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Rob Kelly: Zoetis can take wider technology approach to a global customer base

In June, Rob Kelly moved from Singapore to Dublin as he stepped into the role of president of international operations for Zoetis. Animal Pharm editor Joseph Harvey travelled to the company's International headquarters to find out how he will approach his new position.

It is perhaps significant that Animal Pharm met Mr Kelly in Europe at Zoetis' headquarters for its international business in Dublin.

"Europe is the one market I had never worked in until now," he explained.

Mr Kelly – a native Australian – originally moved to Pfizer Animal Health as part of its acquisition of Fort Dodge in 2009. At the time of the purchase, he was working as the managing director of Fort Dodge's Canadian business and then became the head of Pfizer's US cattle division. He then spent over three years working in Singapore – his final role there saw him head up Zoetis' Asia Pacific division.

Mr Kelly has taken on the role previously held by Clint Lewis, who has moved back to the company's global HQ in Parsippany, New Jersey. Mr Lewis and Kristin Peck have taken up further roles after the departure of Alejandro Bernal to Mars

"Scale adds complexities but our strategy tends to be the same globally."

In his new position, Mr Kelly oversees all of Zoetis' international markets apart from China (headed up by Mike Wang) and Brazil (Paco Ortiz).

"A lot of people think all markets are unique but there are more similarities between them than differences," he said. "Obviously, we have different go-to-market models and regulations can be different in each market. But with globalization, regulations are becoming much more aligned.

"Scale adds complexities but our strategy tends to be the same globally. It always comes down to our three core capabilities: R&D and innovation; our quality manufacturing; and commercial power. The focus on these three pillars doesn't change."

Regulatory advances

Mr Kelly said across any international market, getting to grips with local regulatory systems is usually the biggest challenge for Zoetis. He highlighted his experience in the Asian market, where regulatory requirements are being adapted by local authorities to suit domestic needs.

He pointed out many Asian markets previously accepted a US approval as a gateway to domestic authorization. However, these countries are now building new regulatory systems aligned to the European style of product approval – all of them with their own nuances and guidelines.

Mr Kelly suggested new domestic regulations for veterinary medicines are not always a bad sign for approval timeframes. He pointed out although the time-to-market in some countries tends to elongate at first, the process can improve over time via collaborative dialog between authorities and industry.

For example, Mr Kelly pinpointed Thailand as a market that has improved its regulatory situation in recent years.

"The Thai FDA really struggled at first," he explained to Animal Pharm. "We spoke to them and they told us they just didn't have the resources or money to improve approval times. So, we suggested they start to increase their fees for companies. It might seem mad from our point-of-view to pay more but they increased the fees and now they can afford more resources. We have definitely seen an improvement – it's been a benefit to Zoetis. Other countries are further behind but we are in dialog with them as well."

Building a global business

Zoetis' international network is a mixture of its own domestic divisions and distributor relationships. After the recent cost-cutting measures at the company, it has reduced its standalone presence in international markets.

Mr Kelly said Zoetis has retained its presence in a host of different markets. Market size was not the deciding factor behind the company's decision to remain in a particular country, rather it was market potential. This is evident in Zoetis' commitment to sub-Saharan Africa through its A.L.P.H.A. project. While some African markets may not be large revenue-earners, they represent areas of immense growth potential due to current low care adoption rates.

When comparing Zoetis' businesses in developed and emerging markets, Mr Kelly said the company is in the unique position of growing at the same rate in both areas.

Mr Kelly stated: "The operational efficiency review we began in 2015 is always being revised and we are always looking to see how we can improve. Since then, we've empowered a lot of people in a lot of different markets by decentralizing them. We're seeing growth everywhere and across all species too." 

"When buying companies to be the biggest in a particular country, you have to think: How does this deal fit in with your strategy?"

Since it spun-out from Pfizer, Zoetis has been able to pursue a range of acquisitions that it previously may not have been able to carry out under the Big Pharma remit. While it has acquired in monoclonal antibodies, fish vaccines, diagnostics and other specific technology areas, none of its recent acquisitions have been geographically focused – meaning deals designed to bring leadership credentials in a country or region.

Mr Kelly said: "When buying companies to be the biggest in a particular country, you have to think: How does this deal fit in with your strategy? We will always consider an opportunity but it has to fit within Zoetis."

Zoetis' recent M&A game plan has seen it previously acquire companies such as Scandinavian Micro Biodevices (SMB) with the aim of developing their technologies to add value and then rolling them out on a global basis.

"We didn't buy SMB in Europe for the benefit of Europe," Mr Kelly said. "We bought the technology for a global focus. Abaxis is no different. Again, we come back to the three pillars of our continuum – sales, manufacturing scale-up and R&D network. We provide all of these to the companies we acquire and add more value than if they were standalone."

Focus on technology, genetics

As well as targeted external R&D, Zoetis prides itself on its internal R&D. Mr Kelly said he believes the company "has more internal development than our peers".

"That's the benefit of being standalone," he noted. "You generate profitable growth and you drive your own decisions. You're in control of your destiny. It doesn't guarantee success. You have to have the right culture – a risk-taking culture, which is what we have at Zoetis. We'll try stuff that is new. Take a look at our deal with Smartbow. Precision farming is booming in agriculture. So, we've taken a calculated risk in this area for animal health."

Zoetis partnered with Austrian start-up Smartbow in 2016 for a smart eartag system aimed at the dairy farming sector.

The company's recent R&D partnerships have had the end user in mind, Mr Kelly explained.

"If you're a vet or a farmer, you're not thinking about animal health products. You're thinking about environmental issues, sustainability or genetics, and you want to be ahead of the next disease outbreak. Putting something into a bottle and injecting it into an animal is only a small part of their every day job.

"We have to adopt that mindset at Zoetis. We have to spend time with farmers and vets to understand the tools they need to improve animal care."

This approach has seen Zoetis recently delve further into areas that were previously deemed adjacent to the core animal health sector, such as data and genetics.

Earlier this year, the firm's genetics division developed the first complete Holstein de novo reference genome. This allows geneticists to map regions of the genome that influence a range of health and disease outcomes in cattle.

Mr Kelly pointed out the Zoetis genetics business worked on over one million samples last year. The firm currently has a market share of around 70% of the veterinary genetics testing space, he claimed.

Zoetis is the only major animal health company offering a genetic testing service – Merial sold its Igenity portfolio to Neogen in 2012. The other 30% market share belongs to businesses focused on human genetic testing with a crossover into the animal genetics market. Mr Kelly said the genetics business began growing relatively quickly in 2008 and started seeing momentum increase in 2010.

Taking local innovation global

Mr Kelly pointed out the firm's work in the area of infectious diseases as a good example of local projects that sometimes go on to have a worldwide impact as pathogens spread.

Zoetis' technology scope sees it aim to predict, prevent, detect and treat disease. But is this a feasible mantra in developing nations with a lack of access to the latest innovations?

"It's absolutely achievable," stated Mr Kelly. "We have always got to aspire to those four things in every market."


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