Speaker 1 (00:03):
From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now at the NYC and at ICE's exchanges and clearing houses around the world. And now welcome inside the ICE House, here's your host, Josh King, of Intercontinental Exchange.
Josh King (00:46):
Harry S. Truman, our 33rd president once said, "If you want a friend in Washington, get a dog." He had Feller, a Cocker Spaniel, and Mike, an Irish Setter. When I was working for Bill Clinton in the White House, the increasingly embattled president hadn't yet got that memo. He had a cat that went by the name of Socks to be joined only years later by a chocolate Lab named Buddy.
Josh King (01:11):
The Bushes famously had two Scotty's named Barney and Miss Beazley, and that their ranch in Texas, a longhorn cow named Ofelia. They were followed by the Obama's Portuguese Water Dogs, Bo and Sunny, the last presidential pets to reside in the White House, until German shepherds Champ and Major moved in this January. Major, not without some adjustment challenges. Even with those minor dust ups with the secret service, though, it was good to have K-9 companionship back at 1600 Pennsylvania Avenue, following a four-year absence of barks and wags during the dogless years of Donald J. Trump.
Josh King (01:47):
My family's now on the third of our success of string of Rhodesian Ridgebacks. Cancer took the first in 2007. Old age, the second in 2020. And we were quick to get back into the animal companion business with Daisy's arrival here in the middle of the pandemic last year, joining the two-thirds of American households who have a pet, with a they noticeable spike during the lockdown. Now, a lot of those new owners are heading back to work, but what isn't going away is the amount of money being spent to care, feed, monitor, and protect the animals who share our homes.
Josh King (02:24):
According to the American Pet Association, in 2020, $103 billion was spent on pets in the US alone. That's a lot of leashes, dog beds, GPS trackers. And as I know, along with crates and kibble, tick collars, vet visits, and $40 bowls from Yeti. And in the animal health space alone, there were about 383 million companion animals and 640 million food animals in the US. And the products that keep pets, livestock, poultry, swine, and every other species that we interact with healthy, whether for love or sustenance, represents an economic impact of about $55 billion.
Josh King (03:07):
Our guest today, Kristin Peck, knows a thing or two about the big business of animal care, as the CEO of Zoetis, the largest animal health company in the world. How large? Well, to quote Kristin, "If you have a dog or cat on your couch, or you like to drink milk or eat protein, we affect your life in some way." Let me say, with the exception of the cat, I do all of those things. Our conversation Kristin Peck on the innovations improving animal health, the explosion of the pet care industry, and why the future of sustainable food involves a Fitbit on every cow. It's coming up right after this.
Speaker 3 (03:49):
The growth of Brent crude is the story of a global benchmark. It's the story of managing risk as market dynamics, technology and economies evolve. And it's the story of Intercontinental Exchange. Oil was largely considered a landlocked commodity, until Brent was discovered and extracted from the North Sea floor in the 1970s. As production became commercialized, market participants needed protection against price moves. In response, the Brent futures contract was developed by the oil industry in the 1980s. Brent quickly became the global price benchmark for crude oil as a waterborne supply, easily transported across trade routes, and is the basis for refined products such as diesel and jet fuel.
Speaker 4 (04:31):
In 2001, when ICE first acquired the International Petroleum Exchange, the Brent contract had just begun its ascent towards being recognized as a global benchmark. We worked with the industry to shift towards electronic trading and it transformed the market, boosting transparency and market access. We've worked closely with our customers to manage their oil price risk across global markets. We serve a wide range of customers, from commercial users and producers, to financial players.
Speaker 3 (04:55):
With over 20 plus consecutive years of record volume, ICE Futures Europe is the world's leading global oil exchange. Two-thirds of the world's oil is priced relative to Brent, providing security and liquidity to the global market. And at ICE, we're helping customers navigate global oil markets.
Josh King (05:16):
Our guest today, Kristin Peck, was appointed CEO of Zoetis, that's NYSE ticker symbol ZTS, in January, 2020. She previously was Zoetis's executive vice president and group president for US operations, business development and strategy. And earlier in her career, she held executive positions at Pfizer, that's NYSE ticker symbol PFE, and the Boston Consulting Group. Welcome, Kristin, inside the ICE House.
Kristin Peck (05:42):
Thanks, Josh. It's great to be here.
