ZOETIS INC., 10-K filed on 2/14/2023
Annual Report
v3.22.4
Cover - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Feb. 10, 2023
Jun. 30, 2022
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2022    
Current Fiscal Year End Date --12-31    
Document Transition Report false    
Entity File Number 001-35797    
Entity Registrant Name Zoetis Inc.    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 46-0696167    
Entity Address, Address Line One 10 Sylvan Way,    
Entity Address, City or Town Parsippany,    
Entity Address, State or Province NJ    
Entity Address, Postal Zip Code 07054    
City Area Code 973    
Local Phone Number 822-7000    
Title of 12(b) Security Common Stock, $0.01 par value per share    
Trading Symbol ZTS    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 80,550
Entity Common Stock, Shares Outstanding   463,386,716  
Document Fiscal Year Focus 2022    
Document Fiscal Period Focus FY    
Entity Central Index Key 0001555280    
Amendment Flag false    
v3.22.4
Audit Information
 12 Months Ended
Dec. 31, 2022
Auditor Information [Abstract]  
Auditor Location Short Hills, NJ
Auditor Name KPMG LLP
Auditor Firm ID 185
v3.22.4
CONSOLIDATED STATEMENTS OF INCOME - USD ($)
shares in Thousands, $ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Income Statement [Abstract]      
Revenues $ 8,080 $ 7,776 $ 6,675
Costs and expenses:      
Cost of Sales [1] 2,454 2,303 2,057
Selling, general and administrative expenses [1] 2,009 2,001 1,726
Research and development expenses [1] 539 508 463
Amortization of intangible assets 150 161 160
Total Restructuring charges and certain acquisition-related costs 11 43 25
Interest expense, net of capitalized interest 221 224 231
Other (income)/deductions––net 40 48 17
Income before provision for taxes on income [2] 2,656 2,488 1,996
Provision for taxes on income 545 454 360
Net income before allocation to noncontrolling interests 2,111 2,034 1,636
Less: Net loss attributable to noncontrolling interests (3) (3) (2)
Net income attributable to Zoetis Inc. $ 2,114 $ 2,037 $ 1,638
Earnings per share attributable to Zoetis Inc. stockholders:      
Basic (in dollars per share) $ 4.51 $ 4.29 $ 3.44
Diluted (in dollars per share) $ 4.49 $ 4.27 $ 3.42
Weighted-average common shares outstanding:      
Basic (in shares) 468,891 474,348 475,502
Diluted (in shares) 470,385 476,717 478,569
Dividends declared per common share $ 1.350 $ 1.075 $ 0.850
[1] Exclusive of amortization of intangible assets, except as disclosed in Note 3. Significant Accounting Policies—Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets.
[2] Defined as income before provision for taxes on income.
v3.22.4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Statement of Comprehensive Income [Abstract]      
Net income before allocation to noncontrolling interests $ 2,111 $ 2,034 $ 1,636
Other comprehensive loss, net of tax and reclassification adjustments:      
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax [1] 86 19 (15)
Unrecognized net gains/(losses) on derivative instruments [1] 36 42 (58)
Foreign currency translation adjustments, net (188) (101) 69
Benefit plans: Actuarial gain/(loss), net [1] 13 6 0
Total other comprehensive loss, net of tax (53) (34) (4)
Comprehensive income before allocation to noncontrolling interests 2,058 2,000 1,632
Less: Comprehensive loss attributable to noncontrolling interests (3) (3) (2)
Comprehensive income attributable to Zoetis Inc. $ 2,061 $ 2,003 $ 1,634
[1] Presented net of reclassification adjustments, which are not material in any period presented. Reclassification adjustments related to benefit plans are generally reclassified, as part of net periodic pension cost, into Cost of sales, Selling, general and administrative expenses, and/or Research and development expenses, as appropriate, in the Consolidated Statements of Income.
v3.22.4
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Assets    
Cash and cash equivalents [1] $ 3,581 $ 3,485
Accounts receivable, less allowance for doubtful accounts of $19 in 2022 and $17 in 2021 1,215 1,133
Inventories 2,345 1,923
Other current assets 365 389
Total current assets 7,506 6,930
Property, plant and equipment, less accumulated depreciation of $2,297 in 2022 and $2,072 in 2021 2,753 2,422
Operating lease right of use assets 220 181
Goodwill 2,746 2,682
Identifiable intangible assets, less accumulated amortization 1,380 1,474
Noncurrent deferred tax assets 173 100
Other noncurrent assets 147 111
Total assets 14,925 13,900
Liabilities and Equity    
Short-term borrowings 2 0
Current portion of long-term debt 1,350 0
Accounts payable 405 436
Dividends payable 174 154
Accrued expenses 682 710
Accrued compensation and related items 300 392
Income taxes payable 157 38
Other current liabilities 97 67
Total current liabilities 3,167 1,797
Long-term debt, net of discount and issuance costs 6,552 6,592
Noncurrent deferred tax liabilities 142 320
Operating lease liabilities 186 151
Other taxes payable 258 257
Other noncurrent liabilities 217 239
Total liabilities 10,522 9,356
Common stock, $0.01 par value: 6,000,000,000 authorized, 501,891,243 and 501,891,243 shares issued; 463,808,059 and 472,574,090 shares outstanding at December 31, 2022 and 2021, respectively 5 5
Treasury stock, at cost, 38,083,184 and 29,317,153 shares of common stock at December 31, 2022 and 2021, respectively (4,539) (2,952)
Additional paid-in capital 1,088 1,068
Retained earnings 8,668 7,186
Accumulated other comprehensive loss (817) (764)
Stockholders' Equity Attributable to Parent 4,405 4,543
Stockholders' Equity Attributable to Noncontrolling Interest (2) 1
Total equity 4,403 4,544
Total liabilities and equity $ 14,925 $ 13,900
[1] As of December 31, 2022 and 2021, includes $4 million and $3 million, respectively, of restricted cash.
