Zoetis (ZTS) 10-K risk factor changes: FY2021 vs FY2020

*In addition to the other information set forth in this [removed: 2020] [added: 2021] Annual Report, any of the factors described below could materially adversely affect our operating results, financial condition and liquidity, which could cause the trading price of our securities to decline.*

*In particular, forward-looking statements include statements relating to the impact of the coronavirus (COVID-19) pandemic and any recovery therefrom on our business, our [removed: 2021] [added: 2022] financial guidance, future actions, business plans or prospects, prospective products, product approvals or products under development, product supply disruptions, R&D costs, timing and likelihood of success, future operating or financial performance, future results of current and anticipated products and services, strategies, sales efforts, expenses, production efficiencies, production margins, anticipated timing of generic market entries, integration of acquired businesses, interest rates, tax rates and tax regimes and any changes thereto, foreign exchange rates, growth in emerging markets, the outcome of contingencies, such as legal proceedings, plans related to share repurchases and dividends,* *government regulation and financial results.

- The COVID-19 pandemic has negatively affected the global economy; has disrupted our and our customers', suppliers', and vendors' operations; has [removed: significantly] [added: negatively] affected [added: certain elements of] our business and operations; and may materially adversely affect our business, financial condition, results of operations and/or cash flows.

- Our results of operations are dependent on the success of our [removed: top] [added: top-selling] products.

The COVID-19 pandemic has negatively affected the global economy; has disrupted our and our customers', suppliers', and vendors' operations; has [removed: significantly] [added: negatively] affected [added: certain elements of] our business and operations; and may materially adversely affect our business, financial condition, results of operations and/or cash flows.

The spread of [removed: the novel coronavirus (COVID-19)] [added: COVID-19] has resulted in authorities [added: in various jurisdictions in which we operate] implementing numerous measures [added: since late 2019] to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns of non-essential businesses.

The COVID-19 pandemic also has and may continue to reduce demand for [added: some of] our products as a result of the negative impact it has had and may continue to have on our [removed: livestock and companion animal] customers.

[removed: Our] [added: In particular, our] livestock customers have been and may continue to be challenged by voluntary or mandatory facility closures, reduced packing plant capacity, travel bans and quarantines inhibiting consumption of protein and transportation of live animals, and labor shortages negatively impacting their operations.

For example, a number of significant meat processing plants were [removed: closed temporarily during the COVID-19 pandemic after employees tested positive for COVID-19.]

The resulting reduction in demand for [added: some of] our [removed: products,] [added: products] has negatively impacted our business, financial condition, results of operations and cash flows and may have a material adverse effect on our business, financial condition, results of operations and/or cash flows, if such demand reduction accelerates or is prolonged.

Remote working arrangements could [added: result in additional complexity or inefficiency or] increase operational risks, including, but not limited to, risks associated with information technology and [removed: systems, including service interruptions, misappropriation of data, or breaches of security, any of] [added: systems] which could have a material adverse effect on our business.

We cannot at this time predict the full impact of the COVID-19 pandemic, but we anticipate that the COVID-19 pandemic is likely to continue to impact our business, financial condition, results of operations and/or cash flows in [removed: 2021.][added: 2022.]

This situation continues to change [removed: rapidly] [added: rapidly, especially as new variants of the virus are identified] and additional impacts may arise that we are not aware of currently.

Unanticipated safety, quality or efficacy concerns can arise with respect to our products, whether or not scientifically or clinically supported, [removed: leading] [added: which can lead] to product recalls, withdrawals or suspended or declining sales, as well as product liability and other claims.

In addition, since we depend on positive perceptions of the safety, quality and efficacy of our products, and animal health products generally, by our customers, veterinarians and end-users, any concerns as to the safety, quality or efficacy of our products, whether actual or perceived, may harm our [removed: reputation.][added: reputation or materially adversely affect our operating results and financial condition, regardless of whether such concerns are accurate.]

Our results of operations are dependent upon the success of our [removed: top] [added: top-selling] products.

If any of our [removed: top] [added: top-selling] products experience issues, such as loss of patent protection, material product liability litigation, new or unexpected side effects, manufacturing disruptions, regulatory proceedings, labeling changes, negative publicity, changes to veterinarian or customer preferences, and/or disruptive innovations or the introduction of more effective products, our revenues could be negatively impacted, perhaps significantly.

Our [removed: top] five [added: top-selling] products, Apoquel, [removed: the Simparica product line, the] [added: Simparica/Simparica Trio,] Revolution/Revolution [removed: Plus/Stronghold product line, Draxxin,] [added: Plus/Stronghold, Cytopoint] and the ceftiofur product line, contributed approximately [removed: 31%] [added: 33%] of our revenue in [removed: 2020.][added: 2021.]

Any issues with these [removed: top] [added: top-selling] products would have a more significant impact to our results of operations.

[removed: As a result] [added: In the years since the start] of generic and other competition, sales of our Rimadyl chewable product [added: have declined by approximately 19%] in the [removed: U.S.][added: U.S., its largest market.]

Generic [added: or other competing] tulathromycin products are now marketed in [removed: key] [added: many] markets including [added: the U.S.,] Europe, Canada, Mexico and Australia, as well as in many smaller [removed: markets.][added: markets, and are now marketed for swine in Brazil.]

The [removed: patent] [added: patents] covering the commercial formulation of Excede in the [removed: U.S. extends] [added: U.S., Japan and Brazil extend] to 2024, [added: 2026, and 2027, respectively,] but [removed: expires in September 2021] [added: the corresponding patents] in Europe, Canada and [removed: Australia.][added: Australia expired in September 2021.]

The commercial method of administration patent relevant to the product line expires in 2023 in the U.S., Europe and [removed: Australia.][added: Australia, and in 2028 in Japan.]

- [removed: In addition, the] [added: Cerenia: The] patent for the active ingredient of [removed: Convenia®] [added: Cerenia] has [removed: expired; however, there are] [added: expired in all countries and the] formulation patents relevant to the [added: injectable] product line [removed: which] expire between [removed: November 2022] [added: 2025] and [removed: October 2023.][added: 2028.]

Zoetis typically enforces its patents [removed: whenever] [added: vigorously as] appropriate both within and outside the U.S., including by filing infringement claims against other parties.

There are also [removed: several] [added: many] start-up companies working in the animal health area.

In addition to competition from established market participants, new entrants to the animal health medicines, vaccines and diagnostics [removed: industry] [added: industry, including start-up companies,] could substantially reduce our market share or render our products obsolete.

In addition, livestock producers, particularly swine and poultry producers, and our distributors, have [added: seen consolidation in their industries.]

Divesting businesses entails numerous operational and financial risks, including difficulties separating businesses or product groups, diversion of management’s attention away from other business concerns, adverse customer [removed: reaction,] [added: reactions,] and potential loss of key employees or customers.

We are also investing in genetics and precision [removed: livestock farming,] [added: animal health,] digital technology and data analytics and insurance agency services.

[removed: Failure to successfully manage these risks in the implementation or] acquisition of new lines of business or the offering of new products or services could have a material adverse effect on our reputation, business, results of operations, and financial condition.

Our total revenue attributable to antibacterials for livestock was approximately $1.1 billion for the year ended December 31, [removed: 2020.][added: 2021.]

Macroeconomic, business and financial [removed: disruptions] [added: disruptions, including inflation,] could have a material adverse effect on our operating results, financial condition and liquidity.

While we have procedures to monitor and limit exposure to credit and collectability risk, there can be no assurances [added: that] such procedures will effectively limit such risk and avoid losses.

In recent years, outbreaks of various diseases, including African Swine Fever, avian influenza, foot-and-mouth disease, bovine spongiform encephalopathy (otherwise known as BSE or mad cow disease) and porcine epidemic diarrhea virus (otherwise [removed: known as PEDv), have impacted the animal health business.]

The discovery of additional cases of any of these, or [removed: new,] [added: new] diseases may result in additional restrictions on animal proteins, reduced herd sizes, or reduced demand [removed: for,] [added: for] animal protein, which may have a material adverse effect on our operating results and financial condition.

Veterinarians’ patient volume and ability to operate could be adversely affected if they experience natural [removed: disasters,] [added: disasters or adverse weather conditions,] including floods, fires, earthquakes and hurricanes or other storms, or prolonged [removed: snow, ice] [added: snow] or [removed: other weather conditions,] [added: ice,] particularly in regions not accustomed to sustained inclement weather.

We operate in many regions, countries and communities around the world where our businesses, and [added: our activities and] the activities of our [removed: customers,] [added: customers and suppliers,] could be disrupted by climate change.

Potential physical risks from climate change may include altered distribution and intensity of rainfall, prolonged droughts or flooding, increased frequency of wildfires and other natural disasters, rising sea levels, and a rising heat index, any of which could cause negative impacts to our and our customers’ [added: and suppliers’] businesses.

A number of our customers, particularly U.S.-based [added: livestock producers, benefit from free trade agreements.]

- Our business may be negatively affected by weather conditions, natural disasters and the availability of natural resources.

- Climate change could have a material adverse impact on our and our customer's businesses.

- Our business may be harmed if we are unable to retain and hire executive officers or other key personnel.

- Our operations and reputation may be impacted if we do not comply with continually changing laws and regulations regarding data privacy.

Our global operations expose us to risks associated with public health crises, including epidemics and pandemics such as the novel coronavirus (COVID-19).

The global spread of COVID-19 has had, and may continue to have, an adverse impact on our operations, sales and delivery and supply chains.

The COVID-19 pandemic has and may continue to impact our supply chain as we experience disruptions or delays in shipments of certain materials or components of our products.

Any prolonged component shortages or supply chain disruption may result in manufacturing or R&D delays and could limit our ability to meet customer demand or otherwise adversely impact our revenue, and may have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

closed temporarily in 2020 after employees tested positive for COVID-19, and plants continue to experience periodic disruptions.

Additionally, on September 9, 2021, U.S. President Biden issued an Executive Order requiring federal employees and covered contractors to be vaccinated against COVID-19.

On November 4, 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) issued a COVID-19 Vaccination and Testing Emergency Temporary Standard requiring all employers with 100 or more employees to ensure that their employees are fully vaccinated or tested for COVID-19 on at least a weekly basis, the U.S. Supreme Court recently stayed implementation of this OSHA Standard and we cannot predict the eventual outcome or impact on us, our suppliers or our customers.

Additional vaccine and testing mandates may be announced in other jurisdictions in which we operate our business.

While it is not currently possible to predict with any certainty the exact impact the new regulations would have on us, our suppliers and our customers, the implementation of such government mandated vaccination or testing mandates may impact our ability to retain current employees and attract new employees and result in labor disruptions.

Further, implementation could also have similar consequences for our subcontractors, which may impact their ability to deliver the goods and services we need from them, and for our customers, which may impact their business processes and as a result their demand for our products.

Weak global economic conditions also may exacerbate the ongoing impact of the pandemic.

In 2021, the first year of generic competition, sales of Draxxin declined by 12% in the U.S., its largest market, and additional declines are expected in subsequent years.

- Draxxin: Patents relating to the active ingredient (tulathromycin) and formulation of Draxxin have expired, with the exception of the active ingredient and formulation patents in Japan that expire in 2023 and 2025, respectively.

In Brazil, there are patents for the active ingredient and formulation which expire in February 2022 and in 2025, respectively, although their current status is uncertain.

Sales of Draxxin have been negatively affected by generic competition in the markets where the patents have expired.

- Ceftiofur: All patents relating to the active ingredient of Excede/Naxcel (ceftiofur crystalline free acid) have expired.

- Revolution/Stronghold: All patents relating to Revolution/Stronghold containing selamectin as the sole active ingredient have expired.

Selamectin is one of the active ingredients in our combination parasiticide product, Revolution Plus/Stronghold Plus, which is separately patent protected.

- Convenia: The patent for the active ingredient of Convenia (cefovecin sodium) has expired in all countries, and the patents covering the commercial formulation expire in Europe, Australia, Canada and Japan in November 2022, in the U.S. in October 2023, and in Brazil in 2025.

Generic versions of Cerenia injectable have been registered and marketed in Europe, and we are aware that regulatory approval of at least one generic version of Cerenia injectable is currently being pursued in the U.S. There is also a pending registration for generic version of Cerenia injectable in Australia.

- ProHeart: All patents covering ProHeart 6 and ProHeart 12 have expired.

Failure to successfully manage these risks in the implementation or

known as PEDv), have impacted the animal health business.

In addition, concerns regarding greenhouse gas emissions and other potential environmental impacts of livestock production have led to some consumers opting to limit or avoid consuming animal products.

The impacts from climate change may also impact Zoetis’ and our suppliers’ manufacturing processes.

For example, ample amounts of clean water are needed to produce our products, and the effects from climate change could result in water supply interruptions and low water quality.

In addition, increased frequency of natural disasters and adverse weather conditions may disrupt our manufacturing processes or our supply chain.

These disruptions may have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

remains to be seen what the ultimate impact of the new USMCA will be on our customers.