Josh King (05:44):
You're heading to Stifel's 2021 Virtual Jaws and Paws Conference next week. Will the minor scandal involving Major Biden's jaws require its own breakout panel discussion?
Kristin Peck (05:55):
I'm sincerely hoping not. It is a big scandal, I will say. I mean, there haven't been that many in the White House have these challenges. The dog is at the end of the day, they're still, at least for me, the animals I love coming home to who never talk back and are always happy to see me. And with that, I think they'll still be in good stead.
Josh King (06:12):
What pets do you have beside Poppy and Sky?
Kristin Peck (06:16):
Poppy, Sky. And I also have a bird, Kiwi. But actually I grew up with every animal. My family raised Morgan horses and my sister did Medal Maclay riding. We generally had four dogs and we lived in the country. We always had a few birds, cockatiels, cockatoos, you name it, we had it. So my mom wanted chickens. We didn't actually end with chickens. But as you probably know, my first job was actually in animal health for ironically a legacies Zoetis company at American Equine products. So maybe you could say animals were in my blood from the beginning.
Josh King (06:49):
Give us a preview of the broad message you'll carry to Stifel beyond sort of the breakout session on Major Biden's brouhaha.
Kristin Peck (06:56):
I mean, I think the key message for the animal health industry overall has been the resilience. People have always looked at it as an industry that's had pretty steady growth. If you look at Zoetis, for example, since we IPO's, which is about nine years ago, we've had steady growth above the market, call it 7% plus year in, year out. And as you look at the pandemic last year, you really saw the essential nature of what we do, whether or not you had a pet.
Kristin Peck (07:25):
And it's nice to welcome you, Josh, as one of the many new pandemic pet owners, although you were a pet owner before. And really, if you look at Zoetis's portfolio in particular, it's also the diversity of that. So although it was a challenging time for livestock as more people ate in versus going out, less entertainment, less travel and tourism, what you really start was as a global company with about half as business in the US, half outside, with a nice split between companion animal and livestock, what you're really seeing is the resilience of our industry and the diversity of our portfolio.
Kristin Peck (08:01):
And as you probably saw in Q1 of this year, we actually had our best quarter ever. So across species, we make products for eight species of animals at Zoetis. We make medicines, vaccines, diagnostics, devices, monoclonal antibodies, even nutritionals for horses, dogs, and cats.
Josh King (08:19):
In recent weeks, Kristin, there's been reporting about how the return to office is going to affect pets and the pet industry. I was looking at the Zoetis history timeline on your website and noted the 2016 move into your new global headquarters in Parsippany. I'm curious, are pets allowed there?
Kristin Peck (08:35):
Yes, they are allowed here. We definitely have a pet-friendly office space here and we're looking to make it even more pet friendly as we think about our return to the workplace, where we're going to make sure that we've got flexibility. And I do think that for many businesses, the ability to let colleagues bring their pets to work will certainly encourage more people to come in. And I know I always love going... My one dog is approved, Sky. Poppy doesn't exactly get approved for in the office. She's not as friendly with all other dogs, but I always love going out to the people who have their dogs in the office.
Josh King (09:06):
I mean, it makes me want to sign up for Zoetis right now because of all the roles that I've had, it's always been a corporate suit and tie type role, and I desperately want to have Daisy curled up at the feet. What does it take to get approved?
Kristin Peck (09:20):
I mean, for starters, you either have to have all your vaccines, but you also have to have a pet that gets along well with other pets and that also doesn't have any accidents in the office. So there's a little tryout period once you fill that out and if your dog makes it, it gets approved. My dog actually has its own ID. Dogs here have their own ID's. So Sky has her own ID for Zoetis.
Josh King (09:38):
Have companion animal trends evolved over the past year? And do you see a drawback as people are going to, unless they work at Zoetis or another pet-friendly office, spend less time with and presumably maybe less money on their pets?
Kristin Peck (09:52):
Well, the trends that we're really seeing is that people are spending more time with their pets and they're noticing more about their pets. And as you've looked at the trends in spend per visit for vet clinics, it continues to go up as people are really noticing and asking more questions, engaging more. And as you know, pets can't speak, so that also means more diagnostics when they do so.
Kristin Peck (10:12):
But I think the other important trend is, who's adopting a lot of these pets? And you've got a lot of millennials and Gen Z's adopting pets, and they tend to spend more on their pets. So we really do see this as a trend that's going to continue. They've become important parts of your family. I think many people will be more flexible in how they return to work. So I think you're going to continue to see an increased spend per pet and people just spending more time at home.