v3.22.4
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 19 $ 17
Accumulated depreciation $ 2,297 $ 2,072
Preferred stock, authorized (in shares) 1,000,000,000  
Common stock, par value (in dollars per share) $ 0.01  
Common stock, shares authorized 6,000,000,000  
Common stock, shares issued 501,891,243 501,900,000
Common stock, shares outstanding 463,808,059 472,574,090
Treasury shares 38,083,184 29,317,153
Restricted cash $ 4 $ 3
v3.22.4
CONSOLIDATED STATEMENTS OF EQUITY - USD ($)
$ in Millions
Total
Common Stock
 [1]
Treasury Stock
 [1]
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Equity Attributable to Noncontrolling Interests
Share Repurchase Program
Treasury shares 26,400,000              
Common stock, shares outstanding 501,900,000              
Beginning balance at Dec. 31, 2019 $ 2,708 $ 5 $ (2,042) $ 1,044 $ 4,427 $ (726) $ 0  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income/(loss) 1,636       1,638   (2)  
Other comprehensive loss $ (4)         (4) 0  
Stock-based compensation 0              
Treasury Stock, Shares, Acquired 1,600,000             1,800,000
The fair value of our noncontrolling interest in a VIE $ (6)           (6)  
Share-based compensation awards [2] $ 78   62 18 (2)      
Share repurchase program 0              
Treasury stock acquired [3] $ (250)   (250)          
Employee benefit plan contribution from Pfizer Inc. [4] 3     3        
Dividends declared (404)       (404)      
Ending balance at Dec. 31, 2020 $ 3,773 5 (2,230) 1,065 5,659 (730) 4  
Treasury shares 26,600,000              
Common stock, shares outstanding 501,900,000              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income/(loss) $ 2,034       2,037   (3)  
Other comprehensive loss $ (34)         (34) 0  
Stock-based compensation 0              
Treasury Stock, Shares, Acquired 1,300,000             4,000,000.0
Share-based compensation awards [2] $ 20   21   (1)      
Share repurchase program 0              
Treasury stock acquired [3] $ (743)   (743)          
Employee benefit plan contribution from Pfizer Inc. [4] 3     3        
Dividends declared (509)       (509)      
Ending balance at Dec. 31, 2021 $ 4,544 5 (2,952) 1,068 7,186 (764) 1  
Treasury shares 29,317,153              
Common stock, shares outstanding 501,900,000              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income/(loss) $ 2,111           (3)  
Other comprehensive loss $ (53)         (53) 0  
Treasury Stock, Shares, Acquired 700,000             9,500,000
Share-based compensation awards [2] $ 23   7 17 (1)      
Treasury stock acquired [3] (1,594)   (1,594)          
Employee benefit plan contribution from Pfizer Inc. [4] 3     3        
Dividends declared (631)       (631)      
Ending balance at Dec. 31, 2022 $ 4,403 $ 5 $ (4,539) $ 1,088 $ 8,668 $ (817) $ (2)  
Treasury shares 38,083,184              
Common stock, shares outstanding 501,891,243              
[1] $4,550 
[2] Includes the issuance of shares of Zoetis Inc. common stock and the reacquisition of shares of treasury stock associated with exercises of employee share-based awards. Also includes the reacquisition of shares of treasury stock associated with the vesting of employee share-based awards to satisfy tax withholding requirements. For additional information, see Note 15. Share-based Payments and Note 16. Stockholders' Equity.
[3] Reflects the acquisition of treasury shares in connection with the share repurchase program. For additional information, see Note 16. Stockholders' Equity.
[4] Represents contributed capital from Pfizer Inc. associated with service credit continuation for certain Zoetis Inc. employees in Pfizer Inc.'s U.S. qualified defined benefit and U.S. retiree medical plans. See Note 14. Benefit Plans.
v3.22.4
CONSOLIDATED STATEMENTS OF EQUITY (PARENTHETICAL) - shares
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]        
Common stock, shares outstanding 463,808,059 472,574,090    
Treasury shares 38,083,184 29,317,153 26,600,000 26,400,000
v3.22.4
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Operating Activities      
Net income before allocation to noncontrolling interests $ 2,111 $ 2,034 $ 1,636
Adjustments to reconcile net income before noncontrolling interests to net cash provided by/(used in) operating activities      
Depreciation and amortization expense [1],[2] 465 448 441
Share-based compensation expense 62 58 59
Asset write-offs and asset impairments 53 47 43
Net loss/(gain) on sales of assets 0 2 (19)
Provision for losses on inventory 76 46 105
Deferred taxes (286) (80) (62)
Employee benefit plan contribution from Pfizer Inc. 3 3 3
Other non-cash adjustments 13 (2) 11
Other changes in assets and liabilities, net of acquisitions and divestitures:      
Accounts receivable (137) (155) 74
Inventories (486) (366) (346)
Other assets 35 (7) (68)
Accounts payable (29) (17) 147
Other liabilities (180) 227 91
Other tax accounts, net 98 (25) 17
Net cash provided by operating activities 1,912 2,213 2,126
Investing Activities      
Capital expenditures (586) (477) (453)
Acquisitions, net of cash acquired (312) (14) (113)
Purchase of investments (9) (12) 0
Net proceeds from sale of assets 1 2 21
Proceeds from/(payments of) derivative instrument activity, net 23 44 (27)
Other investing activities 0 (1) 0
Net cash used in investing activities (883) (458) (572)
Financing Activities      
Increase/(decrease) in short-term borrowings, net 2 (4) 4
Principal payments on long-term debt 0 (600) (500)
Proceeds from issuance of long-term debt—senior notes, net of discount 1,348 0 1,240
Payment of consideration related to previous acquisitions (1) (6) (2)
Share-based compensation-related proceeds, net of taxes paid on withholding shares (38) (35) 20
Purchases of treasury stock (1,594) (743) (250)
Cash dividends paid (611) (474) (380)
Acquisition of a noncontrolling interest, net of cash acquired 0 0 3
Net cash (used in)/provided by financing activities (904) (1,862) 123
Effect of exchange-rate changes on cash and cash equivalents (29) (12) (7)
Net increase/(decrease) in cash and cash equivalents 96 (119) 1,670
Cash and cash equivalents at beginning of period 3,581 [3] 3,485 [3] 3,604
Cash paid during the period for:      
Income taxes 638 548 418
Interest, net of capitalized interest 242 253 257
Non-cash transactions:      
Capital expenditures 3 6 3
Dividends payable 174 154 119
Payments to Settle Derivative Instruments 114 0 (6)
Payments of Debt Issuance Costs $ (10) $ 0 $ (12)
[1] Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
[2] Defined as income before provision for taxes on income.
