You continue to see consumer confidence being low and swine prices remaining fairly depressed in consumption there as well. So, all those factors. Of course, long-term, we continue to expect China to be a strong growth market. It has done exceptionally well for us over the last decade, but in the near term, we’re not expecting that to be a contribution to growth. In fact, we’ll see some declining comps in the first half on China.
Operator: Thank you. We’ll take our next question from Balaji Prasad with Barclays. Please go ahead.
Balaji Prasad: Hi. Good morning, everyone, and thanks for the questions. A couple. firstly, I just wanted to understand the currency dynamics better, considering that most of the nearly 100 basis points based on revenue and 150 basis points based on EPS seems to be growing from here. Why is FX so severe and any particular currencies hurting you? I mean, my general understanding is with $4 billion plus of export revenues and dollar weakening, I thought the impact would have been the other way around. Second question is around the FDA letter that Zoetis has received on Librela number. I want to understand how frequent or normal are these kinds of letters on the animal health side and the issues that FDA found with Librela’s promotion, with the inclusion of the P value on the secondary end points? And what is the current status now with regard to your communication with the FDA? Thank you.
Kristin Peck: So, I’ll take your second question first and then let Wetteny take it. I assume you’re referencing the letter back in November. Honestly, the letter is uneventful and was well addressed. We immediately resolved the request for clarification. What you’re talking about was a request for clarification on our promotional materials. We just made a minor change to the promotional materials and how we represented some statistical data. The concerns are well addressed and the modifications were accepted by the FDA. I mean, this isn’t uncommon. So, I don’t – that was easily resolved last year. That was a minor issue, but Wetteny, do you want to take the second question?
Wetteny Joseph: Yes, sure. On currency dynamics – and again, we don’t forecast FX, so we tend to report out what we see the impact is. And the dollar continues to strengthen against the number of currencies that we operate in. And there’s a little bit of a disproportional effect that we see on some of the higher inflationary markets like Argentina. If you follow Argentina, there’ve been two really significant drops in terms of FX rates versus the dollar, if you follow back, as we ended last year, both in December and I think back in August, and there’s a little bit of a delayed effect on those. Clearly, there’s an impact on top line that we’ve talked about, but there’s also a little bit of a delayed effect if you look at the impact it has on inventory and receivables that are on the books at the time.
So, by the time you collect those, they have a greater impact, which is why you see the impact down the bottom line. So, combination of Argentina, Brazil, Turkey, those are more pronounced than their relative percentage of our revenues, given how significantly they devalue. That’s what you’re seeing play out. But really across the board, if you look at how the dollar ended the year, it ended a bit stronger than you saw throughout the average of the year.
Operator: Thank you. We’ll take our next question from Brandon Vazquez with William Blair. Please go ahead.
Brandon Vazquez: Hi, everyone. Thanks for taking the question. First, can you talk a little bit about the pre-price buying the quarter? Are you able to quantify how much of a headwind that was? And then maybe talk about should we expect that to be a headwind going forward at all? Are you guys still working through that? And a follow-up to that maybe higher level, is there anything in the pipeline or kind of in product cycle management that you guys can share with us? You’re still spending a lot of money in R&D, and even for next year, it looks like that may not be a specific area to get leverage off of the R&D line. So, anything that you’d be able to share with us there would be helpful. Thank you.
Wetteny Joseph: Yes, sure. I’ll take the first one and then Kristin will cover the second one. Look, there’s always some level of pre-price buying in our – as we exit the year, given what our price increases are going to be. I would say compared to the prior year where there was higher than average pre-price buying ending 2022 into 2023, which had the effect on 2024, we more actively managed customer orders in terms of pre-price buying exiting 2023, and that gave us really first the underlying market strength and momentum that we carried into, but also I would say our order position walking into January 2024 was certainly in better position than say the prior year. So, we more actively manage those, but there’s always some level in the numbers.
Kristin Peck: Sure. And the question with regard to R&D, obviously we are very confident in our pipeline. I think we’ve been the most innovative company in animal health. And as you look at the how we exceeded market growth every year for the last 11 years, it is due to the innovation in our pipeline. We are investing both for the short, medium, and long-term in animal health different than human health. That really makes a difference. You look at sort of what I call like lifecycle enhancements that we just launched such as Apoquel chewable, which will significantly support our key brands. We’re also looking at pretty disruptive innovations as well. As you look at sort of the short one-to-three-year term of innovation, we’re excited really for some of our long actings.
And we’ve talked a lot about investing in the medium to long term in really important new franchises as well such as renal chronic kidney disease spaces, looking at cardiology, looking at oncology and diabetes. There’s really important spaces of unmet medical need in animal health that we’re really excited to tackle. We’re continuing to invest behind our diagnostics, as well as behind our livestock business, looking at new vaccines and immunomodulators in our genetics business. So, we have a very diverse pipeline because we have a diverse portfolio. So, we’re continuing to invest behind that and remain very confident in that.
Operator: Thank you. We’ll take our next question from Chris Schott with J.P. Morgan. Please go ahead.
Chris Schott: Great. Thanks so much for the questions. Just two for me. Just latest on vet visit growth. I know it’s not the primary driver of growth for your business, but you’re targeting 0% to 1% this year. And I’m just trying to get more color on what’s the underlying kind of dynamics here. Is this mostly still vet capacity? Is it macro dynamics? Just any color there would be appreciated. And then my second question was just coming back to Librela ex-US. From your perspective, how penetrated is the market for monoclonals at this point? And where do you see the largest opportunity for growth in these markets? I’m sure you have a sense of like, are we in the second inning or the seventh inning of the ramp ex-US? Thanks.
Kristin Peck: Sure. I mean, starting on the first, we are not very levered, as we’ve spoken about many times before to vet visits. I mean, obviously, they’re not inconsequential. Our view of zero to one is that’s where it’s historically been. That is historically what you see in vet clinic visits over time. So, I think we’re really saying it’s back to a normal. What’s really happening is there’s strong end market demand. There remains some capacity issues in the US, but I think some of that’s being addressed by more stuff going to auto-ship and retail and online, which has also been supporting it. But we really sort of view the year, as you look into the year for 2023, although we saw flat vet visits, we saw revenue and revenue per visit up 7.5%.
So, we really are seeing really strong growth, obviously overall in revenue, and we’re much more correlated over time with that, just given the strength of our portfolio, et cetera. And to your second question with regards to Librela outside the US, I think we’re still early innings. And really where I think we see the growth is, right now that product is primarily being used in severe dogs. I think getting it into more moderate dogs, I mean, I think, obviously, at least as someone, in my 50s, I will say my hip hurts right now, but everyone doesn’t know that who is around me. And so, the reality is, osteoarthritis exists in animals long before they’re limping and can’t walk up the stairs. And the more we can control that pain early, I think is critical.
So, I think what we’re really trying to change the paradigm is getting Librela in first line use for animals with osteoarthritis pain, and getting it into more of those moderate dogs. And we think the more we can do that, the more we can continue to grow the market here and grow our franchise. So, we know, we believe we’re in early innings across the globe with regards to osteoarthritis pain with both Librela and certainly with Solensia, where we still have to continue to grow awareness for osteoarthritis pain in cats.
Operator: We’ll take our next question from Steven Scala with TD Cowen. Please go ahead.
Chris LoBianco: Hi, this is Chris on for Steve. We have two questions. First on Librela, to what degree are US vet capacity constraints a headwind to longer term treatment compliance? And then is there a regulatory path for the approval of an at-home owner-administered formulation? Thank you.