Our business may be harmed if we are unable to retain and hire executive officers or other key personnel.

Our ability to recruit and retain such talent will depend on a number of factors, including compensation and benefits, work location and work environment.

From time to time there may be shortages of skilled labor, which may make it more difficult for us to attract and retain qualified employees or lead to increased labor costs.

If we cannot effectively recruit and retain qualified executives and employees, we may not be able to maintain or expand our operations, or our business could be otherwise adversely affected and could, at least temporarily, have a material adverse effect on our operating results and financial condition.

- natural disasters and adverse weather conditions;

matters.

We are also aware of some counterfeit versions of our Simparica product in Brazil and a field investigation is being performed.

- We may be unable to adequately protect our stakeholders' privacy or we may fail to comply with privacy laws.

While some of these restrictions have been lifted or eased in certain jurisdictions, other jurisdictions have seen increases in new COVID-19 cases, resulting in restrictions being reinstated or new restrictions being imposed.

Even though we are currently designated as an essential business and have continued physical operations with respect to manufacturing and supply chain globally, these measures have impacted and may further impact all or portions of our workforce and operations, the operations and workforce of our customers, and those of our respective vendors and suppliers.

There continues to be considerable uncertainty regarding such measures and potential future measures.

In particular, we, and the contract manufacturing organizations (CMOs) we work with, could be asked or ordered to perform certain activities for human health that would divert significant manufacturing and other resources away from our business and could expose us to additional liability.

Future restrictions on our access to or control over our manufacturing facilities or on our support operations or workforce, or similar limitations on our vendors or suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures and increased border controls or closures, or export bans could limit our ability to meet customer demand and have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

In addition, our companion animal customers’ businesses in certain geographies have been and may continue to be negatively impacted by reduced demand for their veterinary services.

Moreover, while our research and development organization has continued to operate as an essential business, future measures imposed by governments and other authorities to try to contain the COVID-19 pandemic could impede the ability of our R&D organization to complete clinical studies required to register new products in the manner and on the timeline we anticipate and current and future product approvals may be delayed, which could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.

The COVID-19 pandemic has also significantly increased economic uncertainty and has led to continued disruption and volatility in the global capital markets, which could increase the cost of capital and adversely impact access to capital.

The economic impact of the ongoing COVID-19 pandemic has resulted in a global recession that may continue for an unknown period of time.

In order to preserve liquidity, we issued debt securities in May 2020 and we may incur additional indebtedness, whether through the issuance of debt securities, drawdowns under our credit facility or otherwise in the future.

An increase in our outstanding indebtedness will result in additional interest expense.

We may also seek to conserve cash by reducing or canceling future dividends or delaying capital expenditures.

Risks related to negative economic conditions are described in our risk factor titled "Our business is subject to risk based on global economic conditions" below.

Working outside of the typical work environment may also introduce additional complexity or inefficiency into our normal processes for key areas like the preparation of financial statements or marketing and sales, which could negatively impact our business.

In addition, actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic, including as part of the reopening process, may also result in legal claims or litigation against us.

These concerns and the related harm to our reputation could materially adversely affect our operating results and financial condition, regardless of whether such reports are accurate.

have declined by approximately 23% in the years since their introduction.

Sales of our Clavamox products in the U.S. also continue to be negatively impacted by generic competition.

Draxxin, Revolution/Revolution Plus/Stronghold, and the ceftiofur product line contributed approximately 15% of our revenue in 2020.

- Draxxin, containing the active ingredient tulathromycin, is covered by a formulation patent in the U.S. that expired in February 2021.

Corresponding formulation patents in Europe, Canada, Australia and other key markets expired in late 2020, with the exception of the formulation patents in Brazil and Japan that both expire in 2025.

The active ingredient tulathromycin is protected in Brazil until 2022 and in Japan until 2023.

Market entry of generic tulathromycin products in the U.S. is expected in 2021.

- Several patents covering Excede/Naxcel, part of the ceftiofur antibiotic product line, began expiring in the U.S. in 2015.

Corresponding patents in Japan and Brazil expire in 2026 and 2027, respectively.

- The compound patent for selamectin, the active ingredient in our parasiticides Revolution, Revolution Plus and Stronghold, expired in 2014.

Formulation patents covering these products expired in important markets in 2019.

- The patent for the active ingredient of Cerenia has expired; however, there are formulation patents relevant to the injectable product line which expire between 2025 and 2028.

Generic versions of Cerenia have been registered and marketed in Canada and Europe.

At this time, there is no indication of an impending market entry of a generic version of Cerenia in the U.S.

- The formulation patent covering ProHeart 12 expired in the U.S. in 2019, but expires in Australia, Canada and Japan in October 2021.

Competitive pressure could arise from, among other things, safety and efficacy concerns, limited demand growth or a significant number of additional competitive products being introduced into a particular market, price reductions by competitors, the ability of competitors to capitalize on their economies of scale, the ability of competitors to produce or otherwise procure animal health products at lower costs than us and the ability of competitors to access more or newer technology than us.

seen consolidation in their industries.

Any resulting reduced demand for animal-based foods could adversely affect the livestock industry and, as a result, reduce demand for our livestock products, which could materially adversely affect our operating results and financial condition.

livestock producers, benefit from free trade agreements.

Loss of our executive officers or other key personnel or other changes to our management team could disrupt our operations or harm our business.

Our executive officers and other key personnel are not currently, and are not expected to be, subject to non-compete provisions.

Any unplanned turnover or our failure to develop an adequate succession plan for one or more of our executive officers or other key positions could deplete our institutional knowledge base and erode our competitive advantage.

The loss or limited availability of the services of one or more of our executive officers or other key personnel, or our inability to recruit and retain qualified executive officers or other key personnel in the future, could, at least temporarily, have a material adverse effect on our operating results and financial condition.

Our [added: objective is to also provide discussion of material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of] future [removed: results] [added: results, which] could differ materially from historical performance and from those anticipated in the forward-looking statements as a result of various factors such as those discussed in *Item 1A.

A discussion regarding our financial condition and results of operations for fiscal [removed: 2020] [added: 2021] compared to fiscal [removed: 2019] [added: 2020] is presented below.

A discussion regarding our financial condition and results of operations for fiscal [removed: 2019] [added: 2020] compared to fiscal [removed: 2018] [added: 2019] can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2019,] [added: 2020,] filed with the SEC on February [removed: 13, 2020] [added: 16, 2021] (our [removed: “2019] [added: “2020] Annual Report”), which is available free of charge on the SEC’s website at www.sec.gov.

We are a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic [removed: products,] [added: products and services,] biodevices, genetic tests and precision [removed: livestock farming] [added: animal health] technology.

[removed: Our products include over] [added: We have approximately] 300 [removed: products and] product lines that we sell in over 100 countries for the prediction, prevention, detection and treatment of diseases and conditions that affect various companion animal and livestock species.

A summary of our [removed: 2020] [added: 2021] performance compared with the comparable [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] periods follows:

| | | | | | | [removed: Years] [added: Year] Ended December 31, | | | | | | | | | | | | | | | | | | % Change | | | | | | | | |

| (MILLIONS OF DOLLARS) | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 20/19] [added: 21/20] | | | | | | [removed: 19/18] [added: 20/19] | | |

| Revenue | | | | | | $ | [removed: 6,675] [added: 7,776] | | | | | $ | [removed: 6,260] [added: 6,675] | | | | | $ | [removed: 5,825] [added: 6,260] | | | | | [removed: 7] [added: 16] | | | | | | 7 | | |

| Net income attributable to Zoetis | | | | | | [removed: 1,638] [added: 2,037] | | | | | | [removed: 1,500] [added: 1,638] | | | | | | [removed: 1,428] [added: 1,500] | | | | | | [removed: 9] [added: 24] | | | | | | [removed: 5] [added: 9] | | |

| Adjusted net income(a) | | | | | | [removed: 1,844] [added: 2,240] | | | | | | [removed: 1,755] [added: 1,844] | | | | | | [removed: 1,525] [added: 1,755] | | | | | | [removed: 5] [added: 21] | | | | | | [removed: 15] [added: 5] | | |

In addition to traditional medicines and vaccines, we develop products across additional categories to address the needs of veterinarians and producers to predict, prevent, detect and treat conditions in both companion animals and livestock, including products [added: and services] in diagnostics, genetics, precision [removed: livestock farming] [added: animal health] and digital and data analytics.

Our total revenue attributable to antibacterials for livestock was approximately $1.1 billion for the year ended December 31, [removed: 2020.][added: 2021.]

While these factors have mitigated the impact of prior downturns in the global economy, future economic [removed: challenges could increase cost sensitivity among our]

[added: challenges, including inflation, could increase cost sensitivity among our] customers, which may result in reduced demand for our products, which could have a material adverse effect on our operating results and financial condition.

Although our business is the largest [removed: by] [added: based on] revenue in the animal health [added: industry (which includes] medicines, vaccines and [removed: diagnostics industry,] [added: diagnostics),] we face competition in the regions in which we operate.

There are also [removed: several] [added: many] start-up companies working in the animal health area.

For example, Draxxin currently competes with generic products in key markets including [added: the U.S.,] Europe, Canada, Mexico and [removed: Australia and we expect generic competition in the U.S. in 2021.][added: Australia.]

Changes in water temperatures could affect the timing of reproduction and growth of various fish species, as well as trigger the outbreak of certain [removed: water borne] [added: waterborne] diseases.

[removed: Due to numerous uncertainties regarding the continuing COVID-19 pandemic,] [added: Although] we are unable to fully predict the impact that [removed: it] [added: the COVID-19 pandemic] will ultimately have on our future financial position and operating [removed: results.][added: results, we continue to monitor the potential effects, including impacts on our supply chain, the effect on customer demand, and changes to our operations.]

Sales of our livestock products [removed: could be] [added: have in the past, and may in the future be,] adversely affected by the outbreak of disease carried by animals.

For the year ended December 31, [removed: 2020,] [added: 2021,] approximately [removed: 42%] [added: 44%] of our revenue was denominated in foreign currencies.

As we operate in multiple foreign currencies, including the [removed: euro,] [added: Australian dollar,] Brazilian real, [removed: Chinese renminbi,] [added: British pound,] Canadian dollar, [removed: Australian dollar, U.K. pound] [added: Chinese yuan, euro] and other currencies, changes in those currencies relative to the U.S. dollar will impact our revenue, cost of goods and expenses, and consequently, net income.

For the year ended December 31, [removed: 2020,] [added: 2021,] approximately [removed: 58%] [added: 56%] of our total revenue was in U.S. dollars.

Our year-over-year total revenue growth was [removed: unfavorably] [added: favorably] impacted by [removed: 2%] [added: 1%] from changes in foreign currency values relative to the U.S. dollar.

We have a global presence in both developed and emerging markets and across eight [removed: major] [added: core] species.

We are focused on innovating across vaccines, pharmaceuticals, diagnostics, genetics, biodevices, and other product segments, and across all [removed: major] [added: core] species.

- cultivate a high-performing organization \- We view the strength of our [added: leadership] team and our talented colleagues around the world as a critical component of our past and future success.

We are further committed to sustaining a diverse, equitable and inclusive work environment for our colleagues; [added: and]

Our revenue is primarily derived from our diversified product portfolio of medicines, vaccines and diagnostic products [added: and services] used to treat and protect companion animals and livestock.

[removed: 2020,] [added: In 2021,] our [removed: top] two [removed: selling] [added: top-selling] products, Apoquel and Simparica/Simparica Trio, [added: each] contributed approximately 10% [removed: and 6%, respectively,] of our revenue, and combined with our next three [removed: top selling] [added: top-selling] products, Revolution/Revolution Plus/Stronghold, [removed: Draxxin] [added: Cytopoint] and the ceftiofur line, these five contributed approximately [removed: 31%] [added: 33%] of our revenue.

Our [removed: top] ten [added: top-selling] product lines contributed [removed: 44%] [added: 47%] of our revenue.

For additional information regarding our products, including descriptions of our product lines that each represented approximately 1% or more of our revenue in [removed: 2020,] [added: 2021,] see *Item 1.

Costs of sales consist primarily of cost of materials, facilities and other infrastructure used to manufacture our medicine and vaccine [removed: products] [added: products, as well as costs to operate our reference labs] and royalty expenses associated with the intellectual property of our products, when relevant.

Other (income)/deductions—net [removed: consist primarily] [added: consists] of various [removed: items including] [added: items, primarily] net (gains)/losses on asset disposals, [added: interest income,] royalty-related income, foreign exchange translation (gains)/losses and certain asset impairment charges.

We did not have any significant intangible asset impairment charges for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018.][added: 2019.]

While all identifiable intangible assets can be impacted by events and thus lead to impairment, in general, identifiable intangible assets that are at the highest risk of impairment include IPR&D assets (approximately $88 million as of December 31, [removed: 2020).][added: 2021).]