[3] As of December 31, 2022 and 2021, includes $4 million and $3 million, respectively, of restricted cash.
v3.22.4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, Tax $ 6 $ 3 $ 0
Cash Flow Hedging      
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax 26 5 (5)
Net Investment Hedging      
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax $ 11 $ 13 $ (18)
v3.22.4
Subsequent Events
 12 Months Ended
Dec. 31, 2022
Subsequent Events [Abstract]  
Subsequent Events On February 1, 2023, we redeemed in full, upon maturity, the $1.35 billion aggregate principal amount of our 3.250% 2013 senior notes due 2023. See Note 9. Financial Instruments for additional information.
v3.22.4
Business Description
 12 Months Ended
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Description etis Inc. (including its subsidiaries, collectively, Zoetis, the company, we, us or our) is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests and precision animal health technology. We organize and operate our business in two geographic regions: the United States (U.S.) and International.
We directly market our products in approximately 45 countries across North America, Europe, Africa, Asia, Australia and South America. Our products are sold in more than 100 countries, including developed markets and emerging markets. We have a diversified business, marketing products across eight core species: dogs, cats and horses (collectively, companion animals) and cattle, swine, poultry, fish and sheep (collectively, livestock); and within seven major product categories: parasiticides, vaccines, dermatology, anti-infectives, other pharmaceutical products, medicated feed additives and animal health diagnostics.
We were incorporated in Delaware in July 2012 and prior to that the company was a business unit of Pfizer Inc. (Pfizer).
v3.22.4
Basis of Presentation
 12 Months Ended
Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation 2. Basis of Presentation The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). For subsidiaries operating outside the United States, the consolidated financial information is included as of and for the fiscal year ended November 30 for each year presented. All significant intercompany balances and transactions between the legal entities that comprise Zoetis have been eliminated. For those subsidiaries included in these consolidated financial statements where our ownership is less than 100%, including a variable interest entity consolidated by Zoetis as the primary beneficiary, the noncontrolling interests have been shown in equity as Equity attributable to noncontrolling interests.
v3.22.4
Significant Accounting Policies
 12 Months Ended
Dec. 31, 2022
Accounting Policies [Abstract]  
Significant Accounting Policies
Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021 and December 2022, it issued subsequent amendments to the initial guidance: ASU No. 2021-01 and ASU No. 2022-06, Reference Rate Reform (Topic 848). The new guidance provides temporary optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. Adoption of the guidance is optional and effective as of March 12, 2020, but only available through December 31, 2024. We currently have various hedging transactions that reference LIBOR. We will make specific amendments to our affected contracts and hedge documentation to adopt these standards during the transition period and we do not expect these changes to have a material impact on our consolidated financial statements or related disclosures.
Estimates and Assumptions
In preparing the consolidated financial statements, we use certain estimates and assumptions that affect reported amounts and disclosures, including amounts recorded in connection with acquisitions. These estimates and underlying assumptions can impact all elements of our consolidated financial statements. For example, in the Consolidated Statements of Income, estimates are used when accounting for deductions from revenue (such as rebates, sales allowances, product returns and discounts), determining cost of sales, allocating cost in the form of depreciation and amortization, and estimating restructuring charges and the impact of contingencies. On the Consolidated Balance Sheets, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable, uncertain tax positions, benefit obligations, the impact of contingencies, deductions from revenue and restructuring reserves, all of which also impact the Consolidated Statements of Income.
Our estimates are often based on complex judgments, probabilities and assumptions that we believe to be reasonable but that can be inherently uncertain and unpredictable. If our estimates and assumptions are not representative of actual outcomes, our results could be materially impacted.
As future events and their effects cannot be determined with precision, our estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We are subject to risks and uncertainties that may cause actual results to differ from estimated amounts, such as changes in competition, litigation, legislation and regulations. We regularly evaluate our estimates and assumptions using historical experience and expectations about the future. We adjust our estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under relevant accounting standards. It is possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
Acquisitions
Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired in-process research and development (IPR&D) be recorded on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill. When we acquire net assets that do not constitute a business as defined in U.S. GAAP, no goodwill is recognized.
Amounts recorded for acquisitions can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Leases
We determine if a contract contains a lease at inception. Our current portfolio includes only operating leases which are recorded as a right of use asset, as of the lease commencement date, in an amount equal to the present value of future payments over the lease term. We have elected not to recognize right of use assets and lease liabilities for short-term leases of vehicles and equipment with a lease term of twelve months or less.
Options to extend or terminate a lease are considered in the lease term to the extent that the option is reasonably certain of exercise. A corresponding lease liability is recorded within Other current liabilities and Operating lease liabilities. The present value of future payments is discounted using the rate implicit in the lease, when available. When the implicit rate is not available, as is frequently the case with our lease portfolio, the present value is calculated using our incremental borrowing rate, which is determined on the commencement date. The incremental borrowing rate represents the rate of interest that we would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. As we do not borrow on a collateralized basis, our non-collateralized borrowing rate is used as an input in deriving the incremental borrowing rate.
Fixed lease payments are recognized on straight-line basis over the lease term, while variable payments are recognized in the period incurred. Variable lease payments include real estate taxes and charges for other non-lease services due to lessors that are not dependent on an index or rate and utilization based charges associated with fleet vehicles.
Our real estate and fleet lease contracts may include fixed consideration attributable to both lease and non-lease components, including non-lease services provided by the vendor, which are accounted for as a single fixed minimum payment. For leases of certain classes of machinery and equipment, contract consideration is allocated to lease and non-lease components on the basis of relative standalone price.
