{"schemaVersion":1,"research":true,"symbol":"zts","name":"Zoetis","topic":"moat","path":"/stock/zts/moat","status":"published","version":3,"updatedAt":"2026-10-18T12:26:00.792Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"narrow","summary":"Zoetis has a narrow moat from protected intellectual property, proprietary vaccine know-how and demonstrated regulatory approvals and commercialization. Protection is product-specific, and its remaining economic duration is unclear. Realized price increases coexist with forced discounts, generic-driven sales declines and competitive pressure on important franchises. The evidence supports a current advantage but does not establish strong customer lock-in or wide-moat durability.","advantages":[{"mechanism":"intangible_assets","claim":"Granted patents, regulatory exclusivity and proprietary vaccine inputs restrict direct replication of parts of the portfolio. Completed approvals and subsequent commercial launches demonstrate an ability to turn innovation into marketed products. Brand loyalty after exclusivity expires remains principally a management assertion.","durability":"Product-specific and finite. Proprietary know-how and continued approvals support renewal of the advantage, but patent counts do not establish economically important remaining protection. Pipeline candidates represent potential rather than current protection.","risks":"Generic competition has already caused lower sales, price reductions and discounts. Important companion-animal franchises face heightened competition and price sensitivity. Patent protection varies by jurisdiction, while some licensed intellectual property depends on Pfizer's enforcement and termination rights.","invalidation":"The narrow-moat thesis would fail if competitive and generic displacement persistently spread across protected core franchises while new approvals and launches fail to replace the lost demand, or if loss of enforceable rights permits broad replication of economically important products.","competitors":[],"evidenceIds":["e1","e2","e3","e4","e5"],"counterEvidenceIds":["e6","e7","e8","e9","e10","e11"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business / Intellectual Property / granted patents and applications","excerpt":"Our product portfolio enjoys the protection of more than 5,500 granted patents and 1,600 pending patent applications, filed in over 50 countries, with a focus on our major markets, including Australia, Brazil, Canada, China, Europe, Japan and the U.S., as well as other countries with strong patent systems."},{"id":"e2","sourceId":"filing-1","location":"Risk Factors / proprietary vaccine master seeds and adjuvant formulations","excerpt":"In addition, many of our vaccine products and other products are based on or incorporate proprietary information, including proprietary master seeds and proprietary or patented adjuvant formulations."},{"id":"e3","sourceId":"filing-1","location":"Risk Factors / patent and regulatory data exclusivity","excerpt":"We depend on patents and regulatory data exclusivity periods to provide us with exclusive marketing rights for some of our products."},{"id":"e4","sourceId":"filing-3","location":"Executive Compensation / CEO 2025 Achievements / completed regulatory approvals","excerpt":"•Secured the industry’s first regulatory approvals for long-acting anti-nerve growth factor monoclonal antibody therapies to treat osteoarthritis pain – Lenivia® for dogs and Portela® for cats – in the EU and Canada."},{"id":"e5","sourceId":"filing-2","location":"MD&A / second-quarter International companion-animal results and launches","excerpt":"•Companion animal operational revenue growth was driven primarily by increased sales of our parasiticides portfolio, as well as an increase in demand for small animal diagnostics and our mAb products for pain with the launch of Lenivia® and Portela™, the company's long-acting monoclonal antibody pain products, partially offset by decreased sales of key dermatology products."},{"id":"e6","sourceId":"filing-1","location":"Risk Factors / realized generic-related sales declines and price concessions","excerpt":"In certain circumstances, our products have become subject to decreased sales and we have been forced to lower our prices and provide discounts or rebates in order to compete with generic products."},{"id":"e7","sourceId":"filing-2","location":"MD&A / second-quarter U.S. dermatology and Simparica Trio competitive pressure","excerpt":"The company's key dermatology franchise and Simparica Trio faced heightened competitive pressure and persistent macroeconomic-driven price sensitivity."},{"id":"e8","sourceId":"filing-2","location":"MD&A / second-quarter generic competition and lower Librela sales","excerpt":"Also contributing to the decline was the impact of generic competition on Cerenia and Convenia, as well as lower sales of Librela."