ZOETIS INC.

Customer and revenue · Customer concentration and key customer dependence

If one or more of our large customers, including distributors, discontinue their relationship with us as a result of economic conditions, public health conditions, sanctions or otherwise, our operating results and financial condition may be materially adversely affected.

Innovation and product development · Time to market and commercialization risks

We may experience difficulties or delays in the development and commercialization of new products. New products may appear promising in development but fail to reach the market within the expected or optimal timeframe, or at all.

Strategic execution · Merger acquisition and divestiture risks

We may not successfully acquire and integrate other businesses, license rights to technologies or products, form and manage alliances or divest businesses. We pursue acquisitions, technology licensing arrangements, strategic alliances or divestitures of some of our businesses as part of our business strategy.

Innovation and product development · Product development and randd investment risks

There are many difficulties and uncertainties inherent in animal health research and development, the introduction of new products and indications, business development activities to enhance or refine our product pipeline and the commercialization of our products. There is a high rate of failure inherent in medicine and vaccine discovery and development.

Innovation and product development · Intellectual property protection and infringement

If our intellectual property rights are challenged or circumvented, competitors may be able to take advantage of our research and development efforts. Our long-term success largely depends on our ability to market technologically competitive products.

Market position and competition · Competitive pressure and market share loss

The animal health industry is highly competitive. We believe many of our competitors are conducting R&D activities in areas served by our products and in areas in which we are developing products. Our competitors include standalone animal health businesses, start-up companies working in the animal health area and the animal health businesses of large pharmaceutical companies.

Industry regulation · Safety and environmental regulations

A failure to comply with the environmental, health and safety laws and regulations to which we are subject, including any permits issued thereunder, may result in environmental remediation costs, loss of permits, public regulatory communications or announcements, fines, penalties or other adverse governmental or private actions.

Industry regulation · Regulatory compliance and changes

As a global company, we are subject to various state, federal and international laws and regulations, including but not limited to, regulations relating to the research, development, quality assurance, manufacturing, data protection, environmental protection, importation, exportation, distribution, marketing and sale of our products.

Geopolitical and trade · Regulatory and policy uncertainty

Furthermore, we cannot predict the nature of future laws, regulations, or changes in tax laws and tariffs, nor can we determine the effect that additional laws or regulations or changes in existing laws or regulations could have on our business when and if promulgated.

Social and demographic · Public perception and reputation

Public confidence in pharmaceuticals has been challenged in recent years by highly publicized debates about vaccine safety, the spread of misinformation and disinformation on traditional and social media, and increasing skepticism toward public health institutions including animal health institutions.

Geopolitical and trade · Government funding and budget changes

If a prolonged government shutdown or other disruption of normal business operations occurs, it could significantly impact the ability of the USDA, FDA, EPA and other agencies to timely review and process our regulatory submissions, including with respect to new product candidates.

Technology infrastructure · Cloud services and data center operations

We depend on third parties and applications on virtualized (cloud) infrastructure to operate and support our information systems and are currently in the process of a multi-year implementation process to update our enterprise resource planning (ERP) system to a new fully cloud-based system.

Cybersecurity and data protection · Data privacy and protection regulations

Our operations and reputation may be impacted if we do not comply with complex and continually evolving laws and regulations regarding data privacy information and the use of AI. We collect, store and use personal data of our customers, employees and suppliers, including sensitive personal data, such as health information in our human health business.

Digital transformation and innovation · Technology implementation and upgrades

The current transition of our ERP system is a multi-year implementation process; transitioning to new systems, integrating new systems into current systems or any disruptions or malfunctions (including from circumstances beyond our control) affecting our information systems could cause critical information upon which we rely to be delayed, unreliable, corrupted, insufficient or inaccessible.

Information management · Technology vendor dependence

We depend on third parties and applications on virtualized (cloud) infrastructure to operate and support our information systems. Failure by these providers to adequately support our operations or a change in control or insolvency of these providers could have an adverse effect on our business.

International and currency · International operations and emerging markets

A significant portion of our operations are conducted in foreign jurisdictions, including jurisdictions presenting a high risk of bribery and corruption, and are subject to the economic, political, legal and business environments of the countries in which we do business.

Credit and liquidity · Debt service and covenant compliance

In addition, the instruments governing our indebtedness contain restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with such covenants could result in an event of default, which could result in the acceleration of all our debt.

Market and investment · Asset valuation and impairment

We may be required to write down goodwill or identifiable intangible assets. Under accounting principles generally accepted in the United States of America (U.S. GAAP), if we determine goodwill or identifiable intangible assets are impaired, we will be required to write down these assets and record a non-cash impairment charge.

Credit and liquidity · Credit risk and customer defaults

Our exposure to credit and collectability risk is higher in certain international markets, our ability to mitigate such risks may be limited. While we have procedures to monitor and limit exposure to credit and collectability risk and have defensive measures in place to prevent and mitigate cyberattacks, there can be no assurances that such procedures and measures will effectively limit such risks and avoid losses.

Supply chain and procurement · Raw material availability and cost volatility

Labor costs and the materials used to manufacture our products may be subject to availability constraints and price volatility caused by changes in demand, weather conditions, supply conditions, government regulations, evolving trade policies (including the imposition of tariffs), economic climate and other factors.