We test goodwill for impairment on at least an annual basis, or more frequently if [removed: impairment indicators exist,] [added: necessary,] either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or by performing a periodic quantitative assessment.

Some of the more significant estimates and assumptions inherent in this approach include: the amount and timing of the projected net cash flows, which includes the expected impact of technological risk and competitive, legal and/or regulatory [added: forces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the effective tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.]

In [added: 2021 and] 2020, we performed a periodic quantitative impairment assessment as of September 30, [added: 2021 and] 2020, [added: respectively,] which did not result in the impairment of goodwill associated with any of our reporting units.

For 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from livestock farmers to veterinarians and pet owners.

- increasing pet ownership and pet owners’ commitment to the health and well-being of their pets;

38 |

Each of these factors, plus our broad and innovative portfolio, contributes to our ability to incorporate inflationary challenges into our product pricing and mitigate the impact on our results.

For further information regarding the impact of COVID-19 on the Company, see *Item 1A, Risk Factors* in this Annual Report on Form 10-K.

In 2021, we experienced isolated supply challenges for Librela, Solensia and some of our other products, resulting from strong demand as well as competition for manufacturing inputs with human health vaccine development during the pandemic.

Some of these challenges are expected to continue in 2022, but are being managed by our global manufacturing network through certain supply chain optimizations, controlled launches for new products in additional markets and customer coordination.

We test goodwill for impairment on at least an annual basis, or more frequently if necessary, either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or by performing a periodic quantitative assessment.

| Revenue | | | | | | $ | 7,776 | | | | | $ | 6,675 | | | | | $ | 6,260 | | | | | 16 | | | | | | 7 | | |

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

| Total Revenue | | | | | | $ | 7,776 | | | | | $ | 6,675 | | | | | $ | 6,260 | | | | | 16 | | | | | | 7 | | |

Foreign exchange increased our reported revenue growth by approximately 1%.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

- favorable foreign exchange; and

- higher freight and import costs; and

- unfavorable manufacturing and other costs.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

- higher charitable contributions; and

- the reduced impact of purchase accounting adjustments and certain significant items.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

Restructuring charges and certain acquisition-related costs in 2021 primarily consisted of employee termination costs associated with the realignment of our international operations and other costs associated with cost-reduction and productivity initiatives, asset impairment charges related to the consolidation of manufacturing sites in China and integration costs related to recent acquisitions.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

The change in *Other (income)/deductions—net* is primarily as a result of a net gain in 2020 related to a cash payment received pursuant to an agreement related to the 2016 sale of a certain U.S. manufacturing site, as well as higher foreign currency losses and lower interest income in the current year, partially offset by an impairment of an equity investment in the prior year.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 21/20 | | | | | | 20/19 | | |

2021 vs. 2020

In addition, 2021 includes a tax benefit related to foreign-derived intangible income;

Beginning in the first quarter of 2021, certain costs associated with information technology that specifically support our global manufacturing operations, which were previously reported in Other unallocated, are now reported in Corporate.

In addition, in the first quarter of 2021, the company realigned certain management responsibilities.

These changes primarily include the following: (i) certain diagnostics costs, which were previously reported in Corporate, are now reported in our U.S. results; and (ii) certain other miscellaneous costs, which were previously reported in our U.S. results, are now reported in Corporate.

These changes did not impact the determination of our operating segments, however they resulted in the reallocation of certain costs between segments.

For more than 65 years, we have been committed to enhancing the health of animals and bringing solutions to our customers who raise and care for them.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

- increasing pet ownership;

We are currently designated an essential business globally and have continued physical operations with respect to research and development, manufacturing and our supply chain.

As the pandemic continues to progress, the severity of the impact across markets remains uncertain as the number of cases rises and falls in various jurisdictions leading to changes in the imposition of restrictive measures intended to contain the virus.

These uncertainties include the severity of the virus, the duration of the outbreak and number of recurrences, the effectiveness of measures to contain and treat the virus, including the timing of widespread vaccinations, governmental, business or other actions in response to the pandemic (which could include actions that result in limitations on, or disruptions to, our manufacturing, transportation and other operations, or mandates to provide products or services), impacts on our supply chain, the effect on customer demand, or changes to our operations.

In particular, our livestock customers have been, and may continue to be, negatively impacted by facility closures, reduced packing plant capacity, quarantines, travel bans and labor shortages, and the shift in protein production from foodservice to grocery, among other impacts.

In addition, our companion animal customers have been, and may in the future be, negatively impacted by lack of demand for veterinary services in areas where lockdown and stay-at-home orders are in place.

The impact of COVID-19 on our customers has reduced and could continue to reduce the demand for our products, which could continue to adversely impact our revenue.

The health of our workforce, and our ability to meet staffing needs in our manufacturing operations and other critical functions also cannot be predicted and is vital to our operations.

Further, the impacts of a prolonged global recession and the continued disruptions to, and volatility in, the credit and financial markets, as well as other unanticipated consequences, remain unknown.

In addition, in order to preserve liquidity, we issued debt securities in May 2020 and we may in the future incur additional indebtedness, whether through the issuance of debt securities, drawdowns under our credit facility or otherwise.

An increase in our outstanding indebtedness will result in additional interest expense.

It is not clear what the potential effects any such alterations or modifications may ultimately have on our business, including the effects on our customers, workforce, and prospects, or on our financial results in fiscal 2021.

In

forces on the projections, as well as the selection of a long-term growth rate; the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and the effective tax rate, which seeks to incorporate the geographic diversity of the projected cash flows.

In 2019, we performed a qualitative impairment assessment as of September 30, 2019, which did not result in the impairment of goodwill associated with any of our reporting units.

- recent acquisitions which contributed approximately 1%.

- a change in estimate related to inventory costing in 2019;

- favorable manufacturing costs,

partially offset by:

- the inclusion of recent acquisitions.

- expenses related to recent acquisitions;

- an increase in depreciation;

- lower travel and entertainment expenses as a result of decreases in travel and events related to the COVID-19 pandemic; and

Our acquisition-related costs primarily relate to restructuring charges for employees, assets and activities that will not continue in the future, as well as integration costs.

The majority of net restructuring charges are related to termination costs.

Our integration costs are generally comprised of consulting costs related to the integration of systems and processes, as well as product transfer costs.

Restructuring charges and certain acquisition-related costs in 2019 included integration costs and employee termination costs incurred as a result of the acquisition of Abaxis in the third quarter of 2018.

The change in *Other (income)/deductions—net* from net other deductions of $17 million in 2020 compared with net other income of $57 million in 2019, is primarily as a result of:

- lower interest income due to lower interest rates as compared to the prior year period;

- higher foreign currency losses;

- an impairment of an equity investment; and

- other asset impairment charges.

- a $14 million net discrete deferred tax benefit recorded in 2019 due to a change in tax basis related to purchase accounting;

We believe that it is important to not only understand overall revenue and earnings growth, but also “operational growth.” Operational growth is defined as revenue or earnings growth excluding the impact of foreign exchange.

| | | | | | | | | | | | | | | | 20/19 | | | | | | | | | | | | | | | | | | 19/18 | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | 20/19 | | | | | | | | | | | | 19/18 | | | | | | | | |

| Corporate | | | (820) | | | (707) | | | (666) | | | | | | 16 | | | | | | | | | | | | 6 | | | | | | | | |

The overall objective of our financial risk management program is to seek to [removed: minimize] [added: manage] the impact of foreign exchange rate movements and interest rate movements on our earnings.

These contracts are used to offset the potential earnings effects from mostly intercompany short-term foreign currency assets and liabilities that arise from [removed: operations.][added: operations but are not designated as hedges.]

Our [removed: financial instrument holdings] [added: forward-exchange contracts] at December 31, [removed: 2020] [added: 2021] were analyzed to determine their sensitivity to foreign exchange rate changes.

[removed: For additional details, see] [added: See] Notes to Consolidated Financial [removed: Statements— *Note 3.][added: Statements—*Note 9.]

[removed: The sensitivity analysis of changes in the fair value of all foreign currency forward-exchange contracts at December 31, 2020, indicates that if the U.S. dollar were to appreciate against all other currencies by 10%, the fair value of these contracts would decrease by $4 million, and if] [added: If] the U.S. dollar were to [added: strengthen or] weaken against all other currencies by 10%, the fair value of these contracts would [removed: change] [added: decrease or increase] by [removed: an insignificant amount.][added: $2 million.]

[removed: For additional details, see] [added: See] Notes to Consolidated Financial [removed: Statements— *Note 9C.][added: Statements—*Note 9.]

[removed: Financial Instruments:] Derivative Financial Instruments*.

While changes in interest rates will have no impact on the interest we pay on our fixed rate debt, interest on our [removed: $300 million aggregate principal amount of 2018 Floating Rate Senior Notes due 2021, as well as interest on our] commercial paper and revolving credit facility will be exposed to interest rate fluctuations.

Additionally, as of December 31, [removed: 2020,] [added: 2021,] because we held certain interest rate swap agreements that have the economic effect of modifying the fixed-interest obligations associated with our 3.900% Senior Notes due [removed: 2028, so that] [added: 2028 and our 2.00% Senior Notes due 2030,] a portion of the fixed-rate interest payable on these senior notes effectively became variable based on [removed: LIBOR.][added: LIBOR or SOFR.]

At December 31, [removed: 2020,] [added: 2021,] there were no commercial paper borrowings outstanding and no outstanding principal balance under our revolving credit facility.

By [removed: issuing the Floating-Rate Notes and by] entering into the aforementioned swap arrangements, we have assumed risks associated with variable interest rates based upon [removed: LIBOR.][added: LIBOR and SOFR.]

As of December 31, [removed: 2020,] [added: 2021,] if [removed: LIBOR-based] [added: LIBOR or SOFR-based] interest rates would have been higher by 100 basis points, the change would have increased our interest expense annually by approximately [removed: $4.5] [added: $3] million, as it relates to our fixed to floating interest rate swap [removed: agreements and floating-rate borrowings.][added: agreements.]

See Notes to Consolidated Financial [removed: Statements— *Note] [added: Statements—*Note] 9.

We use cross-currency swap contracts designated as net investment hedges to hedge the foreign currency risks related to our investment in foreign subsidiaries.

These cross-currency swap contracts serve to offset the foreign currency translation risk from certain of our foreign operations.

Our cross-currency swap contracts at December 31, 2021 were analyzed to determine their sensitivity to foreign exchange rate changes.

If the U.S. dollar were to strengthen or weaken against all other currencies by 10%, the amount recorded in cumulative translation adjustment (CTA) within *Accumulated other comprehensive loss* related to our net investment hedge would increase or decrease by approximately $86 million.

The change in value recorded to CTA would be expected to offset a corresponding foreign currency translation gain or loss from our investment in foreign subsidiaries.

Financial Instruments*: *B.

The foreign currency gains and losses on the assets and liabilities are recorded in *Other income (deductions)-net*.

Financial Instruments: B.

Derivative Financial Instruments*.

In anticipation of issuing fixed-rate debt, we may use forward-starting interest rate swaps that are designated as cash flow hedges to hedge against changes in interest rates that could impact expected future issuances of debt.

A 100-basis point change in LIBOR or SOFR-based interest rates would have resulted in an increase or (decrease) in the fair value of our forward-starting interest rate swaps by $47 million and $(53) million, respectively at December 31, 2021.

At December 31, 2021, our cash equivalents were primarily invested in money market funds.

Interest paid on such funds fluctuates with the prevailing interest rate.

59 |

The fair values of these instruments were determined using Level 2 inputs.

Significant Accounting Policies: Fair Value*.

61 |

Zoetis Inc. is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic [removed: products,] [added: products and services,] biodevices, genetic tests and precision [removed: livestock farming] [added: animal health] technology.

We have a diversified business, commercializing products across eight core species: dogs, cats and horses (collectively, companion animals) and cattle, swine, poultry, fish and sheep (collectively, livestock); and within seven major product categories: vaccines, [removed: anti-infectives,] parasiticides, [added: anti-infectives,] dermatology, other pharmaceutical products, medicated feed additives and animal health diagnostics.

Unless the context requires otherwise, references to “Zoetis,” “the company,” “we,” “us” or “our” in this Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2020 (2020] [added: 2021 (2021] Annual Report) refer to Zoetis Inc., a Delaware corporation, and its subsidiaries.

In addition, unless the context requires otherwise, references to “Pfizer” in this [removed: 2020] [added: 2021] Annual Report refer to Pfizer Inc., a Delaware corporation, and its subsidiaries.

- United States (U.S.) with revenue of [removed: $3,557] [added: $4,042] million, or [removed: 53%] [added: 52%] of total revenue for the year ended December 31, [removed: 2020;] [added: 2021;] and

- International with revenue of [removed: $3,035] [added: $3,652] million, or [removed: 46%] [added: 47%] of total revenue for the year ended December 31, [removed: 2020.][added: 2021.]

In addition, our Client Supply Services (CSS) organization which provides contract manufacturing services to third parties, and our human health products, together represented approximately 1% of our total revenue for the year ended December 31, [removed: 2020.][added: 2021.]