Foreign Currency Translation
For most of our international operations, local currencies have been determined to be the functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at exchange rates in effect at the balance sheet date and we translate functional currency income and expense amounts to their U.S. dollar equivalents at average exchange rates for the period. The U.S. dollar effects that arise from changing translation rates are recorded in Other comprehensive income/(loss), net of tax. The effects of converting non-functional currency assets and liabilities into the functional currency are recorded in Other (income)/deductions––net. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.
Revenue, Deductions from Revenue and the Allowance for Doubtful Accounts
We recognize revenue from product sales when control of the goods has transferred to the customer, which is typically once the goods have shipped and the customer has assumed title. Revenue reflects the total consideration to which we expect to be entitled (i.e., the transaction price), in exchange for products sold, after considering various types of variable consideration including rebates, sales allowances, product returns and discounts.
Variable consideration is estimated and recorded at the time that related revenue is recognized. Our estimates reflect the amount by which we expect variable consideration to impact revenue recognized and are generally based on contractual terms or historical experience, adjusted as necessary to reflect our expectations about the future. Our customer payment terms generally range from 30 to 90 days.
Estimates of variable consideration utilize a complex series of judgments and assumptions to determine the amount by which we expect revenue to be reduced, for example;
•for sales returns, we perform calculations in each market that incorporate the following, as appropriate: local returns policies and practices; historic returns as a percentage of revenue; estimated shelf life by product; an estimate of the amount of time between shipment and return or lag time; and any other factors that could impact the estimate of future returns, product recalls, discontinuation of products or a changing competitive environment; and
•for revenue incentives, we use our historical experience with similar incentives programs to estimate the impact of such programs on revenue for the current period.
Although the amounts recorded for these deductions from revenue are dependent on estimates and assumptions, historically our adjustments to actual results have not been material. The sensitivity of our estimates can vary by program, type of customer and geographic location.
Accruals for deductions from revenue are recorded as either a reduction in Accounts receivable or within Accrued expenses, depending on the nature of the contract and method of expected payment. Amounts recorded as a reduction in Accounts receivable as of December 31, 2022 and 2021 are approximately $295 million and $216 million, respectively. As of December 31, 2022, and 2021, accruals for deductions from revenue included in Accrued expenses are approximately $285 million and $312 million, respectively.
A deferral of revenue may be required in the event that we have not satisfied all customer obligations for which we have been compensated. The transaction price is allocated to the individual performance obligations on the basis of relative stand-alone selling price, which is typically based on actual sales prices. Revenue associated with unsatisfied performance obligations are contract liabilities, is recorded within Other current liabilities and Other noncurrent liabilities, and is recognized once control of the underlying products has transferred to the customer. Contract liabilities reflected within Other current liabilities as of December 31, 2021 and subsequently recognized as revenue during 2022 were approximately $5 million. Contract liabilities as of December 31, 2022 were approximately $14 million.
We do not disclose the transaction price allocated to unsatisfied performance obligations related to contracts with an original expected duration of one year or less, or for contracts for which we recognize revenue in line with our right to invoice the customer. Estimated future revenue expected to be generated from long-term contracts with unsatisfied performance obligations as of December 31, 2022 is not material.
Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from Revenue. Shipping and handling costs incurred after control of the purchased product has transferred to the customer are accounted for as a fulfillment cost, within Selling, general and administrative expenses.
We also record estimates for bad debts. We periodically assess the adequacy of the allowance for doubtful accounts by evaluating the collectability of outstanding receivables based on factors such as past due history, historical and expected collection patterns, the financial condition of our customers, the robust nature of our credit and collection practices and the economic environment.
Amounts recorded for sales deductions and bad debts can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Cost of Sales and Inventories
Inventories are carried at the lower of cost or net realizable value. The cost of finished goods, work-in-process and raw materials is determined using average actual cost. We regularly review our inventories for impairment and adjustments are recorded when necessary.
Selling, General and Administrative Expenses
Selling, general and administrative costs are expensed as incurred. Among other things, these expenses include the internal and external costs of marketing, advertising, and shipping and handling as well as certain costs related to business technology, facilities, legal, finance, human resources, business development, public affairs and procurement, among others.
Advertising expenses relating to production costs are expensed as incurred, and the costs of space in publications are expensed when the related advertising occurs. Advertising and promotion expenses totaled approximately $287 million in 2022, $292 million in 2021 and $233 million in 2020.
Shipping and handling costs totaled approximately $82 million in 2022, $80 million in 2021 and $66 million in 2020.
Research and Development Expenses
Research and development (R&D) costs are expensed as incurred. Research is the effort associated with the discovery of new knowledge that will be useful in developing a new product or in significantly improving an existing product. Development is the implementation of the research findings. Before a compound receives regulatory approval, we record upfront and milestone payments made by us to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a compound receives regulatory approval in a major market, we record any milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the assets are determined to have an indefinite life, we amortize them on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter.
Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets
Long-lived assets include:
•    Goodwill—goodwill represents the excess of the consideration transferred for an acquired business over the assigned values of its net assets. Goodwill is not amortized.
•    Identifiable intangible assets, less accumulated amortization—these acquired assets are recorded at our cost. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Identifiable intangible assets with indefinite lives that are associated with marketed products are not amortized until a useful life can be determined. Identifiable intangible assets associated with IPR&D projects are not amortized until regulatory approval is obtained. The useful life of an amortizing asset generally is determined by identifying the period in which substantially all of the cash flows are expected to be generated.
•    Property, plant and equipment, less accumulated depreciation––these assets are recorded at our cost and are increased by the cost of any significant improvements after purchase. Property, plant and equipment assets, other than land and construction-in-progress, are depreciated on a straight-line basis over the estimated useful life of the individual assets. Depreciation begins when the asset is ready for its intended use. For tax purposes, accelerated depreciation methods are used as allowed by tax laws.