},{"id":"e9","sourceId":"filing-1","location":"Risk Factors / limits on patent protection","excerpt":"The extent of protection afforded by our patents varies from country to country and is limited by the scope of the claimed subject matter of our patents, the term of the patent and the availability and enforcement of legal remedies in the applicable country and potential legislative or regulatory changes to the underlying patent framework."},{"id":"e10","sourceId":"filing-1","location":"Risk Factors / Pfizer license restrictions and termination rights","excerpt":"In addition, in circumstances where Pfizer has an interest in the licensed intellectual property in connection with its human health development programs, our rights to use the licensed intellectual property are restricted and/or, in limited instances, subject to Pfizer's right to terminate such license at will."},{"id":"e11","sourceId":"filing-1","location":"Risk Factors / Pfizer rights to enforce licensed patents","excerpt":"In the animal health field, Pfizer has the first right, and in some cases the sole right, to enforce such licensed patents, and in the human health field, subject to certain exceptions, Pfizer has the sole right to enforce the licensed patents."},{"id":"e12","sourceId":"filing-1","location":"Business / management belief concerning post-exclusivity brand loyalty","excerpt":"As a result, we believe that significant brand loyalty to products often continues after the loss of patent-based and regulatory exclusivity."},{"id":"e13","sourceId":"filing-2","location":"MD&A / first-half U.S. poultry demand and realized pricing","excerpt":"Poultry products grew due to increased demand for vaccines, as well as price."},{"id":"e14","sourceId":"filing-2","location":"MD&A / first-half consolidated cost of sales as a percentage of revenue","excerpt":"six months ended June 30, 2025 Cost of sales as a percentage of revenue was 27.8% in the six months ended June 30, 2026, compared with 27.4% in the six months ended June 30, 2025."},{"id":"e15","sourceId":"filing-2","location":"MD&A / mix, foreign exchange, manufacturing costs and price effects","excerpt":"The increase was primarily a result of: •unfavorable product mix; and •unfavorable foreign exchange, partially offset by: •favorable manufacturing and other costs; and •price increases."},{"id":"e16","sourceId":"filing-2","location":"MD&A / first-half International companion-animal demand by product","excerpt":"•Companion animal operational revenue growth was driven primarily by increased sales of our parasiticides portfolio, as well as an increase in demand for small animal diagnostics and vaccines, partially offset by decreased sales of key dermatology products."},{"id":"e17","sourceId":"filing-2","location":"MD&A / fiscal-year alignment benefit to International growth","excerpt":"Growth in the current period was positively impacted by operational changes made in connection with the Fiscal Year Alignment."},{"id":"e18","sourceId":"filing-2","location":"MD&A / first-half U.S. segment earnings decline","excerpt":"U.S. segment earnings decreased by $175 million, or 10%, in the six months ended June 30, 2026, compared with the six months ended June 30, 2025, primarily due to lower gross profit, partially offset by lower operating expenses."},{"id":"e19","sourceId":"filing-2","location":"Liquidity and Capital Resources / convertible-note-funded initial repurchases","excerpt":"In connection with the December 18, 2025 private offering of 0.250% convertible senior notes, we purchased approximately 2.1 million shares of Zoetis’ common stock, par value $0.01 per share, for $248 million in privately negotiated transactions entered into concurrently with the pricing of the convertible senior notes offering effected with or through one of the initial purchasers or its affiliate."},{"id":"e20","sourceId":"filing-2","location":"Liquidity and Capital Resources / completed additional note-funded repurchases","excerpt":"Following the date of the offering, we used $1,535 million of the remaining proceeds from the offering for additional repurchases of 12.3 million shares of common stock which repurchases were completed as of March 31, 2026."},{"id":"e21","sourceId":"filing-3","location":"Executive Compensation / actual 2025 dividends and repurchases","excerpt":"We paid $889 million in dividends and repurchased $3,235 million in Zoetis common stock under our share repurchase program."},{"id":"e22","sourceId":"filing-1","location":"Segment reporting / realized divestiture loss and aquaculture impairment","excerpt":"For 2024, certain significant items primarily consisted of employee termination costs related to organizational structure refinements, a net loss related to the sale of our medicated feed additive product portfolio, certain water soluble products and related assets, as well as asset impairment charges related to our aquaculture business, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative."},{"id":"e23","sourceId":"filing-2","location":"Note 12 / actual first-half 2026 PSU grants","excerpt":"During the six months ended June 30, 2026, the company granted 183,488 PSUs with a weighted-average grant date fair value of $156.44 per PSU."},{"id":"e24","sourceId":"filing-2","location":"Note 12 / three-year relative TSR and operational revenue growth vesting conditions","excerpt":"Beginning in 2025, the units underlying the PSUs will be earned and vested over a three-year performance period in two tranches, each subject to an independent achievement condition: (1) a market condition comprising the total shareholder return of the company in comparison to the total shareholder return of the companies comprising the S&P 500 Health Care index at the start of the performance period, excluding companies that during the performance period are acquired or no longer publicly traded (Relative TSR); and (2) a performance condition comprising a three-year average annual operational revenue growth metric (average PSU operational revenue growth)."},{"id":"e25","sourceId":"filing-3","location":"Executive Compensation / annual incentive financial metrics","excerpt":"•The AIP pool is funded based on Zoetis’ performance against revenue, adjusted diluted EPS and free cash flow goals."},{"id":"e26","sourceId":"filing-3","location":"Ownership / directors' and executive officers' aggregate ownership limitation","excerpt":"(7)The directors and executive officers as a group do not own more than 1% of the total outstanding shares based on 420,640,004 shares outstanding on March 20, 2026."},{"id":"e27","sourceId":"filing-3","location":"Corporate Governance / board refreshment and existing majority voting standard","excerpt":"Director since December 2025 Board Refreshment 4 New independent directors have been added to the Board in the last four years Zoetis 2026 Proxy Statement 7 Corporate Governance at Zoetis Majority Voting Standard for Director Elections Our Amended and Restated By-laws (the “By-laws”) contain a majority voting standard for all uncontested director elections."},{"id":"e28","sourceId":"filing-3","location":"Executive Compensation / independent approval of CEO compensation","excerpt":"The Human Resources Committee, with the advice of its independent compensation consultant, approves the compensation for the NEOs (other than the CEO) and the other members of the ZET, and recommends the compensation of the CEO to our full Board for approval by its independent members."},{"id":"e29","sourceId":"filing-3","location":"Audit Committee / auditor-service pre-approval","excerpt":"Prior to engagement, the Audit Committee pre-approves independent registered public accounting firm services within each category, and the fees for each category are budgeted."},{"id":"e30","sourceId":"filing-3","location":"Transactions with Related Persons / adopted written review policy","excerpt":"Zoetis 2026 Proxy Statement 93 Transactions with Related Persons Policy Concerning Related Person Transactions Our Board has adopted a written policy regarding the review and approval of transactions with related persons."},{"id":"e31","sourceId":"filing-1","location":"Business / differing product patent expiration dates","excerpt":"Patents for individual products expire at different times based on the date of the patent filing (or sometimes the date of patent grant) and the legal term of patents in the countries where such patents are obtained."},{"id":"e32","sourceId":"filing-6","location":"MD&A / actual first-quarter 2026 R&D spending increase","excerpt":"R&D expenses increased by $18 million, or 11%, in the three months ended March 31, 2026, compared with the three months ended March 31, 2025, primarily as a result of:"}],"changes":["Retain the previous narrow verdict; the supplied patent and exclusivity disclosures strengthen its structural basis without establishing wide-moat duration.","Explicitly balance realized price increases against disclosed historical forced concessions and 2026 franchise erosion.","Add assessments grounded in actual incentive grants, adopted governance practices, spending and completed financing; do not treat proposals or pipeline expectations as achieved outcomes."],"limitations":["The sources are issuer filings. Reported operating outcomes and contractual disclosures support numerical grades, while brand loyalty and comparative leadership claims receive less weight.","No current rival is identified by name as a competitor in the relevant passages. Competitor arrays remain empty; Pfizer is identified as a licensor, and acquired businesses and compensation peers are not established current competitors.","Product-level patent expiration schedules, protected revenue exposure and comparative clinical or market-share evidence are missing. Patent totals alone cannot establish duration.","Repeat demand is assessed indirectly from product sales and demand disclosures. Customer retention