Our [removed: 2020] [added: 2021] revenue for the U.S. and key international markets, together with the percentage of revenue attributable to companion animal and livestock products in those markets, is as follows:

[Financial Statements and Supplementary [removed: Data](#ie099829c0b414b768acbbd22b285a2c1_142):*][added: Data](#i557a9d1dda324175b603a2d1c8e225ee_139):*]

Segment Information.* Our [removed: 2020] [added: 2021] reported revenue for each segment, by species, is as follows:

[removed: ][added: ]

[removed: ][added: ]

Companion animal products represented approximately [removed: 55%] [added: 60%] of our revenue for the year ended December 31, [removed: 2020.][added: 2021.]

Our livestock products primarily help prevent or treat diseases and conditions to allow veterinarians and producers to care for their animals and to enable the cost-effective [added: and sustainable] production of safe, high-quality animal protein.

Human population [removed: growth and] [added: growth,] increasing standards of living [added: and a greater focus on sustainable food production] are important long-term growth drivers for our livestock products in three major ways.

Finally, as standards of living improve and the global food chain faces increased scrutiny, there is more focus on food quality, [added: sustainability,] safety and reliability of supply.

Livestock products represented approximately [removed: 44%] [added: 39%] of our revenue for the year ended December 31, [removed: 2020.][added: 2021.]

In addition, our CSS organization, which provides contract manufacturing services to third parties, and our human health products, together represented approximately 1% of our total revenue for the year ended December 31, [removed: 2020.][added: 2021.]

- [removed: anti-infectives:] [added: anti-infectives:] products that prevent, kill or slow the growth of bacteria, fungi or protozoa;

- animal health diagnostics: [removed: portable] blood and urine analysis [removed: systems and] [added: testing capabilities, including] point-of-care diagnostic products, [removed: including] instruments and reagents, rapid immunoassay tests, reference laboratory [removed: kits,] [added: kits and services and] blood glucose [removed: monitors and reference laboratory services.][added: monitors.]

Our remaining revenue is derived from other non-pharmaceutical product categories, such as nutritionals and agribusiness, as well as products and services in biodevices, genetic tests and precision [removed: livestock farming.][added: animal health.]

Since January 2014, we launched Apoquel in key markets including the U.S., Europe, Japan, Brazil, Australia and [removed: China;][added: China.]

[removed: Since 2016, the] [added: The] product has been approved in major markets [added: since 2016,] including Canada, the [removed: European Union,] [added: EU,] New Zealand, Australia, Brazil and [removed: Mexico.][added: Mexico, and was approved in China in 2021.]

- Fostera® PCV MH was introduced in November 2013 in the U.S. and approved in the [removed: European Union] [added: EU] in 2015 and Australia in 2017.

It was developed to help protect pigs from porcine circovirus-associated disease (PCVAD) and enzootic pneumonia caused by [removed: *M.] [added: M.] hyopneumoniae (M. [removed: hyo)*.][added: hyo).]

The Fostera franchise also includes Fostera/Suvaxyn® PRRS, which was approved in the U.S. in 2015 and in Taiwan, Vietnam and [removed: European Union] [added: EU] countries in [removed: 2017.]

This vaccine offers protection against both the respiratory and reproductive forms of disease caused by porcine reproductive and respiratory syndrome (PRRS) [removed: virus.][added: virus;]

Fostera Gold PCV [removed: MH] [added: MH, the only vaccine to contain two PCV2 genotypes and long-lasting M. hyo coverage,] was approved in the U.S. and Canada in 2018, Brazil and Mexico in 2019 and Australia, Europe (under the name CircoMax Myco) and Japan in 2020.

- Librela® (bedinvetmab), the first injectable mAb therapy for monthly alleviation of osteoarthritis (OA) pain in dogs, was approved in the [removed: European Union] [added: EU] and Switzerland in 2020, and [removed: Canada] [added: Canada, Brazil,] and [removed: Brazil] [added: the U.K.] in [removed: early] 2021;

In 2020, we expanded our line of recombinant vector vaccines with the launch of Poulvac Procerta HVT-IBD, which [added: helps protect against Marek's disease and] provides early protection against the contemporary infectious bursal disease (IBD) [removed: viruses confronting U.S borders;][added: viruses.]

- Simparica® (sarolaner) Chewables, a monthly chewable tablet for dogs to control fleas and ticks, was approved in the [removed: European Union] [added: EU] and New Zealand in 2015, the U.S., Canada, Australia, and Brazil (Simparic) in 2016, Japan and additional European, Latin American and Asia Pacific markets in 2017, and China in 2020.

[removed: Building on this franchise, in 2017, Zoetis received European Commission approval for] [added: -] Stronghold® Plus (selamectin/sarolaner), a topical combination product that treats ticks, fleas, ear mites, lice and gastrointestinal worms and prevents heartworm disease in [removed: cats.][added: cats, received European Commission approval in 2017.]

In 2018, this product was approved in the U.S., Japan and Canada (Revolution® [added: Plus) and in 2021 this product was approved in China (Revolution] Plus); [added: and]

[removed: -] Simparica Trio®, a triple combination parasiticide for dogs, was approved in the [removed: European Union] [added: EU] and Canada in 2019, the U.S. and Australia in 2020, and [added: Japan and] Mexico in [removed: early] 2021.

- SolensiaTM (frunevetmab), the first injectable mAb therapy for monthly alleviation of OA pain in cats, was approved in Switzerland in [removed: 2020;] [added: 2020, Canada, the EU] and [added: the U.K. in 2021 and the U.S. in 2022;]

We pursue the development of new vaccines for emerging infectious diseases, with an operating philosophy of “first to know and fast to market.” Examples of the successful execution of this strategy include the first [added: experimental COVID-19 vaccine to help protect the health and well-being of more than 100 mammalian species living in zoos around the world; the first] equine vaccine for West Nile virus in the U.S. and [removed: European Union;] [added: EU;] the first swine vaccine for pandemic H1N1 influenza virus in the U.S.; the first fully licensed vaccine to help reduce disease caused by the Georgia 08 variant of infectious bronchitis virus (IBV) in poultry; a conditionally licensed vaccine to help fight porcine epidemic diarrhea virus (PEDv) in the U.S.; and the first conditionally licensed vaccine to help prevent the H3N2 type of canine influenza that emerged in the U.S. In 2019, Zoetis established a research facility with Texas A&M University to develop vaccines for transboundary and emerging diseases in animals, including Foot-and-Mouth Disease (FMD), a virus that can cause serious illness in cattle, pigs, and sheep.

In 2020, Pharmaq received approval in Norway for Alpha ERM Salar, [removed: an oil-based] [added: a water-based] injectable vaccine that helps protect salmon from red mouth, a common bacterial infection.

With this acquisition came the VetScan® portfolio of benchtop and handheld diagnostic instruments and consumables, which serves a large customer base of veterinary practices both in [removed: North America] [added: the U.S.] and international markets.

[removed: In 2020, the company launched Vetscan Imagyst™ in Australia, Ireland, New Zealand, the U.K. and the U.S.] Imagyst uses a combination of image recognition technology, algorithms and cloud-based artificial intelligence [added: (AI)] to deliver rapid testing results to veterinary clinics.

In [removed: 2020,] [added: 2021,] our [removed: top] two [removed: selling] [added: top-selling] products, Apoquel and [removed: Simparica/ Simparica] [added: Simparica/Simparica] Trio, [added: each] contributed approximately 10% [removed: and 6%, respectively,] of our revenue.

For 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from livestock farmers to veterinarians and pet owners.

| United States | | | $4,042 | | | 74% | | | 26% | | |

| Total International | | | $3,652 | | | 47% | | | 53% | | |

| Australia | | | $259 | | | 47% | | | 53% | | |

| Brazil | | | $312 | | | 33% | | | 67% | | |

| Canada | | | $232 | | | 58% | | | 42% | | |

| Chile | | | $136 | | | 21% | | | 79% | | |

| China | | | $357 | | | 53% | | | 47% | | |

| France | | | $132 | | | 56% | | | 44% | | |

| Germany | | | $183 | | | 64% | | | 36% | | |

| Italy | | | $115 | | | 66% | | | 34% | | |

| Japan | | | $186 | | | 67% | | | 33% | | |

| Mexico | | | $133 | | | 29% | | | 71% | | |

| Spain | | | $128 | | | 46% | | | 54% | | |

| United Kingdom | | | $234 | | | 68% | | | 32% | | |

| Other Developed | | | $467 | | | 45% | | | 55% | | |

| Other Emerging | | | $778 | | | 34% | | | 66% | | |

In 2021, a chewable version of Apoquel was approved in the European Union (EU) and the U.K.;

2017.

In 2021, we expanded Poulvac Procerta HVT-ND into new markets, including Brazil, Canada and the Philippines;

In 2021, Vanguard Intranasal I-III was approved in China.

In 2020, the company opened a research lab at Colorado State University in a partnership to increase our understanding of the potential use of immunomodulators in livestock that would reduce the need for antibiotics, as well as advance our understanding of the biology of key diseases affecting companion animals which could lead to new therapies that can treat chronic health conditions in pets.

In 2020, the company launched Vetscan Imagyst™ in the U.S., Australia, Ireland, New Zealand, and the U.K. In 2021 we expanded to Canada, Spain, Germany, Italy, Netherlands, Belgium and Luxembourg.

In 2021, the company added digital cytology testing to the Vetscan Imagyst platform, which offers a network of expert remote pathologists in addition to AI technology for fecal testing.

As Zoetis continues to develop additional innovative applications for Vetscan Imagyst, it plans to seamlessly integrate even more new capabilities into the platform, helping veterinarians provide the best possible care for dogs and cats.

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In certain markets, including the U.S., pet owners are taking a more active role in product purchasing decisions, and as a result we are increasingly investing in direct-to-consumer marketing efforts.

In addition, we maintain R&D operations in Sydney, Australia; Zaventem, Belgium; São Paulo, Brazil; Beijing, China; Thane, India; Oslo, Norway; Hong Ngu, Vietnam; Con Tho, Vietnam; Fort Collins, Colorado and College Station, Texas, U.S. Each site is designed to meet the regulatory requirements for working with chemical or infectious disease agents, as appropriate.

- Patents relating to the active ingredient (tulathromycin) and formulation of Draxxin have expired, with the exception of the active ingredient and formulation patents in Japan that expire in 2023 and 2025, respectively.

In Brazil, there are patents for the active ingredient and formulation which expire in February 2022 and in 2025, respectively, although their current status is uncertain.

Additional marketing authorizations for generic tulathromycin products may be granted in various markets in the future.

Sales of Draxxin have been negatively affected by generic competition in the markets where the patents have expired.

- All patents relating to the active ingredient of Excede/Naxcel (ceftiofur crystalline free acid) have expired.

- All patents relating to Revolution/Stronghold containing selamectin as the sole active ingredient have expired.

Selamectin is one of the active ingredients in our combination parasiticide product, Revolution Plus/Stronghold Plus, which is separately patent protected.

For more than 65 years, we have been committed to advancing the health of animals and bringing solutions to our customers who raise and care for them.

| United States | | | $3,557 | | | 67% | | | 33% | | |

| Australia | | | $207 | | | 46% | | | 54% | | |

| Brazil | | | $258 | | | 30% | | | 70% | | |

| Canada | | | $210 | | | 50% | | | 50% | | |

| Chile | | | $100 | | | 14% | | | 86% | | |

| China | | | $266 | | | 50% | | | 50% | | |

| France | | | $118 | | | 48% | | | 52% | | |

| Germany | | | $159 | | | 58% | | | 42% | | |

| Italy | | | $90 | | | 56% | | | 44% | | |

| Japan | | | $177 | | | 65% | | | 35% | | |

| Mexico | | | $116 | | | 23% | | | 77% | | |

| Spain | | | $112 | | | 35% | | | 65% | | |

| United Kingdom | | | $178 | | | 63% | | | 37% | | |

| Other Developed | | | $388 | | | 41% | | | 59% | | |

| Other Emerging | | | $656 | | | 28% | | | 72% | | |

This is the only vaccine to contain two PCV2 genotypes and long-lasting M. hyo coverage;

In 2020, the company opened a research lab at Colorado State University in a partnership to explore the livestock immune system and target new immunotherapies with a goal of paving the way for new alternatives to antibiotics in food-producing animals.