Josh King (10:37):
After business school at Columbia, you joined BCG. How did that opportunity, particularly being able to work across a number of clients, not necessarily in this industry or space, help you hone your leadership skills?
Kristin Peck (10:49):
Sure. I mean, I think really, I go back down to what I think my purpose as a leader really is. I spent some time when I was in college in Ecuador and I thought I'd actually was going to go into foreign service through social work. And really what doing that taught me was really the best way to impact an industry is to drive growth, to drive jobs, and to empower people to take control of their own life and their own success.
Kristin Peck (11:13):
And I think that experience then has really led to most of my jobs. And what I loved when I was in the Boston Consulting Group is helping companies figure out how to drive growth, to turn around their business, how to create new opportunities for organizations and for people. And one thing consulting will teach you is it's a lot about influence. It's not just about power. It's, how do you set a vision?
Kristin Peck (11:33):
How do you inspire people to go after that vision and to achieve their own personal goals and their own personal purpose? And so I think being able to do that across multiple industries when I was at Boston Consulting Group was just a great lesson and certainly it led me to joining Pfizer. I had leadership team roles there. And thankfully then being part of the spinoff to become Zoetis.
Josh King (11:54):
In 2004, Kristin, you joined Pfizer, now the creator of one of our COVID-19 vaccines. And whether human or animal medicine, pharmaceutical companies seem to rise and fall on their ability to constantly innovate, age, size, often viewed as the enemy of invention. But Pfizer, one of the largest and oldest companies on the exchange today, is there a secret to their success? And do you model anything at Zoetis today after what you learned there?
Kristin Peck (12:22):
Certainly a culture of innovation is something we definitely modeled off our experience there.It's a willingness to pursue disruptive innovation, very similar to what Pfizer has done. It's willing to really make big bets in areas that make a big difference in medicine. And for us at Zoetis, that's looking at the opportunities in the animal health space. And we've been one of the most innovative companies for the last eight years in the animal health space.
Kristin Peck (12:45):
There are some great technologies that many people even aren't aware that animal health has, such as monoclonal antibodies. We have one for atopic dermatitis, cytopoint, and we recently got approval in Europe for Librela and Solensia, which are monoclonal antibodies for the alleviation of pain from osteoarthritis. So really exciting spaces. But also diagnostics. We've launched a product called IMAGYST, which is a diagnostic using cloud-based AI.
Kristin Peck (13:13):
So there's really exciting spaces you're seeing coming into animal health. and not to mention really important things like parasiticide. I'm sure with your dogs you've seen ticks and fleas. We have a combination product in Simparica TRIO, an injectable for heartworm called ProHeart. It's just an exciting time to be in the space overall, whether that's in vaccines or medicines or preventatives, just a really nice time to see innovation across different devices.
Josh King (13:41):
I mean, bring us into the strategy session on Pfizer's decision to spin. I mean, it's an extremely profitable business for the company, a very large part of the business for the company. Why does a human pharmaceutical behemoth decide to spin off and create a standalone company like Zoetis?
Kristin Peck (13:58):
I think what they saw was the opportunity to create value from a Pfizer's perspective, to create value for their shareholders. Animal health was a business that consistently grew in the sort of mid single digits, which was faster than Pfizer was growing, given it was facing many loss of exclusivity. And what they saw was a PE arbitrage. And that was Pfizer's perspective. They could probably spin it off.
Kristin Peck (14:22):
As you probably remember, they got $14 billion in equity and a few billion in debt. It created value for their shareholders. But I think what was really an amazing opportunity was also for the investors who stayed with Zoetis and for the customers. And that was to have a company single-handedly focused on animal health, every decision was going to be different. And people sort of say, "Is that really true? What does that really mean?"
Kristin Peck (14:44):
But we sell our products to small business owners, to vets and producers, and they have very different needs than selling to large distributors like you do in human health. We sell directly to a vet. So being able to have online bill pay. What does your customer service look like? It's very, very different, the innovations we needed to invest in, the technologies from not just R&D, but from our manufacturing sites were quite different. We make a lot of skews. We have eight species of animals across the world. So we can make different decisions in how we allocated capital that created outsized returns for our customers, for our colleagues and for our shareholders.