Amortization expense related to finite-lived identifiable intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property are included in Amortization of intangible assets as they benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function and depreciation of property, plant and equipment are included in Cost of sales, Selling, general and administrative expenses and Research and development expenses, as appropriate.
We review all of our long-lived assets for impairment indicators throughout the year and we perform detailed testing whenever impairment indicators are present. In addition, we perform impairment testing for goodwill and indefinite-lived assets at least annually. When necessary, we record charges for impairments. Specifically:
•    For finite-lived identifiable intangible assets, such as developed technology rights, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate.
•    For indefinite-lived identifiable intangible assets, such as brands and IPR&D assets, we test for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If we conclude it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the indefinite-lived intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized. We record an impairment loss, if any, for the excess of book value over fair value. In addition, in all cases of an impairment review other than for IPR&D assets, we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate.
•    For goodwill, we test for impairment on at least an annual basis, or more frequently if necessary, either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or by performing a periodic quantitative assessment. If we choose to perform a qualitative analysis and conclude it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed. We determine the implied fair value of goodwill
by subtracting the fair value of all the identifiable net assets other than goodwill from the fair value of the reporting unit and record an impairment loss for the excess, if any, of book value of goodwill over the implied fair value. In 2022 and 2021, we performed a periodic quantitative impairment assessment as of September 30, 2022 and 2021, respectively, which did not result in the impairment of goodwill associated with any of our reporting units.
Impairment reviews can involve a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Software Capitalization and Depreciation
We capitalize certain costs incurred in connection with obtaining or developing internal-use software, including payroll and payroll-related costs for employees who are directly associated with the internal-use software project, external direct costs of materials and services and interest costs while developing the software. Capitalized software costs are included in Property, plant and equipment and are amortized using the straight-line method over the estimated useful life of 5 to 10 years. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose. Costs incurred during the preliminary project and post-implementation stages, as well as software maintenance and training costs, are expensed in the period in which they are incurred. The company capitalized $57 million and $73 million of internal-use software for the years ended December 31, 2022 and 2021, respectively. Depreciation expense for capitalized software was $69 million in 2022, $52 million in 2021 and $46 million in 2020.
Restructuring Charges and Certain Acquisition-Related Costs
We may incur restructuring charges in connection with acquisitions when we implement plans to restructure and integrate the acquired operations or in connection with cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related costs are all restructuring charges and certain costs associated with acquiring and integrating an acquired business. Transaction costs and integration costs are expensed as incurred. Termination costs are a significant component of restructuring charges and are generally recorded when the actions are probable and estimable.
Amounts recorded for restructuring charges and other associated costs can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Earnings per Share
Basic earnings per share is computed by dividing net income attributable to Zoetis by the weighted-average number of common shares outstanding during the period. Diluted earnings per share adjusts the weighted-average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (stock options, restricted stock units, and performance-vesting restricted stock units) were exercised or converted into common stock, calculated using the treasury stock method.
Cash Equivalents
Cash equivalents include items almost as liquid as cash, such as money market funds, certificates of deposit and time deposits with maturity periods of three months or less when purchased.
Fair Value
Certain assets and liabilities are required to be measured at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, we use fair value extensively in the initial recognition of net assets acquired in a business combination. Fair value is estimated using an exit price approach, which requires, among other things, that we determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.
When estimating fair value, depending on the nature and complexity of the asset or liability, we may use one or all of the following approaches:
•    Income approach, which is based on the present value of a future stream of net cash flows.
•    Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
•    Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.
These fair value methodologies depend on the following types of inputs:
•    Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
•    Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable (Level 2 inputs).
•    Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Accounts Receivable
The recorded amounts of accounts receivable approximate fair value because of their relatively short-term nature. As of December 31, 2022 and 2021, Accounts receivable, less allowance for doubtful accounts, of $1,215 million and $1,133 million, respectively, includes approximately $71 million and $47 million, respectively, of other receivables, such as trade notes receivable and royalty receivables, among others.
Deferred Tax Assets and Liabilities and Income Tax Contingencies
Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws. We provide a valuation allowance when we believe that our deferred tax assets are not recoverable based on an assessment of estimated future taxable income that incorporates ongoing, prudent and feasible tax planning strategies.
We account for income tax contingencies using a benefit recognition model. If we consider that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. Under the benefit recognition model, if the initial assessment fails to result in the recognition of a tax benefit, we regularly monitor our position and subsequently recognize the tax benefit: (i) if there are changes in tax law, analogous case law or there is new information that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) if the statute of limitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of that tax year with the appropriate agency. We regularly re-evaluate our tax positions based on the results of audits of federal, state and foreign income tax filings, statute of limitations expirations, changes in tax law or receipt of new information that would either increase or decrease the technical merits of a position relative to the “more-likely-than-not” standard. Liabilities associated with uncertain tax positions are classified as current only when we expect to pay cash within the next 12 months. Interest and penalties, if any, are recorded in Provision for taxes on income and are classified on our Consolidated Balance Sheets with the related tax liability.
Amounts recorded for valuation allowances and income tax contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Benefit Plans
All dedicated benefit plans are pension plans. For our dedicated benefit plans, we recognize the overfunded or underfunded status of defined benefit plans as an asset or liability on the Consolidated Balance Sheets and the obligations generally are measured at the actuarial present value of all benefits attributable to employee service rendered, as provided by the applicable benefit formula. Pension obligations may include assumptions such as long-term rate of return on plan assets, expected employee turnover, participant mortality, and future compensation levels. Plan assets are measured at fair value. Net periodic benefit costs are recognized, as required, into Cost of sales, Selling, general and administrative expenses and Research and development expenses, as appropriate.
Amounts recorded for benefit plans can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Asset Retirement Obligations
We record accruals for the legal obligations associated with the retirement of tangible long-lived assets, including obligations under the doctrine of promissory estoppel and those that are conditioned upon the occurrence of future events. These obligations generally result from the acquisition, construction, development and/or normal operation of long-lived assets. We recognize the fair value of these obligations in the period in which they are incurred by increasing the carrying amount of the related asset. Over time, we recognize expense for the accretion of the liability and for the amortization of the asset.