Its first indication is for testing fecal samples for parasites, with the potential for broader applications to different types of testing in the future.

| Aureomycin® | | | | | | Provides livestock producers control, treatment and convenience against a wide range of respiratory, enteric and reproductive diseases | | | | | | Cattle, poultry, sheep, swine | | |

| BMD® | | | | | | Aids in preventing and controlling enteritis; and increases rate of weight gain and improves feed efficiency in poultry and swine | | | | | | Poultry, swine | | |

| Lasalocid line | | | | | | Controls coccidiosis in poultry (Avatec®) and cattle (Bovatec®) and for increased rate of weight gain and improved feed efficiency in cattle | | | | | | Poultry, cattle | | |

| Zoamix® | | | | | | A non-ionophore anticoccidial for the prevention and control of coccidiosis in poultry | | | | | | Poultry | | |

| Other Non-Pharmaceutical Products | | | | | | | | | | | | | | |

| Embrex® devices | | | | | | Devices for enhancing hatchery operations' efficiency through *in ovo* detection and vaccination | | | | | | Poultry | | |

In addition, we maintain R&D operations in Sydney, Australia; Zaventem, Belgium; São Paulo, Brazil; Beijing, China; Navi Mumbai, India; Oslo, Norway; Hong Ngu, Vietnam; and Thanh Binh, Vietnam.

Each site is designed to meet the regulatory requirements for working with chemical or infectious disease agents, as appropriate.

| Medolla | | | | | | Italy | | | | | | | | | | | | | | |

- Draxxin, containing the active ingredient tulathromycin, is covered by a formulation patent in the U.S. which expired in February 2021.

Corresponding formulation patents in Europe, Canada, Australia and other key markets expired in late 2020, with the exception of the formulation patents in Brazil and Japan that both expire in 2025.

The active ingredient tulathromycin is protected in Brazil until 2022 and in Japan until 2023.

Market entry of generic tulathromycin products in the U.S. is expected in 2021.

- Several patents covering Excede/Naxcel, part of the ceftiofur antibiotic product line, began expiring in the U.S. in 2015.

Corresponding patents in Japan and Brazil expire in 2026 and 2027, respectively.

- The compound patent for selamectin, the active ingredient in our parasiticides Revolution, Revolution Plus and Stronghold, expired in 2014.

Formulation patents covering these products expired in important markets in 2019.

- The patent for the active ingredient of Cerenia has expired; however, there are formulation patents relevant to the product line which expire between 2025 and 2028.

Generic versions of Cerenia have been registered and marketed in Canada and Europe.

At this time, there is no indication of an impending market entry of a generic version of Cerenia in the U.S.

- The formulation patent covering ProHeart 12 expired in the U.S. in 2019, but expires in Australia, Canada and Japan in October 2021.

The aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, [removed: 2020,] [added: 2021,] the last business day of the registrant's most recently completed second fiscal quarter, was [removed: $65,094] [added: $88,374] million.

The number of shares outstanding of the registrant's common stock as of February 11, [removed: 2021] [added: 2022] was [removed: 475,166,373] [added: 471,970,580] shares.

Portions of the registrant’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders (hereinafter referred to as the [removed: “2021] [added: “2022] Proxy Statement”) are incorporated into Part III of this Form 10-K.

| [PART [removed: I](#ie099829c0b414b768acbbd22b285a2c1_10)] [added: I](#i557a9d1dda324175b603a2d1c8e225ee_10)] | | | | | | | | | | | | Page | | |

| Item 1. | | | | | | [removed: [Business](#ie099829c0b414b768acbbd22b285a2c1_13)] [added: [Business](#i557a9d1dda324175b603a2d1c8e225ee_13)] | | | | | | | | |

| | | | | | | [Operating [removed: Segments](#ie099829c0b414b768acbbd22b285a2c1_19)] [added: Segments](#i557a9d1dda324175b603a2d1c8e225ee_19)] | | | | | | [removed: [1](#ie099829c0b414b768acbbd22b285a2c1_19)] [added: [1](#i557a9d1dda324175b603a2d1c8e225ee_19)] | | |

| | | | | | | [International [removed: Operations](#ie099829c0b414b768acbbd22b285a2c1_25)] [added: Operations](#i557a9d1dda324175b603a2d1c8e225ee_25)] | | | | | | [removed: [6](#ie099829c0b414b768acbbd22b285a2c1_25)] [added: [6](#i557a9d1dda324175b603a2d1c8e225ee_25)] | | |

| | | | | | | [Sales and [removed: Marketing](#ie099829c0b414b768acbbd22b285a2c1_28)] [added: Marketing](#i557a9d1dda324175b603a2d1c8e225ee_28)] | | | | | | [removed: [6](#ie099829c0b414b768acbbd22b285a2c1_28)] [added: [6](#i557a9d1dda324175b603a2d1c8e225ee_28)] | | |

| | | | | | | [Research and [removed: Development](#ie099829c0b414b768acbbd22b285a2c1_34)] [added: Development](#i557a9d1dda324175b603a2d1c8e225ee_34)] | | | | | | [removed: [7](#ie099829c0b414b768acbbd22b285a2c1_34)] [added: [7](#i557a9d1dda324175b603a2d1c8e225ee_34)] | | |

| | | | | | | [Manufacturing and Supply [removed: Chain](#ie099829c0b414b768acbbd22b285a2c1_37)] [added: Chain](#i557a9d1dda324175b603a2d1c8e225ee_37)] | | | | | | [removed: [7](#ie099829c0b414b768acbbd22b285a2c1_37)] [added: [7](#i557a9d1dda324175b603a2d1c8e225ee_37)] | | |

| | | | | | | [Intellectual [removed: Property](#ie099829c0b414b768acbbd22b285a2c1_43)] [added: Property](#i557a9d1dda324175b603a2d1c8e225ee_43)] | | | | | | [removed: [9](#ie099829c0b414b768acbbd22b285a2c1_43)] [added: [8](#i557a9d1dda324175b603a2d1c8e225ee_43)] | | |

| | | | | | | [Human Capital [removed: Management](#ie099829c0b414b768acbbd22b285a2c1_49)] [added: Management](#i557a9d1dda324175b603a2d1c8e225ee_49)] | | | | | | [removed: [11](#ie099829c0b414b768acbbd22b285a2c1_49)] [added: [11](#i557a9d1dda324175b603a2d1c8e225ee_49)] | | |

| | | | | | | [Information about our Executive [removed: Officers](#ie099829c0b414b768acbbd22b285a2c1_52)] [added: Officers](#i557a9d1dda324175b603a2d1c8e225ee_52)] | | | | | | [removed: [13](#ie099829c0b414b768acbbd22b285a2c1_52)] [added: [12](#i557a9d1dda324175b603a2d1c8e225ee_52)] | | |

| | | | | | | [Environmental, Health and [removed: Safety](#ie099829c0b414b768acbbd22b285a2c1_55)] [added: Safety](#i557a9d1dda324175b603a2d1c8e225ee_55)] | | | | | | [removed: [15](#ie099829c0b414b768acbbd22b285a2c1_55)] [added: [14](#i557a9d1dda324175b603a2d1c8e225ee_55)] | | |

| | | | | | | [Available [removed: Information](#ie099829c0b414b768acbbd22b285a2c1_58)] [added: Information](#i557a9d1dda324175b603a2d1c8e225ee_58)] | | | | | | [removed: [15](#ie099829c0b414b768acbbd22b285a2c1_58)] [added: [14](#i557a9d1dda324175b603a2d1c8e225ee_58)] | | |

| Item 1A. | | | | | | [Risk [removed: Factors](#ie099829c0b414b768acbbd22b285a2c1_61)] [added: Factors](#i557a9d1dda324175b603a2d1c8e225ee_61)] | | | | | | [removed: [16](#ie099829c0b414b768acbbd22b285a2c1_61)] [added: [16](#i557a9d1dda324175b603a2d1c8e225ee_61)] | | |

| Item 1B. | | | | | | [Unresolved Staff [removed: Comments](#ie099829c0b414b768acbbd22b285a2c1_64)] [added: Comments](#i557a9d1dda324175b603a2d1c8e225ee_64)] | | | | | | [removed: [36](#ie099829c0b414b768acbbd22b285a2c1_64)] [added: [35](#i557a9d1dda324175b603a2d1c8e225ee_64)] | | |

| Item 2. | | | | | | [removed: [Properties](#ie099829c0b414b768acbbd22b285a2c1_67)] [added: [Properties](#i557a9d1dda324175b603a2d1c8e225ee_67)] | | | | | | [removed: [36](#ie099829c0b414b768acbbd22b285a2c1_67)] [added: [35](#i557a9d1dda324175b603a2d1c8e225ee_67)] | | |

| Item 3. | | | | | | [Legal [removed: Proceedings](#ie099829c0b414b768acbbd22b285a2c1_70)] [added: Proceedings](#i557a9d1dda324175b603a2d1c8e225ee_70)] | | | | | | [removed: [36](#ie099829c0b414b768acbbd22b285a2c1_70)] [added: [35](#i557a9d1dda324175b603a2d1c8e225ee_70)] | | |

| Item 4. | | | | | | [Mine Safety [removed: Disclosures](#ie099829c0b414b768acbbd22b285a2c1_73)] [added: Disclosures](#i557a9d1dda324175b603a2d1c8e225ee_73)] | | | | | | [removed: [36](#ie099829c0b414b768acbbd22b285a2c1_73)] [added: [35](#i557a9d1dda324175b603a2d1c8e225ee_73)] | | |

| Item 5. | | | | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ie099829c0b414b768acbbd22b285a2c1_79)] [added: Securities](#i557a9d1dda324175b603a2d1c8e225ee_79)] | | | | | | [removed: [37](#ie099829c0b414b768acbbd22b285a2c1_79)] [added: [36](#i557a9d1dda324175b603a2d1c8e225ee_79)] | | |

| Item 7. | | | | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ie099829c0b414b768acbbd22b285a2c1_85)] [added: Operations](#i557a9d1dda324175b603a2d1c8e225ee_82)] | | | | | | [removed: [39](#ie099829c0b414b768acbbd22b285a2c1_85)] [added: [38](#i557a9d1dda324175b603a2d1c8e225ee_82)] | | |

| Item 7A. | | | | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ie099829c0b414b768acbbd22b285a2c1_139)] [added: Risk](#i557a9d1dda324175b603a2d1c8e225ee_136)] | | | | | | [removed: [61](#ie099829c0b414b768acbbd22b285a2c1_139)] [added: [59](#i557a9d1dda324175b603a2d1c8e225ee_136)] | | |

| Item 8. | | | | | | [Financial Statements and Supplementary [removed: Data](#ie099829c0b414b768acbbd22b285a2c1_142)] [added: Data](#i557a9d1dda324175b603a2d1c8e225ee_139)] | | | | | | [removed: [62](#ie099829c0b414b768acbbd22b285a2c1_142)] [added: [60](#i557a9d1dda324175b603a2d1c8e225ee_139)] | | |

| Item 9. | | | | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ie099829c0b414b768acbbd22b285a2c1_247)] [added: Disclosure](#i557a9d1dda324175b603a2d1c8e225ee_241)] | | | | | | [removed: [104](#ie099829c0b414b768acbbd22b285a2c1_247)] [added: [100](#i557a9d1dda324175b603a2d1c8e225ee_241)] | | |

| Item 9A. | | | | | | [Controls and [removed: Procedures](#ie099829c0b414b768acbbd22b285a2c1_250)] [added: Procedures](#i557a9d1dda324175b603a2d1c8e225ee_244)] | | | | | | [removed: [104](#ie099829c0b414b768acbbd22b285a2c1_250)] [added: [100](#i557a9d1dda324175b603a2d1c8e225ee_244)] | | |

| Item 9B. | | | | | | [Other [removed: Information](#ie099829c0b414b768acbbd22b285a2c1_253)] [added: Information](#i557a9d1dda324175b603a2d1c8e225ee_247)] | | | | | | [removed: [104](#ie099829c0b414b768acbbd22b285a2c1_253)] [added: [100](#i557a9d1dda324175b603a2d1c8e225ee_247)] | | |

| Item 10. | | | | | | [Directors, Executive Officers and Corporate [removed: Governance](#ie099829c0b414b768acbbd22b285a2c1_259)] [added: Governance](#i557a9d1dda324175b603a2d1c8e225ee_253)] | | | | | | [removed: [105](#ie099829c0b414b768acbbd22b285a2c1_259)] [added: [101](#i557a9d1dda324175b603a2d1c8e225ee_253)] | | |

| Item 11. | | | | | | [Executive [removed: Compensation](#ie099829c0b414b768acbbd22b285a2c1_262)] [added: Compensation](#i557a9d1dda324175b603a2d1c8e225ee_256)] | | | | | | [removed: [105](#ie099829c0b414b768acbbd22b285a2c1_262)] [added: [101](#i557a9d1dda324175b603a2d1c8e225ee_256)] | | |

| Item 12. | | | | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ie099829c0b414b768acbbd22b285a2c1_265)] [added: Matters](#i557a9d1dda324175b603a2d1c8e225ee_259)] | | | | | | [removed: [105](#ie099829c0b414b768acbbd22b285a2c1_265)] [added: [101](#i557a9d1dda324175b603a2d1c8e225ee_259)] | | |

| Item 13. | | | | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ie099829c0b414b768acbbd22b285a2c1_268)] [added: Independence](#i557a9d1dda324175b603a2d1c8e225ee_262)] | | | | | | [removed: [105](#ie099829c0b414b768acbbd22b285a2c1_268)] [added: [101](#i557a9d1dda324175b603a2d1c8e225ee_262)] | | |

