Senior Analyst Kevin Kedra of Gabelli & Company says Zoetis Inc (ZTS), a manufacturer of pharmaceuticals in the animal health space, is a very interesting story. He says ZTS is a leader in the industry with great growth prospects, and it may be an acquisition target.
“They have about 20% market share within their industry. Normally when you are the biggest player in the industry you are the one who is out there looking to buy everybody else, but they could very well end up being a target of acquisitions because the company that would be trying to acquire them would actually be much bigger than they are. It’s just that they are much bigger because they are attached to a human health company, while Zoetis is completely independent,” Kedra says.
Kevin Kedra
Kedra points out that a lot of companies are looking to get into the animal health industry, and if they are looking for an acquisition target, Zoetis is the best pick.
“You instantly become the market leader by acquiring them, and you get a nice business that actually has some very interesting new products coming down the line,” Kedra says. “One of the most recent products they launched is a product called APOQUEL. It’s doing very well. It’s for these excessive itching and skin conditions in dogs, and it’s a product that Zoetis thinks could be a $300 million product.”
Kedra says a human health blockbuster is typically a $1 billion-type product, but in animal health anything over $100 million is considered a blockbuster.
“So this is a significant, very attractive high-margin product with great growth that the company is launching. They’ve got a few things in their pipeline that look like that. So that’s one of our favorite names,” he says.
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