The Investor’s Guide to Zoetis Inc (ZTS): Pfizer Inc. (PFE), Merck & Co., Inc. (MRK)

Merck & Co., Inc. (NYSE:MRK) offers the next-largest animal health business by sales behind Zoetis currently, with its own division recording sales of almost $3.4 billion in 2012. The business has been a strong one for Merck — it saw 4% sales growth over last year despite total company revenues falling by 2% — but with Merck’s struggles in the pharmaceutical arena and recent downbeat projections for 2013, investors will need to watch whether the company’s tough times dealing with falling drug sales begin to negatively impact its animal health business.

Eli Lilly & Co. (NYSE:LLY) , which is facing a boatload of patent-related problems on the pharmaceutical front, has another strong contender in animal health in its Elanco business. The company’s division grew sales by an impressive 21% in 2012 to just over $2 billion. Companion animal products spurred Elanco’s growth, particularly in a successful fourth quarter. While Elanco’s currently smaller than its three aforementioned competitors by sales and less than half the size of Zoetis, Eli Lilly’s CFO Derica Rice said that the company plans to double Elanco’s revenue in coming years. If the company can accomplish that goal, it’d put another strong, sizable contender up against Zoetis’ future.

For now, the biggest name in the business
Zoetis investors can feel good for now, however. Its leading competitors still have a ways to go before they catch up to the company on sales, and Zoetis’s specific focus on animal health means that it won’t have any other business weighing in on performance, as Merck and Eli Lilly could with their troubles dealing with pharmaceutical patent losses. With the animal health industry on the rise, Zoetis is in prime position to hold a lucrative lead on the field.

The article The Investor’s Guide to Zoetis originally appeared on and is written by Dan Carroll.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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