As of December 31, 2022 and 2021, accruals for asset retirement obligations are $25 million and are primarily included in Other noncurrent liabilities.
Amounts recorded for asset retirement obligations can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Legal and Environmental Contingencies
We are subject to numerous contingencies arising in the ordinary course of business, such as product liability and other product-related litigation, commercial litigation, patent litigation, environmental claims and proceedings, government investigations and guarantees and indemnifications. We record accruals for these contingencies to the extent that we conclude that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, we accrue that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, we accrue the lowest amount in the range. We record anticipated recoveries under existing insurance contracts when recovery is assured.
Amounts recorded for contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Share-Based Payments
Our compensation programs can include share-based payment plans. All grants under share-based payment programs are accounted for at fair value and such amounts generally are amortized on a straight-line basis over the vesting term to Cost of sales, Selling, general and administrative expenses, and Research and development expenses, as appropriate. We include the impact of estimated forfeitures when determining share-based compensation expense.
Amounts recorded for share-based compensation can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
v3.22.4
Revenue
 12 Months Ended
Dec. 31, 2022
Revenue Recognition and Deferred Revenue [Abstract]  
Revenue
A. Revenue from Product Sales
We offer a diversified portfolio of products which allows us to capitalize on local and regional customer needs. Generally, our products are promoted to veterinarians and livestock producers by our sales organization which includes sales representatives and technical and veterinary operations specialists, and then sold directly by us or through distributors, retailers or e-commerce outlets. The depth of our product portfolio enables us to address the varying needs of customers in different species and geographies. Many of our top-selling product lines are distributed across both of our operating segments, leveraging our R&D operations and manufacturing and supply chain network.
Over the course of our history, we have focused on developing a diverse portfolio of animal health products, including medicines, vaccines and diagnostics, complemented by biodevices, genetic tests and a range of services. We refer to all different brands of a particular product, or its dosage forms for all species, as a product line. We have approximately 300 comprehensive product lines, including products for both companion animals and livestock within each of our major product categories.
Our major product categories are:
•parasiticides: products that prevent or eliminate external and internal parasites such as fleas, ticks and worms;
•vaccines: biological preparations that help prevent diseases of the respiratory, gastrointestinal and reproductive tracts or induce a specific immune response;
•dermatology products: products that relieve itch associated with allergic conditions and atopic dermatitis;
•anti-infectives: products that prevent, kill or slow the growth of bacteria, fungi or protozoa;
•other pharmaceutical products: pain and sedation, antiemetic, reproductive, and oncology products;
•medicated feed additives: products added to animal feed that provide medicines to livestock; and
•animal health diagnostics: testing and analysis of blood, urine and other animal samples and related products and services, including point-of-care diagnostic products, instruments and reagents, rapid immunoassay tests, reference laboratory kits and services and blood glucose monitors.
Our remaining revenue is derived from other non-pharmaceutical product categories, such as nutritionals, as well as products and services in biodevices, genetic tests and precision animal health.
Our companion animal products help extend and improve the quality of life for pets; increase convenience and compliance for pet owners; and help veterinarians improve the quality of their care and the efficiency of their businesses. Growth in the companion animal medicines, vaccines and diagnostics sector is driven by economic development, related increases in disposable income and increases in pet ownership and spending on pet care. Companion animals are also living longer, deepening the human-animal bond, receiving increased medical treatment and benefiting from advances in animal health medicine, vaccines and diagnostics.
Our livestock products primarily help prevent or treat diseases and conditions to allow veterinarians and producers to care for their animals and to enable the cost-effective production of safe, high-quality animal protein. Human population growth and increasing standards of living are important long-term growth drivers for our livestock products in three major ways. First, population growth and increasing standards of living drive demand for improved nutrition, particularly through increased consumption of animal protein. Second, population growth leads to greater natural resource constraints driving a need for enhanced productivity. Finally, as standards of living improve and the global chain faces increased scrutiny, there is more focus on food quality, safety, and reliability of supply.
The following tables present our revenue disaggregated by geographic area, species, and major product category:
Revenue by geographic area
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States$4,313 $4,042 $3,557 
Australia289 259 207 
Brazil330 312 258 
Canada238 232 210 
Chile141 136 100 
China382 357 266 
France126 132 118 
Germany176 183 159 
Italy111 115 90 
Japan173 186 177 
Mexico136 133 116 
Spain118 128 112 
United Kingdom235 234 178 
Other developed markets468 467 388 
Other emerging markets758 778 656 
7,994 7,694 6,592 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Revenue exceeded $100 million in twelve countries outside the U.S. in 2022 and 2021 and eleven countries outside the U.S. in 2020. The U.S. was the only country to contribute more than 10% of total revenue in each year.
Revenue by major species
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
U.S.
Companion animal$3,341 $2,990 $2,391 
Livestock972 1,052 1,166 
4,313 4,042 3,557 
International
Companion animal1,862 1,699 1,261 
Livestock1,819 1,953 1,774 
3,681 3,652 3,035 
Total
Companion animal5,203 4,689 3,652 
Livestock2,791 3,005 2,940 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Revenue by species
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Companion Animal:
Dogs and Cats$4,939 $4,426 $3,437 
Horses264 263 215 
5,203 4,689 3,652 
Livestock:
Cattle1,440 1,557 1,558 
Swine565 659 621 
Poultry476 507 537 
Fish212 187 148 
Sheep and other98 95 76 
2,791 3,005 2,940 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Revenue by product category
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Parasiticides$1,860 $1,635 $1,173 
Vaccines1,718 1,673 1,476 
Dermatology1,329 1,180 941 
Anti-infectives1,081 1,215 1,206 
Other pharmaceuticals1,043 966 821 
Medicated feed additives360 420 460 
Animal health diagnostics353 374 305 
Other non-pharmaceuticals250 231 210 
7,994 7,694 6,592 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
B. Other Revenue Information
Significant Customers
We primarily sell our companion animal products to veterinarians or to third-party veterinary distributors that typically then sell our products to veterinarians, and in each case, veterinarians then typically sell our products to pet owners. In certain markets, we also sell certain companion animal products through retail and e-commerce outlets. We sell our livestock products primarily to veterinarians and livestock producers, including beef and dairy farmers as well as pork and poultry operations, in addition to third-party veterinary distributors and retail outlets who then typically sell the products to livestock producers. Sales to our largest customer, a U.S. veterinary distributor, represented approximately 14% of total revenue for 2022, 2021 and 2020.