Josh King (15:24):
You're there on the podium of the New York Stock Exchange February 1st, 2013, with your then CEO Juan Ramon Alaix. Bring us back to like February 2nd, 2013, getting back to the office and saying, now we have to actually stake out on our own. What was it like?
Kristin Peck (15:41):
First of all, I'll never forget that day. I'll never forget standing on the podium and the cheers, the bell. It was an awesome responsibility. I mean, it was a great opportunity. But I sort of say it was sort of like being born an adults. We had customers we had to ship, we had set up our own supply chain, our own quality, put our own financials out there. It was a stressful time to make sure that you did right by all of your stakeholders.
Kristin Peck (16:11):
Certainly the colleagues, the customers and the shareholders at the time. And I'd say the first few years were just standing up a company, really just doing everything for the first time. And a part of Pfizer, somebody else did all that. We had to do it ourselves. And of those who have followed us, obviously we've had phenomenal returns since we IPO's, but it wasn't a straight line.
Kristin Peck (16:31):
It was first establishing ourselves as a company, what I would say is our first phase of growth. And then the second was, okay, where do we have efficiencies? Once we were sure we could make it, ship it, bill it, and sell it. The next question was, well, how do we do it more efficiently? And that was sort of our second phase. And now I think we're really in our third phase, which is really investing and driving outsized growth and looking for new opportunities and new technologies as we've done over the last few years. So it's been a great way of just creating value in different ways throughout our journey.
Josh King (17:01):
Talking about those new opportunities, new technologies, you have led many of Zoetis's acquisitions, such as a Abaxis and Platinum Performance. But as its CEO, you've gone on record saying any large deals might raise antitrust complications. What does the competitive landscape look like for animal health today and where does Zoetis fit into it?
Kristin Peck (17:21):
Sure. We are the world's largest animal health company. And as you look at that, defined mostly in these sort of medicines vaccines, we're one of the only large animal health companies that are in medicine vaccines that also run diagnostics. So we're probably a little bit broader. But as you look at the industry and you look at other large companies, the only other large independent would be Elanco.
Kristin Peck (17:44):
You've also got Fibro. And then others are owned by large pharma, so Merck and Boehringer Ingelheim. So we compete against well-capitalized companies, all with pretty broad portfolios. So I'd say the consolidation of those top few companies will be pretty difficult from an antitrust perspective. But there's lots of other great growth opportunities we believe for Zoetis and new technologies, potentially in new geographies.
Kristin Peck (18:09):
So we still think there's great opportunities out there, but it's probably not another large pharmaceutical company. We also don't really need the size and scale. So what we really look at is opportunities to leverage our strong infrastructure to take other new technologies and new products and leverage it.
Josh King (18:28):
So it's January, I guess, 2020. The pandemic has not yet set in. I don't know if you had any early radar about it and its impact. But that's when you were going to succeed Juan Ramon as the company's second ever CEO. And not unlike president Biden, who I talked about with a Champ and Major at the resolute desk, you start out with a 100-day plan. What was your vision and your priorities for the company?
Kristin Peck (18:54):
So when I took over, it was to build off the phenomenal platform that Juan Ramon had established and that we'd established in the first seven or so years. I had set out five strategic priorities for my tenure ship. first was to continue to drive innovative growth. Second is to really accelerate our digital and data strategy, to delight our customers, to make sure we had a high-performing culture, and then to drive a healthier and more sustainable world.
Kristin Peck (19:24):
So those were my strategies. I had a great world tour planned to travel the world, to meet with customers, meet with colleagues, to share these strategies. And I would saY I didn't realize... we certainly knew... Our second largest market, as you know, is China. So we were quite plugged in quite early on and were quite focused on COVID, although I honestly had no idea where it was going to go. But I also I'm an optimist at heart. I always say I'm a frustrated optimist.
Kristin Peck (19:52):
I'm optimistic, but always looking for a better way. And I guess what I'd say is I had the opportunity to really engage and connect with colleagues all over the world, which is not how I planned, much more through virtual market visits, which I did, but as well as weekly communications, which I have to say, I didn't really ever imagine sending weekly communications for many months to colleagues about how we were doing and making sure we could be safe, feel safe, et cetera. It was quite an interesting time to be a new leader, but I think it also gave me the opportunity to connect on a much more personal level with our colleagues and our customers around the world.