| Item 14. | | | | | | [Principal [removed: Accounting Fees] [added: Account](#i557a9d1dda324175b603a2d1c8e225ee_265)[ant](#i557a9d1dda324175b603a2d1c8e225ee_265) [Fees] and [removed: Services](#ie099829c0b414b768acbbd22b285a2c1_271)] [added: Services](#i557a9d1dda324175b603a2d1c8e225ee_265)] | | | | | | [removed: [105](#ie099829c0b414b768acbbd22b285a2c1_271)] [added: [101](#i557a9d1dda324175b603a2d1c8e225ee_265)] | | |

| Item 16. | | | | | | [Form 10-K [removed: Summary](#ie099829c0b414b768acbbd22b285a2c1_280)] [added: Summary](#i557a9d1dda324175b603a2d1c8e225ee_274)] | | | | | | [removed: [106](#ie099829c0b414b768acbbd22b285a2c1_280)] [added: [102](#i557a9d1dda324175b603a2d1c8e225ee_274)] | | |

| | | | December 31, 2021 | | | | | |

| | | | | | | [Overview](#i557a9d1dda324175b603a2d1c8e225ee_16) | | | | | | [1](#i557a9d1dda324175b603a2d1c8e225ee_16) | | |

| | | | | | | [Products](#i557a9d1dda324175b603a2d1c8e225ee_22) | | | | | | [3](#i557a9d1dda324175b603a2d1c8e225ee_22) | | |

| | | | | | | [Customers](#i557a9d1dda324175b603a2d1c8e225ee_31) | | | | | | [7](#i557a9d1dda324175b603a2d1c8e225ee_31) | | |

| | | | | | | [Competition](#i557a9d1dda324175b603a2d1c8e225ee_40) | | | | | | [8](#i557a9d1dda324175b603a2d1c8e225ee_40) | | |

| | | | | | | [Regulatory](#i557a9d1dda324175b603a2d1c8e225ee_46) | | | | | | [9](#i557a9d1dda324175b603a2d1c8e225ee_46) | | |

| [PART II](#i557a9d1dda324175b603a2d1c8e225ee_76) | | | | | | | | | | | | | | |

| Item 9C. | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i557a9d1dda324175b603a2d1c8e225ee_2755) | | | | | | [100](#i557a9d1dda324175b603a2d1c8e225ee_2755) | | |

| [PART III](#i557a9d1dda324175b603a2d1c8e225ee_250) | | | | | | | | | | | | | | |

| [PART IV](#i557a9d1dda324175b603a2d1c8e225ee_268) | | | | | | | | | | | | | | |

| Item 15. | | | | | | [Exhibit](#i557a9d1dda324175b603a2d1c8e225ee_271)[, Financial Statement Schedules](#i557a9d1dda324175b603a2d1c8e225ee_271) | | | | | | [102](#i557a9d1dda324175b603a2d1c8e225ee_271) | | |

| [EXHIBIT INDEX](#i557a9d1dda324175b603a2d1c8e225ee_277) | | | | | | | | | | | | [103](#i557a9d1dda324175b603a2d1c8e225ee_277) | | |

| [SIGNATURES](#i557a9d1dda324175b603a2d1c8e225ee_280) | | | | | | | | | | | | [106](#i557a9d1dda324175b603a2d1c8e225ee_280) | | |

| | | | December 31, 2020 | | | | | |

(Check one):

| | | | | | | [Overview](#ie099829c0b414b768acbbd22b285a2c1_16) | | | | | | [1](#ie099829c0b414b768acbbd22b285a2c1_16) | | |

| | | | | | | [Products](#ie099829c0b414b768acbbd22b285a2c1_22) | | | | | | [3](#ie099829c0b414b768acbbd22b285a2c1_22) | | |

| | | | | | | [Customers](#ie099829c0b414b768acbbd22b285a2c1_31) | | | | | | [7](#ie099829c0b414b768acbbd22b285a2c1_31) | | |

| | | | | | | [Competition](#ie099829c0b414b768acbbd22b285a2c1_40) | | | | | | [8](#ie099829c0b414b768acbbd22b285a2c1_40) | | |

| | | | | | | [Regulatory](#ie099829c0b414b768acbbd22b285a2c1_46) | | | | | | [9](#ie099829c0b414b768acbbd22b285a2c1_46) | | |

| [PART II](#ie099829c0b414b768acbbd22b285a2c1_76) | | | | | | | | | | | | | | |

| [PART III](#ie099829c0b414b768acbbd22b285a2c1_256) | | | | | | | | | | | | | | |

| [PART IV](#ie099829c0b414b768acbbd22b285a2c1_274) | | | | | | | | | | | | | | |

| Item 15. | | | | | | [Exhibits, Financial Statement Schedules](#ie099829c0b414b768acbbd22b285a2c1_277) | | | | | | [106](#ie099829c0b414b768acbbd22b285a2c1_277) | | |

| [EXHIBIT INDEX](#ie099829c0b414b768acbbd22b285a2c1_283) | | | | | | | | | | | | [107](#ie099829c0b414b768acbbd22b285a2c1_283) | | |

| [SIGNATURES](#ie099829c0b414b768acbbd22b285a2c1_286) | | | | | | | | | | | | [110](#ie099829c0b414b768acbbd22b285a2c1_286) | | |

We have [removed: 166] [added: 174] owned and leased properties, amounting to approximately [removed: 11.1] [added: 11.9] million square feet, around the world for sales and marketing, customer service, regulatory compliance, R&D, manufacturing and distribution, and administrative support functions.

The largest manufacturing site in our global manufacturing network is our manufacturing site located in Kalamazoo, Michigan, which represents approximately [removed: 0.7] [added: 0.6] million square feet.

No other site in our global manufacturing network is more than [removed: 0.7] [added: 0.6] million square feet.

In addition, our global manufacturing network [removed: will continue] [added: continues] to be supplemented by [removed: 144] [added: 136] CMOs.

35 |

36 |

As of February 11, [removed: 2021,] [added: 2022,] there were [removed: 475,166,373] [added: 471,970,580] shares of our common stock outstanding, held by [removed: 1,748] [added: 1,667] shareholders of record.

As of December 31, [removed: 2020,] [added: 2021,] there was approximately [removed: $1.4 billion] [added: $681 million] remaining under this authorization.

The [removed: program does] [added: programs do] not have a stated expiration date.

Issuer purchases of equity securities for the three months ended December 31, [removed: 2020] [added: 2021] were as follows:

| | | | Total Number of Shares Purchased(a) | | | Average Price Paid Per Share | | | Total Number of Shares Purchased as Part of Publicly Announced [removed: Programs(b)] [added: Programs] | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs | | |

(a) The company repurchased [removed: 2,284] [added: 2,749] shares during the three-month period ended December 31, [removed: 2020,] [added: 2021,] that were not part of the publicly announced share repurchase authorization.

The graph below compares the cumulative total shareholder return on an investment in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index for the five fiscal years beginning with the close of trading on December 31, [removed: 2015] [added: 2016] and ending December 31, [removed: 2020.][added: 2021.]

The graph assumes an investment of $100 on December 31, [removed: 2015,] [added: 2016,] in our common stock, the S&P 500 Index and the S&P 500 Pharmaceuticals Index and assumes dividends, if any, were reinvested.

[removed: ][added: ]

| | | | December 31, [removed: 2015 | | | December 31,] 2016 | | | December 31, 2017 | | | December 31, 2018 | | | December 31, 2019 | | | December 31, 2020 | | | [added: December 31, 2021 | | |]

On December 7, 2021, our Board of Directors authorized a multi-year share repurchase program of up to $3.5 billion of our outstanding common stock.

| October 1 - October 31, 2021 | | | 296,909 | | | $201.33 | | | 296,406 | | | $819,762,190 | | |

| November 1 - November 30, 2021 | | | 324,175 | | | $218.52 | | | 323,780 | | | $749,007,056 | | |

| December 1 - December 31, 2021 | | | 296,682 | | | $230.42 | | | 294,831 | | | $680,739,112 | | |

| Total | | | 917,766 | | | $216.81 | | | 915,017 | | | $680,739,112 | | |

36 |

| Zoetis Inc. | | | $100 | | | $135.55 | | | $161.91 | | | $252.11 | | | $317.06 | | | $470.08 | | |

| S&P 500 Index | | | $100 | | | $121.83 | | | $116.49 | | | $153.17 | | | $181.35 | | | $233.41 | | |

| S&P 500 Pharmaceuticals Index | | | $100 | | | $112.57 | | | $121.68 | | | $140.04 | | | $150.58 | | | $189.36 | | |

The company temporarily suspended share repurchases beginning in the second quarter of 2020.

In January 2021, the company resumed share repurchases under its share repurchase program.

| October 1 - October 31, 2020 | | | 1,026 | | | $162.05 | | | — | | | $1,424,104,390 | | |

| November 1 - November 30, 2020 | | | 617 | | | $161.86 | | | — | | | $1,424,104,390 | | |

| December 1 - December 31, 2020 | | | 641 | | | $161.28 | | | — | | | $1,424,104,390 | | |

| Total | | | 2,284 | | | $161.78 | | | — | | | $1,424,104,390 | | |

(b) The company temporarily suspended share repurchases beginning in the second quarter of 2020.

| Zoetis Inc. | | | $100 | | | $112.64 | | | $152.69 | | | $182.38 | | | $283.99 | | | $357.15 | | |

| S&P 500 Index | | | $100 | | | $111.96 | | | $136.40 | | | $130.42 | | | $171.49 | | | $203.04 | | |

| S&P 500 Pharmaceuticals Index | | | $100 | | | $98.44 | | | $110.81 | | | $119.78 | | | $137.85 | | | $148.23 | | |

38 |

| Reports of Independent Registered Public Accounting Firm | | | [removed: [63](#ie099829c0b414b768acbbd22b285a2c1_145)] [added: [61](#i557a9d1dda324175b603a2d1c8e225ee_142)] | | |

| Consolidated Statements of [added: Comprehensive] Income for the Years Ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: [66](#ie099829c0b414b768acbbd22b285a2c1_151)] [added: [65](#i557a9d1dda324175b603a2d1c8e225ee_151)] | | |

| Consolidated Statements of [removed: Comprehensive] Income for the Years Ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: [67](#ie099829c0b414b768acbbd22b285a2c1_154)] [added: [64](#i557a9d1dda324175b603a2d1c8e225ee_148)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: [68](#ie099829c0b414b768acbbd22b285a2c1_157)] [added: [66](#i557a9d1dda324175b603a2d1c8e225ee_154)] | | |

| Consolidated Statements of Equity for the Years Ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: [69](#ie099829c0b414b768acbbd22b285a2c1_163)] [added: [67](#i557a9d1dda324175b603a2d1c8e225ee_160)] | | |

| Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: [70](#ie099829c0b414b768acbbd22b285a2c1_166)] [added: [68](#i557a9d1dda324175b603a2d1c8e225ee_163)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [71](#ie099829c0b414b768acbbd22b285a2c1_169)] [added: [69](#i557a9d1dda324175b603a2d1c8e225ee_166)] | | |

| Schedule II—Valuation and Qualifying Accounts | | | [removed: [103](#ie099829c0b414b768acbbd22b285a2c1_244)] [added: [99](#i557a9d1dda324175b603a2d1c8e225ee_238)] | | |

We have audited the accompanying consolidated balance sheets of Zoetis Inc. and subsidiaries (the [removed: “Company”)] [added: Company)] as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the [removed: three year] [added: three-year] period ended December 31, [removed: 2020,] [added: 2021,] and the related notes and financial statement [removed: schedule] [added: Schedule] II [removed: –] [added: -] Valuation and Qualifying Accounts (collectively, the [removed: “consolidated] [added: consolidated] financial [removed: statements”).][added: statements).]

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the years in the [removed: three year] [added: three-year] period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: (PCAOB),] the Company’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 16, 2021,] [added: 15, 2022] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As of December 31, [removed: 2020,] [added: 2021,] the Company has recorded gross unrecognized tax benefits of [removed: $188] [added: $189] million.

This [removed: includes] [added: included] controls related to (a) interpretation of relevant tax law, (b) evaluation of which of the Company’s tax positions may not be sustained upon examination, and (c) estimation of the gross unrecognized tax benefits.

–evaluating the Company’s interpretation of relevant tax laws and the potential impact on the unrecognized tax benefits by developing an independent assessment of the tax position’s more likely than not to be sustained under examination determination as well as [removed: and] the estimate of the amount of the gross unrecognized tax benefit, if any, based on our understanding and interpretation of tax laws,

Amounts recorded as a reduction in accounts receivable as of December 31, [removed: 2020] [added: 2021] are approximately [removed: $185] [added: $216] million and accruals for deductions from revenue included in accrued expenses are approximately [removed: $226] [added: $312] million.

