Zoetis has enjoyed a successful first year, and I am pleased to introduce our first-ever Annual Review. In these pages, we have tried to capture our start, outline our beliefs and portray who we are as a company.

In 2013, we successfully established ourselves as a new public company, delivered on our financial objectives and continued meeting our customer commitments. Our performance confirmed and reinforced our long-term objective to grow revenue in line with, or faster than, the industry; to grow adjusted net income faster than revenue; and to bring additional value to our customers, colleagues and shareholders.

I am very proud of the people of Zoetis for their dedication to our customers and for building on our heritage as the world leader in animal health. I want to express my thanks to all of our colleagues at Zoetis.

While the anticipation of an initial public offering like ours — the third largest in the U.S. in 2013 — can be exciting, we never lost sight of the commitments we made to our customers and never lost sight of all the hard work and capabilities that brought us to this point.

As 2013 began, we knew that first and foremost, we must continue to deliver the results our customers, colleagues — and now our shareholders — expected from us. And, we did just that. In fiscal 2013:

• We achieved our financial objectives and grew our sales faster than the market, according to external data.

• We continued to expand our diverse portfolio of more than 300 product lines, receiving nearly 180 approvals for various new products, line extensions and expansions of products into new geographies in 2013. This includes the approval of Apoquel^®, a significant new product for the control or treatment of pruritus — or itching — in dogs with allergic skin conditions in the U.S., the European Union and New Zealand.

• We maintained a high-quality supply of products around the world and continued to achieve important milestones in standing up our company and implementing our growth strategies, while managing our separation from Pfizer.

To achieve these results in our first year, we had to reflect on and establish our own Zoetis culture and identity. We asked ourselves, What attributes would be critical to our new company culture? What values would transcend boundaries and languages across our global team? And, what beliefs would anchor us and guide us over the life of our company?

We answered these fundamental questions with our Core Beliefs, which you see reflected in this Review. These beliefs not only drive our colleagues' performance, they are also part of the promise that we make to our customers, our investors, and to each other as members of One Zoetis team. We believe they are the foundation on which we are establishing Zoetis as a respected, admired and valued name in animal health.

While we are proud of our 60+ year heritage — from Pfizer and the other acquired companies that have been built into Zoetis — we are particularly excited to have set out on our own with a brand, identity and set of beliefs that are uniquely Zoetis and that will shape our future.

Since before our IPO, we have been explaining the attributes of the animal health industry to investors, who knew us only as a small piece of a human health and pharmaceuticals company. The differences in our commercial models, customer relationships and R&D dynamics are just a few pieces of the story we have told.

As we look to the future, we see tremendous opportunities for the animal health industry. Total annual sales of animal medicines and vaccines today are approximately $23.5 billion. And industry sources indicate that the market is expected to grow at a five-year, compound annual growth rate of approximately 5 to 6 percent through the end of 2017.

Three key trends are driving this steady and predictable growth in animal health: the growing world population; the increasing middle class, especially in emerging markets; and the rising urbanization in various markets. As a result of these trends, the world is seeing an increase in demand for sources of protein, while facing limited resources and less arable land to produce them. This makes efficient production and healthy livestock more and more critical to producers. We also see as economies expand — with a rising middle class and greater urbanization — that people with greater disposable incomes are more willing to adopt pets and place a premium on their health and medical care. The need to produce more with less resources and to place greater attention on pet health are great opportunities for animal health companies and for Zoetis as the industry leader.

To continue our leadership and profitable growth in this dynamic market, we will continue developing those capabilities that differentiate us and allocate our resources to maximize our profitable growth.

Our key capabilities include:

• The largest and most well-regarded direct sales force in the industry: Our commercial model, strong relationships and global scale make us a highly valued partner and help us withstand issues in any relevant market or region.

• Innovation in R&D: We address unmet market needs that are important to our local customers, and we are continuously improving and expanding our diverse portfolio of products to enhance their lifecycles.

• Reliable supply and manufacturing: We maintain high-quality standards to ensure a dependable supply for our customers.

As we continue to build on these key capabilities, our new independence has also given us the opportunity to examine the way we work, build our own model, and increase the efficiency of our operations. We continue to stand up many of our own corporate functions and infrastructure, and we are looking at how we can build them for efficiency and simplicity. For example, we are building a technology infrastructure that can support our needs and make us a more nimble and connected global enterprise. We are also making decisions about our use of capital so we can invest in profitable growth opportunities and return capital to our shareholders.

After being a public company for a little more than a year, we recognize that we are only at the beginning of our journey as an independent company. We are pleased to have built a solid foundation as the world leader in animal health, but we have much more work to do.

I am confident that with our Core Beliefs, world-class capabilities and talented colleagues, we can achieve our financial and strategic goals and continue serving the needs of those who care for animals around the world.

Sincerely,


Juan Ramón Alaix
Chief Executive Officer