Josh King (20:26):
You are a manufacturing company so about a third of your workforce remained on plant floors, but many of those 10,000 employees went remote. How did you ensure that everyone on and offsite were connected, not just your own personal connections, but systems and infrastructure that you might not have thought back when you made this succession in 2020 you'd need to put into immediate effect?
Kristin Peck (20:50):
Well, the first thing we did was decide what the global principles were going to be for the company. And they were really simple: that all of our colleagues and our customers should be safe and they should feel safe. And really after that, we let each of the markets and each of the sides decide what that meant. Because over the last year and a half, it's really evolved whether or not, to your point, you are in a manufacturing site.
Kristin Peck (21:12):
And luckily, they were all in full PPE. Anyway, we make vaccines and medicines. So they were in personal protective equipment even before the pandemic. We probably were much stricter. We did have to implement social distancing, staggered shifts. We make life-saving medications and some of that to make sure that you have a safe and affordable food supply. So it was critical that we could maintain operations throughout that entire period.
Kristin Peck (21:35):
That also meant if you weren't critical to operations daily at the site, you needed to get off the site to lower the bio burden. So distribution sites were slightly different. Our field force colleagues we obviously pulled. Our office colleagues as well could try to work from home. We had a really strong infrastructure. So from a digital and data perspective, we really were able to move very quickly to be remote and to be effective.
Kristin Peck (21:57):
We actually, as you probably know, had one of the largest product launches in Zoetis's history scheduled for April of 2020, which was for Simparica Trio. And I'm really proud of how flexible and agile our organization was to launch that product and to meet the original guidance we'd set in January of 2020 at the end of last year for that product. So it says a lot about how we pivoted and found new ways to connect with our customers through incredibly difficult times.
Josh King (22:23):
There's so much debate, Kristin, in the business world as to what the past year is going to mean for the future of work. Some companies choosing to return to the pre-pandemic status quo, others making these radical changes to their operations. What are your thoughts on the future of the office? And can you share your plan as of today for your company?
Kristin Peck (22:42):
I think one of the most enduring lessons of COVID is around flexibility. And I think one thing we learned is our colleagues and our customers were more flexible and agile and more resilient than most people thought. And my personal perspective is that they've earned the right to maintain that flexibility. They've demonstrated they can achieve tremendous results. I think most of us miss the opportunity to connect more. So I hope we can bring colleagues together in person to connect.
Kristin Peck (23:09):
But we've said we're going to have flexibility as a common policy across our company wherever it makes business sense, obviously, and meets business needs. And as importantly, we've also decided that we're going to be flexible about our flexibility. And what that means is it's not just the ability to work from home or in the office. It's also what times those are and letting families do things that work for them. I think they've proven that they can get that job done. So wherever it makes business sense for us and it meets business needs, we are going to keep flexibility as a core way we operate across Zoetis and across the world.
Josh King (23:47):
After the break, Kristin Peck, the CEO of Zoetis, and I discuss how technology is making animal health less expensive, more sustainable, and accessible. That's all coming up right after this.
Speaker 3 (24:01):
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Josh King (24:37):
Welcome back. Before the break, Kristin Peck, the CEO of Zoetis, and I were discussing her career arc and the growth of Zoetis from a Pfizer division into the largest animal health company in the world. Before the break, Kristin, we were discussing the future of work, which does remain somewhat in flux. What is clear is the amount Americans spend on their pets and the growth of e-commerce in the midst of a major growth spurt? How have both of these trends affected Zoetis?
Speaker 3 (25:05):
Well, I think if you look at our sustainable growth drivers going forward, I think you look at 2020 and 2021, for starters, spending on pets in the US, as everyone's talked about, has been accelerating. And we really don't see that slowing down. We think as you look at the new generations adopting pets, they're spending more time with their pets. They're members of their family and they're spending more on those pets.
Speaker 3 (25:28):
And we really see that as an enduring strategy. And as you look at some of the disruptive and innovative technologies that Zoetis has been launching and will continue to launch, we see this as just a great growth driver, whether that's in preventative, such as Simparica Trio or our monoclonal antibody portfolio, or our germ portfolio in APOQUEL and Cytopoint.
Speaker 3 (25:48):
The second thing is you're really looking at a sustainable growth driver over the next few years is just some of the international markets. As you saw in Q1, our China business grew 75%, our Brazil business 48%. So there's still great growth outside of the US in markets that are still really growing fast in pet care and in livestock. And I think the third trend that we're really excited about is just how engaged vets are and consumers are in diagnostics and really bringing some disruptive technologies such as our IMAGYS platform to that space and being able to get better diagnosis for better treatment for our pets.