rates, exclusive purchasing commitments and quantified switching costs are absent.","Pricing effects are disclosed without a comprehensive price-volume bridge or customer pricing contracts. Contractual pricing freedom cannot be established.","The April 8, 2026 proxy and August 6, 2026 quarterly filing contain actual compensation and governance disclosures, but do not establish exceptional effectiveness or completed vesting of the 2026 PSU grants.","International growth benefited from fiscal-year alignment changes; outbreak demand, supply improvements and new launches also complicate inference about underlying retention.","All supplied source dates have dateKind filed. The assessment uses results through June 30, 2026 and does not treat the analysis timestamp as new operating evidence."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":3,"rationale":"Granted patents, exclusive marketing rights and proprietary vaccine inputs establish meaningful replication barriers. Completed approvals and commercialization demonstrate their practical relevance, although protection covers only parts of the portfolio.","evidenceIds":["e1","e2","e3","e4","e5"]},{"criterion":"durability","grade":2,"rationale":"Continuing approvals and proprietary know-how support renewal, but patents expire and protection varies by country. Realized generic erosion and dependence on licensed rights limit demonstrated durability.","evidenceIds":["e2","e4","e6","e9","e10","e11","e31"]},{"criterion":"customer_dependency","grade":1,"rationale":"Observed generic substitution and price sensitivity indicate fragile dependence on particular Zoetis products. Management's brand-loyalty belief does not establish strong switching friction; this assessment uses indirect demand evidence rather than customer-level retention data.","evidenceIds":["e6","e7","e8","e12"]},{"criterion":"erosion_resilience","grade":2,"rationale":"International demand growth and new launches provide a demonstrated offset to erosion, but competition is already impairing major U.S. franchises and earnings. Resilience is mixed, with International growth partly assisted by reporting alignment changes.","evidenceIds":["e5","e7","e8","e16","e17","e18"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":2,"rationale":"Poultry sales and consolidated cost-of-sales commentary demonstrate realized price benefits. Historical forced cuts and discounts against generics, together with current price sensitivity, establish uneven pricing power rather than broad immunity to competition.","evidenceIds":["e6","e7","e13","e15"]},{"criterion":"retention","grade":2,"rationale":"Indirect operating evidence shows continuing demand for International parasiticides, vaccines and diagnostics alongside declining dermatology and generic-exposed products. This supports mixed repeat-demand resilience, not a quantified retention rate.","evidenceIds":["e8","e16","e17"]},{"criterion":"margin_resilience","grade":2,"rationale":"Price increases and favorable manufacturing costs partly offset unfavorable mix and foreign exchange, but first-half cost of sales rose from 27.4% to 27.8% of revenue and U.S. earnings declined. This demonstrates partial resilience without inferring a moat from margin levels.","evidenceIds":["e14","e15","e18"]},{"criterion":"contractual_freedom","grade":null,"rationale":"Observed price changes establish pricing outcomes, but the passages do not disclose customer contract provisions governing price resets, renewal terms or pricing restrictions. Competitive pressure alone does not establish contractual freedom.","evidenceIds":[]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Actual shareholder distributions and increased R&D spending show capital deployment. Substantial convertible-note-funded repurchases add financing and potential dilution exposure, while realized divestiture losses and impairments temper the record. The passages do not establish superior investment returns or complete cash-flow coverage.","evidenceIds":["e19","e20","e21","e22","e32"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Actual 2026 PSU grants have three-year relative TSR and operational revenue growth conditions, while annual incentives include revenue, adjusted EPS and free cash flow. These are implemented alignment mechanisms, not proposed awards or evidence of completed vesting. Aggregate insider ownership below 1% and incomplete payout evidence limit the conclusion.","evidenceIds":["e23","e24","e25","e26"]},{"criterion":"execution","grade":2,"rationale":"Completed regulatory approvals, commercial launches and associated demand demonstrate execution. Competitive franchise declines and lower U.S. earnings make the overall record mixed. Commercial execution is assessed partly from indirect product-demand evidence; pipeline expectations and CEO accolades are excluded.","evidenceIds":["e4","e5","e7","e8","e18"]},{"criterion":"governance","grade":3,"rationale":"Existing