designation. One pricing leader was once a pricing student of mine at DePaul in Chicago, IL—another studied pricing at the Simon School of Business in Rochester, NY.

Given the importance and capabilities of pricing at Zoetis, as indicated in financial reports, management statements, and our pricing function research, we have reached the following conclusion as of August 2026.

Zoetis Pricing Spineometer: 5 out of 5 Vertebrae. Zoetis’s executive management team clearly understands the importance of price management. The research into the pricing team size and function matches that suggested by the Value-Based Pricing Framework contained in the management book, Pricing Done Right. While I would have liked to have identified a vice president of pricing, such a role is not yet ubiquitous, and many companies perform well with no more than a director of pricing.

ZTS (Zoetis Inc.) rose from 123 the day prior to their earnings call to 126 one week later. FY 2025 revenue of $9.4 billion with a 39% operating margin and a P/E ratio near 12.

For FY 2025, a 1% improvement in price would yield a 2.5% improvement in operating profits and a $1.1 billion (3.7%) improvement in market capitalization, holding all else constant at Zoetis