Josh King (26:24):
I think there was a 16% growth in the fourth quarter in companion animal diagnostics. That I guess suggests a rise in physical visits. What permanent shifts do you expect in the veterinarian field?
Speaker 3 (26:38):
So I think part of it is a rise and visits, but a lot of it is also just using more diagnostics in visits. So what we're seeing is a lot of pet owners are doing curbside drop-offs and the vet will say, "Well, I'm going to recommend these diagnostics." And they can get a really good sense. And then they call the customer back. And there's just a greater willingness to run some of those diagnostics at wellness visits.
Speaker 3 (27:00):
And so one thing we're really trying to work with vets on is helping look at, what is a customer journey? I have an itchy dog. What is the test I'm going to run? And what am I going to recommend? I have a wellness visit, I have a dog in pain, et cetera. It's making sure that we can give the best care to every pet and it's partnering with vets to be able to do that.
Josh King (27:19):
You once said I think that, and I'm going to quote you here, "Companies focused on making drugs for humans are all about home run products, but Zoetis stands in contrast to that." You added, "In animal health, singles and doubles make a big difference." How does Zoetis use the diversity of its products to stack up those singles and doubles into a winning game?
Speaker 3 (27:39):
Analyst's sometimes have trouble modeling us because you really do have to look at the singles and doubles, which is new indications. So with the same product, adding an indication or adding a market. So we recently got approval for our Fostera PCV MH in Europe, additional approvals of Cytopoint in a new market. These are just incremental things that continue to deliver. That diversity of a portfolio and getting even some of our older products approved in new markets, like revolution in new markets, it makes a big difference as we continue to build the portfolio.
Speaker 3 (28:12):
We had eight species of animals. They get different diseases in different places. We have different approval timelines for different products. We can launch a vaccine that might be $10 million and no one's modeling that. But it makes a difference to the care of animals, which is what we're really focused on. So when we look at our innovative pipeline and we prioritize our portfolio, we look at the ROI of every product and we make some big bets around big technologies, which we've certainly talked about. But I think if you look at the consistency of our performance, it's a lot also about just executing singles and doubles repeatedly.
Josh King (28:46):
Talking about those eight species, Kristin, people may balk at the idea that there are overlaps between their pets and the food products in their fridge, and also the synergies between those companion pets and also the farm animal businesses that you're able to realize. How are you able to sort of bridge between these two things and realize scale the way you can?
Speaker 3 (29:09):
So the products are generally very different that you're going to be using, but the technologies behind them are common. Biology, chemistry, technology platforms, such as vaccines, things like that. So I think that's really where you see the leverage, is from an R&D and from a manufacturing perspective. The way the diseases that some of these animals get can be quite different, but the technologies that underline the vaccines or the medicines that they use are common.
Speaker 3 (29:35):
And we're looking to even take some of the diagnostics that we use in the pet care side and figure out how to bring those shoot side or barn side for the livestock sector as well. So we're really taking technologies in one species and carrying that across.
Josh King (29:50):
The world has become far too aware of the risk of an epidemic jumping from animals to humans. How does Zoetis and it's partnerships with institutions like Texas A&M, for example, monitor diseases affecting livestock really across the world?
Speaker 3 (30:05):
I think what some consumers aren't yet aware of is that 70% of infectious diseases in humans are zoonotic, which is they move from one animal to another. So staying on top of emerging infectious diseases as animals is actually critical to human health as well. So we are really active in the US, in Europe and across Asia in looking at what we call EID's or Emerging Infectious Diseases.
Speaker 3 (30:28):
Being first to know when there is an outbreak. What is it? How do we make sure we can create a vaccine? And we've had a history of doing this repeatedly when there's been different ones, whether it be West Nile, Hendra, different emerging infectious diseases. But this is really important to animal health, certainly, but also to human health. And I think you're seeing more universities such as Texas A&M, more governments, more nations across the world investing more in understanding animal health. Certainly as you look at COVID, it was the zoonotic disease that had its origins in other species.
Josh King (31:03):
Animal medicines, vaccines, treatments, like those for humans, have to go through this elaborate approval process. What is Zoetis's strategy for bringing a new product to market? Do you have a set playbook or is each innovation given a customized rollout?