We evaluated the historical accuracy of the Company’s U.S. rebates accrual by comparing the previously recorded accrual as of December 31, [removed: 2019] [added: 2020] to the actual amount that ultimately was paid by the Company during [removed: 2020.][added: 2021.]

We have audited Zoetis Inc. and subsidiaries’ (the [removed: “Company”)] [added: Company)] internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (“PCAOB”),] [added: (PCAOB),] the consolidated balance sheets of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] and the related notes and financial statement [removed: schedule] [added: Schedule] II - Valuation and Qualifying Accounts (collectively, the [removed: “consolidated] [added: consolidated] financial [removed: statements”),] [added: statements),] and our report dated February [removed: 16, 2021] [added: 15, 2022] expressed an unqualified opinion on those consolidated financial statements.

| (MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA) | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Revenue | | | | | | $ | [removed: 6,675] [added: 7,776] | | | | | $ | [removed: 6,260] [added: 6,675] | | | | | $ | [removed: 5,825] [added: 6,260] | |

| Cost of sales(a) | | | | | | [removed: 2,057] [added: 2,303] | | | | | | [removed: 1,992] [added: 2,057] | | | | | | [removed: 1,911] [added: 1,992] | | |

| Selling, general and administrative expenses(a) | | | | | | [removed: 1,726] [added: 2,001] | | | | | | [removed: 1,638] [added: 1,726] | | | | | | [removed: 1,484] [added: 1,638] | | |

| Research and development expenses(a) | | | | | | [removed: 463] [added: 508] | | | | | | [removed: 457] [added: 463] | | | | | | [removed: 432] [added: 457] | | |

| Amortization of intangible assets | | | | | | [removed: 160] [added: 161] | | | | | | [removed: 155] [added: 160] | | | | | | [removed: 117] [added: 155] | | |

| Restructuring charges and certain acquisition-related costs | | | | | | [removed: 25] [added: 43] | | | | | | [removed: 51] [added: 25] | | | | | | [removed: 68] [added: 51] | | |

| Interest expense, net of capitalized interest | | | | | | [removed: 231] [added: 224] | | | | | | [removed: 223] [added: 231] | | | | | | [removed: 206] [added: 223] | | |

| Other (income)/deductions––net | | | | | | [removed: 17] [added: 48] | | | | | | [removed: (57)] [added: 17] | | | | | | [removed: (83)] [added: (57)] | | |

| Income before provision for taxes on income | | | | | | [removed: 1,996] [added: 2,488] | | | | | | [removed: 1,801] [added: 1,996] | | | | | | [removed: 1,690] [added: 1,801] | | |

| Provision for taxes on income | | | | | | [removed: 360] [added: 454] | | | | | | [removed: 301] [added: 360] | | | | | | [removed: 266] [added: 301] | | |

| Net income before allocation to noncontrolling interests | | | | | | [removed: 1,636] [added: 2,034] | | | | | | [removed: 1,500] [added: 1,636] | | | | | | [removed: 1,424] [added: 1,500] | | |

| Less: Net loss attributable to noncontrolling interests | | | | | | [removed: (2)] [added: (3)] | | | | | | [removed: —] [added: (2)] | | | | | | [removed: (4)] [added: —] | | |

| Net income attributable to Zoetis [added: Inc.] | | | | | | $ | [removed: 1,638] [added: 2,037] | | | | | $ | [removed: 1,500] [added: 1,638] | | | | | $ | [removed: 1,428] [added: 1,500] | |

| Basic | | | | | | $ | [removed: 3.44] [added: 4.29] | | | | | $ | [removed: 3.14] [added: 3.44] | | | | | $ | [removed: 2.96] [added: 3.14] | |

| Diluted | | | | | | $ | [removed: 3.42] [added: 4.27] | | | | | $ | [removed: 3.11] [added: 3.42] | | | | | $ | [removed: 2.93] [added: 3.11] | |

| Basic | | | | | | [removed: 475.502] [added: 474.348] | | | | | | [removed: 478.128] [added: 475.502] | | | | | | [removed: 483.063] [added: 478.128] | | |

| Diluted | | | | | | [removed: 478.569] [added: 476.717] | | | | | | [removed: 481.787] [added: 478.569] | | | | | | [removed: 486.898] [added: 481.787] | | |

| Dividends declared per common share | | | | | | $ | [removed: 0.850] [added: 1.075] | | | | | $ | [removed: 0.692] [added: 0.850] | | | | | $ | [removed: 0.542] [added: 0.692] | |

| (MILLIONS OF DOLLARS) | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Net income before allocation to noncontrolling interests | | | | | | $ | [removed: 1,636] [added: 2,034] | | | | | $ | [removed: 1,500] [added: 1,636] | | | | | $ | [removed: 1,424] [added: 1,500] | |

60 |

61 |

February 15, 2022

February 15, 2022

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Employee benefit plan contribution from Pfizer Inc.(c) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3 | | |

| Balance, December 31, 2021 | | | | | | 501.9 | | | | | | $ | 5 | | | | | 29.3 | | | | | | $ | (2,952) | | | | | $ | 1,068 | | | | | $ | 7,186 | | | | | $ | (764) | | | | | $ | 1 | | | | | $ | 4,544 | |

| Net income before allocation to noncontrolling interests | | | | | | $ | 2,034 | | | | | $ | 1,636 | | | | | $ | 1,500 | |

| Acquisitions, net of cash acquired | | | | | | (14) | | | | | | (113) | | | | | | (195) | | |

| Payment of consideration related to previous acquisitions | | | | | | (6) | | | | | | (2) | | | | | | (9) | | |

In January 2021, it issued a subsequent amendment to the initial guidance: ASU No. 2021-01, Reference Rate Reform (Topic 848).

We currently have a revolving credit facility and various hedging transactions that reference LIBOR.

We will make specific amendments to our affected contracts and hedge documentation to adopt these standards as of December 31, 2022 and we do not expect these changes to have a material impact on our consolidated financial statements or related disclosures.

We record an impairment loss, if any, for

| Contract manufacturing & human health | | | | | | 82 | | | | | | 83 | | | | | | 85 | | |

| Total Revenue | | | | | | $ | 7,776 | | | | | $ | 6,675 | | | | | $ | 6,260 | |

| Contract manufacturing & human health | | | | | | 82 | | | | | | 83 | | | | | | 85 | | |

| Total Revenue | | | | | | $ | 7,776 | | | | | $ | 6,675 | | | | | $ | 6,260 | |

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | | | | 7,694 | | | | | | 6,592 | | | | | | 6,175 | | |

| Contract manufacturing & human health | | | | | | 82 | | | | | | 83 | | | | | | 85 | | |

| Total Revenue | | | | | | $ | 7,776 | | | | | $ | 6,675 | | | | | $ | 6,260 | |

During 2021, we entered into an agreement to acquire Jurox, a privately held animal health company based in Australia, which develops, manufactures and markets a wide range of veterinary medicines for treating companion animals and livestock.

The transaction is subject to customary closing conditions and the satisfaction of regulatory requirements.

We expect to complete the acquisition in 2022.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| Asset impairment charges | | | | | | 13 | | | | | | — | | | | | | — | | |

| Non-cash activity | | | | | | — | | | | | | (13) | | | | | | — | | | | | | (13) | | |

| Balance, December 31, 2021(b)(c) | | | | | | $ | 23 | | | | | $ | — | | | | | $ | 2 | | | | | $ | 25 | |

(c) Includes contractual obligations of $16 million, of which payments are expected to be approximately $14 million in 2022 and $2 million thereafter.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

(a) For 2021, primarily represents asset impairment charges related to developed technology rights and trademarks in our dairy cattle, diagnostics and aquatic health businesses.

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| (MILLIONS OF DOLLARS) | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

- tax benefit related to foreign-derived intangible income;

- an $8 million net discrete tax benefit recorded in 2021 related to the effective settlement of certain issues with tax authorities;

- a $6 million net discrete tax benefit recorded in 2021 related to changes in various other tax items; and

| Foreign Derived Intangible Income | | | | | | (1.1) | | | | | | — | | | | | | (0.6) | | |

| | | | | | | 2021 | | | | | | 2020 | | |

As such,

| | | | | | |

| --- | --- | --- | --- | --- | --- |

February 16, 2021

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance, December 31, 2017 | | | | | | 501.9 | | | | | | $ | 5 | | | | | 15.8 | | | | | | $ | (852) | | | | | $ | 1,013 | | | | | $ | 2,109 | | | | | $ | (505) | | | | | $ | 16 | | | | | $ | 1,786 | |

(a) For the twelve months ended December 31, 2018, represents the acquisition of a European livestock monitoring company.

| Acquisition of Abaxis, net of cash acquired | | | | | | — | | | | | | — | | | | | | (1,884) | | |

| Other acquisitions | | | | | | (113) | | | | | | (195) | | | | | | (114) | | |

| Payment of contingent consideration related to previously acquired assets | | | | | | (2) | | | | | | (9) | | | | | | (12) | | |

| Acquisition of a noncontrolling interest, net of cash acquired | | | | | | 3 | | | | | | — | | | | | | (26) | | |

(a) For 2018, reflects the reclassification of the one-time deemed repatriation tax from *Noncurrent deferred tax liabilities* to *Income taxes payable* and *Other taxes payable* to properly reflect the liability, which became a fixed obligation in 2018, payable over eight years.

Recently Adopted Accounting Standards

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-15, *Intangibles-Goodwill and Other-Internal-Use Software* (Topic 350-40), an accounting standards update which expands the scope of costs associated with cloud computing arrangements that must be capitalized.

Under the new guidance, costs associated with implementing a cloud computing arrangement that is a service contract must be capitalized and expensed over the term of the hosting arrangement.

We adopted this guidance as of January 1, 2020, the required effective date, on a prospective basis.

In June 2016, the FASB issued ASU 2016-13, *Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments* (Topic 326), an accounting standards update which requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred.

For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded instead of reducing the amortized cost of the investment.

We are currently evaluating the impact that the new guidance will have on our consolidated financial statements and related disclosures, as well as the timing of the potential adoption.

We adjust our estimates and

In 2019, we performed a qualitative impairment assessment as of September 30, 2019, which did not result in the impairment of goodwill associated with any of our reporting units.

Acquisition of Abaxis, Inc.

On July 31, 2018, we completed the acquisition of Abaxis, Inc. (Abaxis), a California corporation and a leader in the development, manufacture and marketing of diagnostic instruments for veterinary point-of-care services.

We acquired all of the outstanding common shares of Abaxis for $83.00 per share in cash resulting in Abaxis becoming our wholly owned subsidiary.

The acquisition enhances our presence in animal health diagnostics.

The acquisition date fair value of the consideration transferred was approximately $1,962 million, which consisted of the following:

| Cash paid to Abaxis' shareholders(a) | | | $ | 1,898 | |

| Cash paid for equity awards attributable to pre-merger services(b) | | | 54 | | |

| Fair value of Zoetis equity awards issued in exchange for outstanding Abaxis equity awards pertaining to pre-merger service(c) | | | 10 | | |

| Total consideration | | | $ | 1,962 | |

(a) Represents cash paid for cancellation and conversion of each outstanding share of Abaxis' common stock at the acquisition date.

(b) Represents cash paid for cancellation and settlement of restricted stock awards that fully vested in July 2018 as a result of service or pre-existing change-in-control provisions and termination provisions.

Includes certain awards that will be settled in cash during 2019, reflected in *Other current liabilities* within the Consolidated Balance Sheets.

(c) Represents the fair value of replacement awards issued for Abaxis equity awards outstanding immediately before the acquisition and attributable to the service period prior to the acquisition.

The previous Abaxis equity awards were converted into the Zoetis equity awards at an exchange ratio based on the closing prices of shares of Zoetis Common Stock and Abaxis Common Stock for ten full trading days before the closing of the acquisition.

The acquisition has been accounted for as a business combination with the assets acquired and liabilities assumed measured at estimated fair values as of the acquisition date, primarily using Level 3 inputs, except for investments in debt securities which were valued using Level 2 inputs.

During the three months ended December 31, 2018, the company recorded measurement period adjustments to reflect the facts and circumstances in existence as of the acquisition date.

These adjustments primarily include an increase to *Property, plant and equipment* of $5 million, a reduction to *Identifiable intangible assets* of $3 million, an increase to *Other current liabilities* of $4 million, and a corresponding decrease to *Goodwill* of $6 million.

These measurement period adjustments primarily related to changes in valuation assumptions, including market participant estimates of cash flows, as well as other initial estimates.

During the first half of 2019, the company recorded additional measurement period adjustments which were made to reflect the facts and circumstances in existence as of the acquisition date.

Based upon that evaluation as of December 31, [removed: 2020,] [added: 2021,] the company's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective at a reasonable level of assurance in alerting them in a timely manner to material information required to be disclosed in our periodic reports filed with the SEC.

Based on our evaluation under the framework in *Internal Control - Integrated Framework*, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report included herein.

104 |

PART III

None.

