Zoetis (ZTS) risk factors, FY2024 10-K

Other

1. 01In addition to the other information set forth in this 2024 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

Risks related to our business and the animal health industry

1. 02The animal health industry is highly competitive
2. 03Our results of operations are dependent upon the success of our top-selling products
3. 04Our products are subject to unanticipated safety, quality or efficacy concerns
4. 05Regulatory actions based on these types of safety, quality or efficacy concerns could impact all or a significant portion of a product’s sales and could, depending on the circumstances, materially adversely affect our operating results
5. 06Our business is subject to risk based on global economic and political conditions
6. 07Generic and other products may be viewed as more cost-effective than our products
7. 08Consolidation of our customers and distributors could negatively affect the pricing of our products
8. 09Changes in distribution channels for companion animal products could negatively impact our market share, margins and distribution of our products
9. 10An outbreak of infectious disease carried by animals could negatively affect the sale and production of our products
10. 11Disruptive innovations and advances in medical practices and technologies could negatively affect the market for our products
11. 12Implementing new business lines or offering new products and services may subject us to additional risks
12. 13Restrictions and bans on the use of and/or consumer preferences regarding antibacterials in food-producing animals may become more prevalent
13. 14Perceived adverse effects linked to the consumption of food derived from animals that utilize our products or animals generally could cause a decline in the sales of such products
14. 15Increased regulation or decreased governmental financial support relating to the raising, processing or consumption of food-producing animals could reduce demand for our livestock products
15. 16We may not successfully acquire and integrate other businesses, license rights to technologies or products, form and manage alliances or divest businesses
16. 17Modification of foreign trade policy by the U.S. or other countries or the imposition of tariffs on imported goods may harm our business
17. 18Our business may be negatively affected by weather conditions, natural disasters and the availability of natural resources
18. 19Climate change could have a material adverse impact on our and our customers’ businesses
19. 20Our business is subject to risk based on customer exposure to rising costs and reduced customer income
20. 21Our business may be harmed if we are unable to retain and hire executive officers or other key personnel
21. 22Our business could be adversely affected by labor disputes, strikes or work stoppages
22. 23We may be required to write down goodwill or identifiable intangible assets

Risks related to manufacturing and supply

1. 24Manufacturing problems and capacity imbalances may cause product launch delays, inventory shortages, recalls or unanticipated costs
2. 25We rely on third parties to provide us with products, materials and services, and are subject to increased labor and material costs and potential disruptions in supply
3. 26There may be delays and additional costs due to changes to our existing manufacturing facilities and the construction of new manufacturing plants

Risks related to our research and development

1. 27Our R&D, acquisition and licensing efforts may fail to generate new products and product lifecycle innovations
2. 28We may experience difficulties or delays in the development and commercialization of new products
3. 29Our R&D relies on evaluations in animals, which may become subject to bans or additional restrictive regulations

Risks related to legal matters and regulation

1. 30Our business is subject to substantial regulation
2. 31We may incur substantial costs and receive adverse outcomes in litigation and/or other legal matters
3. 32The illegal distribution and sale by third parties of counterfeit or illegally compounded versions of our products or of stolen, diverted or relabeled products could have a negative impact on our reputation and business
4. 33The misuse or off-label use of our products may harm our reputation or result in financial or other damages
5. 34Our operations and reputation may be impacted if we do not comply with continually changing laws and regulations regarding data privacy
6. 35Our aspirations, goals and disclosures related to environmental, social and governance (“ESG”) matters expose us to numerous risks, including risks to our reputation

Risks related to information technology

1. 36We may be unable to adequately protect our information technology systems from cyberattacks, breaches of security or misappropriation of data, which could result in the disclosure of confidential information, damage our reputation, and subject us to significant financial and legal exposure
2. 37In support of our flexible work environment, many of our workforce work either part-time or full-time remotely, which could increase risks associated with cybersecurity, information technology and systems which could have a material adverse effect on our business
3. 38We depend on sophisticated information technology and infrastructure
4. 39We may be unable to successfully manage our online ordering sites

Risks related to operating in foreign jurisdictions

1. 40A 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
2. 41Foreign exchange rate fluctuations and potential currency controls affect our results of operations, as reported in our financial statements
3. 42including changes in countries with highly inflationary economies, between the U.S. dollar and other currencies have had, and will continue to have, an impact on our results of operations
4. 43We have been taking steps to increase our presence in emerging markets. Failure to continue to maintain and expand our business in emerging markets could materially adversely affect our operating results and financial condition

Risks related to tax matters

1. 44The Company could be subject to changes in its tax rates, the adoption of new U.S. or foreign tax legislation or exposure to additional tax liabilities

Risks related to intellectual property

1. 45The alleged intellectual property rights of third parties may negatively affect our business
2. 46If our intellectual property rights are challenged or circumvented, competitors may be able to take advantage of our research and development efforts

Risks related to our indebtedness

1. 47We have substantial indebtedness
2. 48We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
3. 49We may not have the funds necessary to finance the change of control offer required by the indenture governing our senior notes

Risks related to our relationship with Pfizer

1. 50Pfizer's rights as licensor under the patent and know-how license could limit our ability to develop and commercialize certain products
2. 51We are dependent on Pfizer to prosecute, maintain and enforce certain intellectual property