v3.22.4
Acquisitions and Divestitures
 12 Months Ended
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
Acquisitions and Divestitures
During 2022, we completed the acquisition of Basepaws, a privately held petcare genetics company based in the U.S., which provides pet owners with genetic tests, analytics and early health risk assessments that can help manage the health, wellness and quality of care for their pets. We also completed the acquisition of NewMetrica, a privately held company based in Scotland, that provides scientifically-developed instruments to measure quality of life in companion animals. These transactions did not have a material impact on our consolidated financial statements.
During 2021, we entered into an agreement to acquire Jurox, a privately held animal health company based in Australia, which develops, manufactures and markets a wide range of veterinary medicines for treating companion animals and livestock. On September 30, 2022, after satisfying all customary closing conditions, including clearance from the Australian Competition and Consumer Commission, we completed the acquisition of Jurox. We acquired 100% of the outstanding shares for an aggregate cash purchase price of $226 million, which was adjusted to $240 million for cash and working capital and other adjustments as of the closing date. Net cash consideration transferred to the seller was $215 million. As of the balance sheet date, the remaining purchase consideration of $5 million was outstanding and recorded in Other current liabilities. The transaction was accounted for as a business combination, with the assets acquired and liabilities assumed measured at their respective acquisition date fair values. The table below presents the preliminary fair values allocated to the assets and liabilities of Jurox as of the acquisition date:
(MILLIONS OF DOLLARS)Amounts
Cash and cash equivalents$20 
Accounts receivable8 
Inventories(a)
20 
Other current assets1 
Property, plant and equipment(b)
28 
Identifiable intangible assets(c)
134 
Other noncurrent assets1 
Accounts payable2 
Other current liabilities12 
Other noncurrent liabilities2 
Total net assets acquired196 
Goodwill(d)
44 
Total consideration$240 
(a)        Acquired inventory is comprised of finished goods, work in process and raw materials. The fair value of finished goods was determined based on net realizable value adjusted for the costs of the selling effort, a reasonable profit allowance for the selling effort, and estimated holding costs. The fair value of work in process was determined based on net realizable value adjusted for costs to complete the manufacturing process, costs of the selling effort, a reasonable profit allowance for the remaining manufacturing and selling effort, and an estimate of holding costs. The fair value of raw materials was determined to approximate book value.
(b)    Property, plant and equipment is comprised of buildings, machinery and equipment, land, construction in progress and furniture and fixtures. The fair value was primarily determined using a reproduction/replacement cost approach which measures the value of an asset by estimating the cost to acquire or construct comparable assets adjusted for age and condition of the asset.
(c)    Identifiable intangible assets consist of developed technology rights. The fair value of identifiable intangible assets was determined using the income approach, which includes a forecast of expected future cash flows. For additional information regarding identifiable intangible assets, see Note 13. Goodwill and Other Intangible Assets.
(d)        Goodwill represents the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. It is allocated to our International segment and is primarily attributable to cost and revenue synergies including market share capture, elimination of cost redundancies and gain of cost efficiencies, and intangible assets such as assembled workforce which are not separately recognizable. The primary strategic purpose of the acquisition was to enhance the company’s existing product portfolio. The goodwill recorded is not deductible for tax purposes.
All amounts recorded are subject to final valuation. Any adjustments to our preliminary purchase price allocation identified during the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively.
In 2021, we also acquired certain assets to expand our portfolio of equine care products, which did not have a material impact on our consolidated financial statements.
During 2020, we completed the acquisitions of Fish Vet Group, a diagnostics company for aquaculture, Virtual Recall, a veterinary engagement software company, Performance Livestock Analytics, a cloud-based technology company in the precision animal health business, and Ethos Diagnostic Science, a veterinary reference laboratory business with labs across the U.S. We also entered into an option purchase agreement as part of a research and development arrangement with a Belgian company, a variable interest entity of which Zoetis is the primary beneficiary and now consolidating within our results. These transactions did not have a material impact on our consolidated financial statements.
B. Divestitures
In 2020, we received cash proceeds of $20 million resulting from payments received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites.
v3.22.4
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
 12 Months Ended
Dec. 31, 2022
Restructuring and Related Activities [Abstract]  
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives
6. Restructuring Charges and Other Costs Associated with Acquisitions, Cost-Reduction and Productivity Initiatives
In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems. In connection with our acquisition activity, we typically incur costs and charges associated with executing the transactions, integrating the acquired operations, which may include expenditures for consulting and the integration of systems and processes, product transfers and restructuring the consolidated company, which may include charges related to employees, assets and activities that will not continue in the consolidated company. All operating functions can be impacted by these actions, including sales and marketing, manufacturing and R&D, as well as functions such as business technology, shared services and corporate operations.
The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives are as follows:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Restructuring charges and certain acquisition-related costs:
Integration costs(a)
$4 $10 $17 
Transaction costs(b)
1 — — 
Restructuring charges(c)(d):
Employee termination costs3 17 8 
Asset impairment charges2 13 — 
Exit costs1 3 — 
Total Restructuring charges and certain acquisition-related costs
$11 $43 $25 
(a)    Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes, as well as product transfer costs.
(b)    Transaction costs represent external costs directly related to acquiring businesses and primarily includes expenditures for banking, legal, accounting and other similar services.
(c)    The restructuring charges for the year ended December 31, 2022 are primarily related to employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, as well as asset impairment charges primarily related to the consolidation of manufacturing sites in China.
    The restructuring charges for the year ended December 31, 2021 are primarily related to the realignment of our international operations and other cost-reduction and productivity initiatives.