100 |

PART III

Information about our directors is incorporated by reference from the discussion under the heading *Item 1*\-*Election of Directors* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about compliance with Section 16(a) of the Exchange Act is incorporated by reference from the discussion under the heading *Delinquent Section 16(a) Reports* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about the Zoetis Code of Conduct governing our employees, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer and Controller, and the Code of Business Conduct and Ethics for members of our Board of Directors, is incorporated by reference from the discussions under the heading *Corporate Governance at Zoetis* in our [removed: 2021] [added: 2022] Proxy Statement.

Information regarding the procedures by which our stockholders may recommend nominees to our Board of Directors is incorporated by reference from the discussion under the heading *Corporate Governance at Zoetis* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about our Audit Committee, including the members of the Committee, and our Audit Committee financial experts, is incorporated by reference from the discussion under the heading *Corporate Governance at Zoetis* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about director compensation is incorporated by reference from the discussion under the heading *Corporate Governance at Zoetis* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about executive compensation is incorporated by reference from the discussion under the heading *Executive* *Compensation* in our [removed: 2021] [added: 2022] Proxy Statement.

Information required by this item is incorporated by reference from the discussion under the heading *Ownership of Our Common Stock* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about certain relationships and transactions with related parties and our policies and procedures in relation to such transactions is incorporated by reference from the discussion under the heading *Transactions with Related Persons* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about director independence is incorporated by reference from the discussion under the heading *Corporate Governance at Zoetis-Corporate Governance Principles and Practices-Director Independence* in our [removed: 2021] [added: 2022] Proxy Statement.

Information about the fees for professional services rendered by our independent registered public accounting firm in [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] is incorporated by reference from the discussion under the heading *Item [removed: 3*—*Ratification] [added: 4*—*Ratification] of Appointment of KPMG as our Independent Registered Public Accounting Firm for [removed: 2021*] [added: 2022*] in our [removed: 2021] [added: 2022] Proxy Statement.

Our Audit Committee’s policy on pre-approval of audit and permissible non-audit services of our independent registered public accounting firm is incorporated by reference from the discussion under the heading *Item [removed: 3*—*Ratification] [added: 4*—*Ratification] of Appointment of KPMG as our Independent Registered Public Accounting Firm for [removed: 2021*] [added: 2022*] in our [removed: 2021] [added: 2022] Proxy Statement*.*

Our independent registered public accounting firm is KPMG LLP, Short Hills, NJ, Auditor Firm ID: 185.

101 |

105 |

| [Exhibit [removed: 4.1](http://www.sec.gov/Archives/edgar/data/1555280/000119312513027025/d381653dex41.htm)] [added: 4.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/zts_ca1xf04x02-14x22x2.htm)] | | | | | | Specimen [removed: Class A] Common Stock [removed: Certificate (incorporated by reference to Exhibit 4.1 of Zoetis Inc.’s registration] [added: Certificate†] | | |

| [Exhibit [removed: 4.13](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] [added: 4.1](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)[3](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] | | | | | | Form of [removed: Floating Rate] [added: 3.900%] Senior Notes due [removed: 2021] [added: 2028] (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form [added: 8-K] | | |

| | | | | | | [removed: 8-K] [added: Zoetis Inc.'s Quarterly Report on Form 10-Q] filed on August [removed: 20, 2018] [added: 5, 2021] (File No. [removed: 001-35797))] [added: 001-35797))*] | | |

| [Exhibit [removed: 4.14](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] [added: 4.1](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)[4](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] | | | | | | Form of [removed: 3.250%] [added: 4.450%] Senior Notes due [removed: 2021] [added: 2048] (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form 8-K | | |

| [Exhibit [removed: 4.15](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] [added: 4.1](https://www.sec.gov/Archives/edgar/data/1555280/000119312520140399/d901166dex42.htm)[5](https://www.sec.gov/Archives/edgar/data/1555280/000119312520140399/d901166dex42.htm)] | | | | | | Form of [removed: 3.900%] [added: 2.000%] Senior Notes due [removed: 2028] [added: 2030] (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form 8-K | | |

| [Exhibit [removed: 4.16](http://www.sec.gov/Archives/edgar/data/1555280/000119312518252910/d601449dex42.htm)] [added: 4.16](https://www.sec.gov/Archives/edgar/data/1555280/000119312520140399/d901166dex42.htm)] | | | | | | Form of [removed: 4.450%] [added: 3.000%] Senior Notes due [removed: 2048] [added: 2050] (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form 8-K | | |

| [Exhibit [removed: 4.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528020000054/a201910-kxexhibit417xd.htm)[9](https://www.sec.gov/Archives/edgar/data/1555280/000155528020000054/a201910-kxexhibit417xd.htm)] [added: 4.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/a2021xex417xdescriptionofs.htm)[7](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/a2021xex417xdescriptionofs.htm)] | | | | | | Description of the Registrant’s [removed: Securities] [added: Securities†] | | |

| | | | | | | thereto and JPMorgan Chase Bank, N.A., as administrative [removed: agent†] [added: agent (incorporated by reference to Exhibit 10.11.2 to Zoetis Inc.'s] | | |

| [Exhibit [removed: 10.21](http://www.sec.gov/Archives/edgar/data/1555280/000155528013000017/zoetis-ex1025.htm)] [added: 10.21](http://www.sec.gov/Archives/edgar/data/0001555280/000155528018000269/a2018q310qex101.htm)] | | | | | | Zoetis Amended and Restated Non-Employee Director Deferred Compensation Plan (incorporated by reference to | | |

| [Exhibit 10.24](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/exhibit102412-31x20.htm) | | | | | | Amendment No. 1 to Zoetis Supplemental Savings Plan effective December 21, [removed: 2020†*] [added: 2020 (incorporated by reference to Exhibit 10.24] | | |

| [Exhibit [removed: 10.2](http://www.sec.gov/Archives/edgar/data/1555280/000155528014000335/exhibit105zoetisequitydefe.htm)[5](http://www.sec.gov/Archives/edgar/data/1555280/000155528014000335/exhibit105zoetisequitydefe.htm)] [added: 10.25](http://www.sec.gov/Archives/edgar/data/1555280/000155528014000335/exhibit105zoetisequitydefe.htm)] | | | | | | Zoetis Equity Deferral Plan, effective November 1, 2014 (incorporated by reference to Exhibit 10.5 to Zoetis Inc.’s | | |

| [Exhibit 10.26](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/exhibit102612-31x20.htm) | | | | | | Amendment No. 1 to Zoetis Equity Deferral Plan effective December 21, [removed: 2020†*] [added: 2020 (incorporated by reference to Exhibit 10.26] | | |

| [Exhibit [removed: 10.2](http://www.sec.gov/Archives/edgar/data/1555280/000119312519261144/d814554dex101.htm)[7](http://www.sec.gov/Archives/edgar/data/1555280/000119312519261144/d814554dex101.htm)] [added: 10.27](http://www.sec.gov/Archives/edgar/data/1555280/000119312519261144/d814554dex101.htm)] | | | | | | Letter Agreement dated as of October 2, 2019, by and between Juan Ramón Alaix and Zoetis Inc. (incorporated by | | |

| [Exhibit [removed: 10.2](http://www.sec.gov/Archives/edgar/data/1555280/000155528019000301/exhibit1012019q4clewis.htm)[8](http://www.sec.gov/Archives/edgar/data/1555280/000155528019000301/exhibit1012019q4clewis.htm)] [added: 10.28](http://www.sec.gov/Archives/edgar/data/1555280/000155528019000301/exhibit1012019q4clewis.htm)] | | | | | | Letter Agreement dated as of December 9, 2019, by and between Clinton A. Lewis, Jr. and Zoetis Inc. (incorporated by | | |

| [Exhibit [removed: 21.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex211-20201231.htm)] [added: 21.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex211-20211231.htm)] | | | | | | Subsidiaries of the Registrant † | | |

| [Exhibit [removed: 23.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex23-20201231.htm)] [added: 23.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex23-20211231.htm)] | | | | | | Consent of KPMG LLP † | | |

| [Exhibit [removed: 24.1](#ie099829c0b414b768acbbd22b285a2c1_286)] [added: 24.1](#i557a9d1dda324175b603a2d1c8e225ee_280)] | | | | | | Power of Attorney (included as part of signature page) † | | |

| [Exhibit [removed: 31.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex31120201231.htm)] [added: 31.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex31120211231.htm)] | | | | | | Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 † | | |

| [Exhibit [removed: 31.2](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex312-20201231.htm)] [added: 31.2](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex312-20211231.htm)] | | | | | | Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 † | | |

| [Exhibit [removed: 32.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex321-20201231.htm)] [added: 32.1](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex321-20211231.htm)] | | | | | | Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the | | |

| [Exhibit [removed: 32.2](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000098/ex322-20201231.htm)] [added: 32.2](https://www.sec.gov/Archives/edgar/data/1555280/000155528022000078/ex322-20211231.htm)] | | | | | | Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the | | |

| [added: | | | | | |] Zoetis Inc. | | | | | | [added: | | |]

| [removed: By:] | | | [removed: /S/ KRISTIN] [added: | | | | | | Kristin] C. [removed: PECK] [added: Peck] | | | [added: | | |]

| [added: Dated: February 15, 2022] | | | [removed: Kristin] [added: | | | By: | | | /S/ KRISTIN] C. [removed: Peck] [added: PECK] | | | [added: | | |]

| | | | [added: | | | | | |] Chief Executive Officer and Director | | | [added: | | |]

We, the undersigned directors and officers of Zoetis Inc., hereby severally constitute [removed: Kristen] [added: Kristin] C.

[removed: Peck and Heidi] Chen, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.

| /S/ KRISTIN C. PECK | | | | | | Chief Executive Officer and Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| [removed: Glenn David] [added: /S/ WETTENY JOSEPH] | | | [added: | | | Executive Vice President and] Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | | | | | | [removed: | | |] [added: February 15, 2022] | | |

| /S/ MICHAEL B. MCCALLISTER | | | | | | Chairman and Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ PAUL M. BISARO | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ FRANK A. D'AMELIO | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ SANJAY KHOSLA | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ ANTOINETTE R. LEATHERBERRY | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| [added: /S/] GREGORY NORDEN | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ LOUISE M. PARENT | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ WILLIE M. REED | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| /S/ LINDA RHODES | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

| [removed: /s/] [added: /S/] ROBERT W. SCULLY | | | | | | Director | | | | | | February [removed: 16, 2021] [added: 15, 2022] | | |

102 |

103 |

| | | | | | | 2020 Annual Report on Form 10-K filed on February 16, 2021 (File No. 001-35797)) | | |

104 |

| | | | | | | to Zoetis Inc.'s 2020 Annual Report on Form 10-K filed on February 16, 2021 (File No. 001-35797))* | | |

| | | | | | | to Zoetis Inc.'s 2020 Annual Report on Form 10-K filed on February 16, 2021 (File No. 001-35797))* | | |

| [Exhibit 10.29](https://www.sec.gov/Archives/edgar/data/1555280/000110465921064249/tm2115787d1_ex10-1.htm) | | | | | | Offer Letter, dated as of May 6, 2021, by and between Wetteny Joseph and Zoetis Inc. (incorporated by reference to Exhibit 10.1 | | |

| | | | | | | to Zoetis Inc.'s Current Report on Form 8-K filed on May 11, 2021 (File No. 001-35797))* | | |

| [Exhibit 10.30](https://www.sec.gov/Archives/edgar/data/1555280/000155528021000287/exhibit101-amendmentno2toz.htm) | | | | | | Amendment No. 2 to Zoetis Supplemental Savings Plan effective May 15, 2021 (incorporated by reference to Exhibit 10.1 to | | |

105 |

Peck and Heidi C.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Wetteny Joseph | | | | | | | | | | | | | | |

| | | | | | | statement on Form S-1 (File No. 333-183254)) | | |

| | | | | | | filed on August 20, 2018 (File No. 001-35797)) | | |

107 |

| [Exhibit 4.17](https://www.sec.gov/Archives/edgar/data/1555280/000119312520140399/d901166dex42.htm) | | | | | | Form of 2.000% Senior Notes due 2030 (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form 8-K | | |

| [Exhibit 4.18](https://www.sec.gov/Archives/edgar/data/1555280/000119312520140399/d901166dex42.htm) | | | | | | Form of 3.000% Senior Notes due 2050 (incorporated by reference to Exhibit 4.2 to Zoetis Inc.’s Current Report on Form 8-K | | |

108 |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

109 |

Dated: February 16, 2021

| /S/ GLENN DAVID | | | | | | Executive Vice President and | | | | | | February 16, 2021 | | |

| /S/ JUAN RAMÓN ALAIX | | | | | | Director | | | | | | February 16, 2021 | | |

| Juan Ramón Alaix | | | | | | | | | | | | | | |

| /S/ WILLIAM C. STEERE, JR. | | | | | | Director | | | | | | February 16, 2021 | | |

| William C. Steere, Jr. | | | | | | | | | | | | | | |

110 |