Speaker 3 (31:20):
Each innovation is slightly different. It depends on what species it's in, what market, and whether it's a new technology or a technology that's been around for a long time. I'll use as an example, launching Cytopoint, it was through the USDA, not the FDA. So it was the first animal health monoclonal antibody. We have different regulators, depending on the mechanism of action at times for some of our products.
Speaker 3 (31:43):
And we really brought it first to specialists, got them really comfortable with it, then eventually moved it over as it got final approval into general practitioners. But it was getting that comfortable with injectable monoclonal antibodies and pats, which was the first time it had ever been done. So that's quite different than launching a parasiticide in a market where you leverage direct to consumer advertising, et cetera.
Speaker 3 (32:05):
So we really have become known for building markets for new technologies and new products that never existed before. And there's lots of new spaces, like we launched the first ever AI cloud-driven diagnostic. And bringing these to market takes a customized approach by species by market as you look at those opportunities. And certainly working with regulators on some of these new technologies as well as you've heard in the human health, it's a partnership.
Josh King (32:31):
One of the things I love to geek out on is people talk about the importance of bringing a high-speed broadband out into our rural communities, particularly for the agricultural applications that can result why accessible broadband among rural communities is something that the modern farm really needs.
Speaker 3 (32:50):
Well, I think having accessible broadband is something that our rural communities need, period, as well as for what we're looking to do in livestock farming. But if you look back at the purpose of Zoetis, which is really around nurturing the world and humankind by advancing animal care, that also means those communities and we're quite active on this issue of advancing rural broadband.
Speaker 3 (33:10):
It also has important opportunities for caring of animals. So we're invested, as you know, in precision livestock farming. So looking at sensors and technologies you can put on an individual animal to look at the individual animals care. Better understanding. Are they eating well? Are they healthy? When should we breed that animal? Making better decisions to use less resources, et cetera. So that will require more broadband coverage across rural America, which we think is really important. But we also just think it's important for the livelihoods, for the education, and for the development of those communities.
Josh King (33:45):
So you'll see an Apple Watch on every hook?
Speaker 3 (33:48):
I don't know about an Apple Watch. Sometimes they're ear tags and sometimes they're colors. I think you can be more efficient with the resources that you use, both in feed, in medicines, in everything, if you can better monitor these animals. I'm not sure you're going to see an Apple Watch. That might be a little pricey. I'm not sure our customers would be willing to pay for that. But we really do think that precision livestock farming and better traceability of our food chain is a really important trend going forward.
Josh King (34:19):
Speaking of technology, not necessarily the Apple Watch on the hook, but what investments have you made in genetics and leveraging blockchain technology to support it?
Speaker 3 (34:28):
So we're quite excited with genetics. And for Zoetis, our focus in genetics is genetic testing. So we can better predict which animals to breed based on which are going to be healthier, which are going to have more of the qualities that you want in the animal. It might be more fertile, et cetera. And this is really important, again, to make sure that we're using the limited resources more effectively.
Speaker 3 (34:49):
But we're also really excited as you combine genetics with precision livestock farming and blockchain to create better traceability throughout the food supply chain. To be able to have the consumer know, for example, in the future that this animal was vaccinated for all the core things. The animal lived life in a certain way. It was antibiotic free. You really are going to need the combination of precision livestock farming and traceability with blockchain to achieve some of this and to be able to do that starting with genetics.
Speaker 3 (35:19):
So I think the real opportunity is when you bring some of these different spaces together. So the precision livestock farming with the genetics, with the blockchain really creates new opportunities, new areas to provide value for consumers, as well as the whole supply chain.
Josh King (35:35):
One fact that analytics has shown again and again, Kristin, is the diversity among decision makers leads to better results. How has Zoetis embraced diversity, not just in the C-suite and among your board of directors, but really across the company?
Speaker 3 (35:53):
It's a core value for us really trying to make sure that every colleague makes a difference. We have core beliefs and that's what it is. And I think that's about every colleague feeling they can bring their full self to work each day. I think if you look at the success that Zoetis had over the last nine years, I think so much of that has been driven by our culture. And although we, as you probably know, have one of the most diverse boards and one of the most diverse executive teams probably in the S&P 500, there's a lot more we need to do across the company.