majority voting, documented board refreshment, independent compensation approval, auditor-service pre-approval and an adopted related-person transaction policy provide strong evidence of governance mechanisms. Their existence does not prove exceptional oversight effectiveness or establish the outcome of proposed shareholder resolutions.","evidenceIds":["e27","e28","e29","e30"]}]}],"financialAssessments":[],"qualityPolicy":"quality-scores-2","sourcePolicy":"issuer-evidence-4","basisHash":"599a92e59bc88ace4d6724b26f91ed89240b6dbea70d2aa2ea82cd4a10788b3d","updatedAt":"2026-10-18T12:26:00.792Z","sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000011/zts-20251231.htm","publishedAt":"2026-02-12","sha256":"ae22ea4f65163cf746e747a06a01c1ad50c4342bf18fcec0a02681aa40ac9b4d","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000040/zts-20260630.htm","publishedAt":"2026-08-06","sha256":"a0aa0a247cebec49629ea853db5a8c3c8ed7a2cfe9a1dd9265c2768cabd2c912","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000015/zts-20260406.htm","publishedAt":"2026-04-08","sha256":"df0e2edd752410b7c78955e8f7e3b4dc91db261e4788945214f2970ecb0e5f74","dateKind":"filed"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528025000102/zts-20241231.htm","publishedAt":"2025-02-13","sha256":"10ed2a1e3921d58f08aa7a3d8ed87ad7dafa1771106a3eb31a157737b4eec875","dateKind":"filed"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528024000143/zts-20231231.htm","publishedAt":"2024-02-13","sha256":"ab426523cdb803f7480bcad127a574d3199957292bde30e203281cb2e95d38d6","dateKind":"filed"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000024/zts-20260331.htm","publishedAt":"2026-05-07","sha256":"f72aeca8c2f71b64fcd630aa29f4513063db828cf8574f0c9a834b458ca32f29","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:5583d7d855557547b47dcf67a35d3c9e8575817e7463600f8e9edb8019d724bd","usage":{"input_tokens":85547,"cached_input_tokens":0,"cache_write_input_tokens":0,"output_tokens":3701,"reasoning_output_tokens":101}},"signals":[{"period":"2021","end":"2021-12-31","values":{"gross_margin":70.3832304526749,"operating_margin":32.61316872427983,"roic":27.60824499042906,"fcf_margin":22.325102880658438,"sbc_revenue":0.7458847736625515},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2022","end":"2022-12-31","values":{"gross_margin":69.62871287128712,"operating_margin":33.366336633663366,"roic":26.168311274039187,"fcf_margin":16.41089108910891,"sbc_revenue":0.7673267326732673},"issues":{"pfcf_growth":"TTM FCF per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2023","end":"2023-12-31","values":{"gross_margin":70.02574906367042,"operating_margin":32.50234082397004,"roic":24.264392553390266,"fcf_margin":18.97237827715356,"sbc_revenue":0.7022471910112359},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2024","end":"2024-12-31","values":{"gross_margin":70.62445980985306,"operating_margin":33.64304235090752,"roic":26.294256179538095,"fcf_margin":24.82713915298185,"sbc_revenue":0.7994814174589455},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2025","end":"2025-12-31","values":{"gross_margin":71.8390197528256,"operating_margin":35.11143973803739,"roic":27.43682002786589,"fcf_margin":24.11534805112496,"sbc_revenue":0.8767296926164572},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}}],"sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000011/zts-20251231.htm","publishedAt":"2026-02-12","sha256":"ae22ea4f65163cf746e747a06a01c1ad50c4342bf18fcec0a02681aa40ac9b4d","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000040/zts-20260630.htm","publishedAt":"2026-08-06","sha256":"a0aa0a247cebec49629ea853db5a8c3c8ed7a2cfe9a1dd9265c2768cabd2c912","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000015/zts-20260406.htm","publishedAt":"2026-04-08","sha256":"df0e2edd752410b7c78955e8f7e3b4dc91db261e4788945214f2970ecb0e5f74","dateKind":"filed"},{"id":"filing-4","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528025000102/zts-20241231.htm","publishedAt":"2025-02-13","sha256":"10ed2a1e3921d58f08aa7a3d8ed87ad7dafa1771106a3eb31a157737b4eec875","dateKind":"filed"},{"id":"filing-5","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528024000143/zts-20231231.htm","publishedAt":"2024-02-13","sha256":"ab426523cdb803f7480bcad127a574d3199957292bde30e203281cb2e95d38d6","dateKind":"filed"},{"id":"filing-6","url":"https://www.sec.gov/Archives/edgar/data/1555280/000155528026000024/zts-20260331.htm","publishedAt":"2026-05-07","sha256":"f72aeca8c2f71b64fcd630aa29f4513063db828cf8574f0c9a834b458ca32f29","dateKind":"filed"}],"history":[{"version":3,"updatedAt":"2026-10-18T16:35:43.872Z","verdict":"narrow","value":null},{"version":2,"updatedAt":"2026-10-18T02:27:49.793Z","verdict":"narrow","value":null},{"version":1,"updatedAt":"2026-10-18T02:18:02.026Z","verdict":null,"value":null}],"hasRequested":false,"requestStatus":"completed","researchIssue":null,"archivedMoat":null,"scope":"supported_catalog"}