Speaker 3 (36:23):
And it's really about spending time as we have over the last year and a half training our colleagues on, what does inclusion mean? Inclusion is global. I mean, diversity is generally defined locally. But there's more we need to do to make sure every colleague feels they can bring their full self to work each day, can have the impact, can challenge the thinking. We serve diverse populations, whether that be in dogs, cats, horses, chickens, cows, you name it. And we want to make sure we can meet our customers where they are and be able to have each of our colleagues be able to do the same.
Speaker 3 (36:53):
And so we spend a lot of time, first, being public about what our metrics are. As you know, we were one of the first companies in our industry to publish where our metrics were and to set targets and to measure our progress against those. So we're quite focused on it. We're proud of sort of their legacy of some of that diversity, but we still think we've got a ways to go to continue to make progress there.
Josh King (37:15):
Talking about a ways to go, despite some strides that we track here at the New York Stock Exchange, female CEOs, particularly of Fortune 500 companies, remain underrepresented. How can companies create a more inclusive culture to allow everyone to rise through the ranks sort of based on your own experiences as you've found your way to the C-suite?
Speaker 3 (37:35):
Well, I think it is about creating an environment where everyone feels that they're able to contribute. And I think making sure that we develop talent and think differently about the leadership behaviors that you need in the future. I think as we look at it, it's awareness. We want learning agile people who can bring the best, who develop diverse talent. I think it's our ability to train our leaders and how to do that, and then to measure progress in doing so.
Speaker 3 (38:00):
And that's for women, but that's also for minorities. It's for LGBTQ. I mean, I think there's lots of different communities where we're underrepresented in CEOs, in leadership at many different levels. But I think it's the same thing that helped me. I mean, I was really grateful as I talked about from my experiences at both Pfizer and at Zoetis to be mentored by phenomenal men who took an interest in me, who pushed me, who gave me great coaching throughout my career. So I do think it's across men and women to make sure that they're developing a diverse pipeline, but it's really just about creating an environment where all colleagues feel they can be valued.
Josh King (38:37):
So, as we wrap up, Kristin, your leadership and Zoetis's success has been broadly recognized in 2020, including Fortune naming you to its top 20 business persons list. Building off of your success in these abnormal times, what are your business and personal goals for the second half of 2021 and beyond that?
Speaker 3 (38:58):
Well, my goal overall is to continue to provide value for our customers by creating an engaged culture where my colleagues really every day come excited to make a difference for our customers. I think what I feel most excited about at Zoetis is some of the incredible technologies that we'll be launching and getting our customers, whether that be vet or producers, to embrace these new technologies.
Speaker 3 (39:23):
And that comes with everyday coming in and thinking, what does my customer need today? How do I best connect with them? How do I develop my colleagues to teach that? The thing I enjoy most is sitting down with our colleagues and our customers to sort of hear what's on their mind. And as I look at the opportunities Zoetis has this year to continue to drive growth in our pet care business, to continue to drive growth in China, Brazil, and our diagnostics business, and to really have a positive impact in the care of animals and providing that.
Josh King (39:52):
You talked about some of the technologies you're excited about. One of my favorite things for Daisy is my attractive GPS device that I put on her collar. Just give us a bit of a glimpse into the future about things that should really excite us about animal health in the years ahead.
Speaker 3 (40:07):
Well, I think what's really exciting is the opportunity to better diagnose illnesses or wellness earlier and therefore to have more preventative care, whether that be in vaccines or whether that's in biologics. But I think the ability to set biomarkers, for example, to know whether your animal is going to get osteoarthritis quite early, so you can treat it before that damage really gets into joints and things like that.
Speaker 3 (40:32):
I think a lot of the exciting technologies that you're seeing in human health are coming to animal health as well, and to keep our animals well longer versus just doing the sick care. And so we're excited there by the areas of genetics, by the areas of diagnostics and biologics as well to keep our animals healthier, longer and well.
Josh King (40:50):
Well, I will bring all this home to Daisy and we'll talk about it over dinner tonight. Kristin, thanks so much for joining us inside the ICE House.
Speaker 3 (40:58):
Thanks so much, Josh.
Josh King (40:59):
And that's our conversation for this week. Our guest was Kristin Peck, CEO of Zoetis, NYSC ticker symbol ZTS. If you liked what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a question or comment you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us at ICE House Podcast. Our show is produced by Stefan Creel with production assistance from Pete Asch. I'm Josh King, your host, signing off in the library of the New York Stock Exchange. Thanks for listening. We'll talk to you next.
Speaker 3 (41:38):
The information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length of clarity.