    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.
(d)    The restructuring charges are associated with the following:
•For the year ended December 31, 2022, Manufacturing/research/corporate of $2 million and International of $4 million.
•For the year ended December 31, 2021, Manufacturing/research/corporate of $21 million and International of $12 million.
•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.
The components of, and changes in, our restructuring accruals are as follows:
EmployeeAsset
TerminationImpairmentExit
(MILLIONS OF DOLLARS)CostsChargesCostsAccrual
Balance, December 31, 2019$45 $— $— $45 
Provision8 — — 8 
Utilization and other(a)
(32)— — (32)
Balance, December 31, 2020$21 $— $— $21 
Provision17 13 3 33 
Non-cash activity— (13)— (13)
Utilization and other(a)
(15)— (1)(16)
Balance, December 31, 2021(b)
$23 $— $2 $25 
Provision3 2 1 6 
Non-cash activity— (2)— (2)
Utilization and other(a)
(12)— (2)(14)
Balance, December 31, 2022(b)(c)
$14 $— $1 $15 
(a)    Includes adjustments for foreign currency translation.
(b)    At December 31, 2022 and 2021, included in Accrued Expenses ($5 million and $14 million, respectively) and Other noncurrent liabilities ($10 million and $11 million, respectively).
(c)    Includes contractual obligations of $7 million, of which payments are expected to be approximately $6 million in 2023 and $1 million thereafter.
v3.22.4
Other (Income)/Deductions - Net
 12 Months Ended
Dec. 31, 2022
Other Income and Expenses [Abstract]  
Other (Income)/Deductions - Net he components of Other (income)/deductions—net follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Royalty-related income$(4)$(10)$(12)
Interest income(50)(6)(12)
Identifiable intangible asset impairment charges(a)
39 27 26 
Net loss/(gain) on sale of assets(b)
— 3 (19)
Impairment of an equity investment— — 4 
Other asset impairment charges7 3 4 
Foreign currency loss(c)
62 27 21 
Other, net(14)4 5 
Other (income)/deductions—net$40 $48 $17 
(a)    For 2022, primarily represents asset impairment charges related to customer relationships and developed technology rights in our diagnostics, poultry, cattle and swine businesses. For 2021, primarily represents asset impairment charges related to developed technology rights and trademarks in our dairy cattle, diagnostics and aquatic health businesses. For 2020, primarily represents asset impairment charges related to developed technology rights in our precision animal health and aquatic health businesses.
(b)    For 2020, represents income resulting from payments received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites.
(c)    Primarily driven by costs related to hedging and exposures to certain developed and emerging market currencies.
v3.22.4
Tax Matters
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Tax Matters
8. Tax Matters
A. Taxes on Income
The income tax provision in the Consolidated Statements of Income includes tax costs and benefits, such as uncertain tax positions, repatriation decisions and audit settlements, among others.
The components of Income before provision for taxes on income follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States$1,645 $1,308 $1,109 
International1,011 1,180 887 
Income before provision for taxes on income
$2,656 $2,488 $1,996 
The components of Provision for taxes on income based on the location of the taxing authorities follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States:
Current income taxes:
Federal$514 $311 $232 
State and local81 35 36 
Deferred income taxes:
Federal(198)(84)(29)
State and local(49)(10)(14)
Total U.S. tax provision
348 252 225 
International:
Current income taxes235 188 154 
Deferred income taxes(38)14 (19)
Total international tax provision197 202 135 
Provision for taxes on income$545 $454 $360 
Tax Rate Reconciliation
The reconciliation of the U.S. statutory income tax rate to our effective tax rate follows:
Year Ended December 31,
202220212020
U.S. statutory income tax rate21 %21 %21 %
State and local taxes, net of federal benefits
0.9 0.8 0.9 
Unrecognized tax benefits and tax settlements and resolution of certain tax positions(a)
0.1 0.1 0.1 
Foreign Derived Intangible Income(0.2)(1.1)— 
U.S. Research and Development Tax Credit (0.7)(0.6)(0.7)
Share-based payments(0.6)(0.9)(1.3)
Non-deductible / non-taxable items
0.1 0.3 0.4 
Taxation of non-U.S. operations(0.4)(1.3)(1.6)
All other—net0.3 (0.1)(0.8)
Effective tax rate 20.5 %18.2 %18.0 %
(a)    For a discussion about unrecognized tax benefits and tax settlements and resolution of certain tax positions, see D. Tax Contingencies.
Our effective income tax rate was 20.5%, 18.2% and 18.0% in 2022, 2021 and 2020, respectively.
The higher effective tax rate for 2022, compared with 2021, was attributable to a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs), a lower benefit in the U.S. related to foreign-derived intangible income and lower net discrete tax benefits in 2022. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items.
The higher effective tax rate for 2021, compared with 2020, was primarily attributable to changes in the jurisdictional mix of earnings, which includes the impact of the location of earnings, repatriation costs, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items, as well as higher net discrete tax benefits in 2020, partially offset by a benefit in the U.S. related to foreign-derived intangible income in 2021.
In 2022, the company implemented an initiative to maximize its cash position in the U.S. This initiative resulted in a tax benefit in the U.S. in connection with a prepayment from a related foreign entity in Belgium which qualifies as foreign-derived intangible income; however, this income tax benefit has been deferred for 2022 and will be recognized in future periods. This deferred benefit is included in Other current assets on our Consolidated Balance Sheets as of December 31, 2022 in the amount of $38 million.
On August 16, 2022, the U.S. Inflation Reduction Act of 2022 (the “IRA”) was enacted which, among other changes, implements a 15% alternative minimum tax on financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. The alternative minimum tax and excise tax are effective for taxable years beginning after December 31, 2022 and the incentives to promote clean energy have various different effective dates. We do not currently expect the IRA to have a material impact on our financial results, including our annual estimated effective tax rate.
B. Tax Matters Agreement
In connection with the separation from Pfizer in 2013, we entered into a tax matters agreement with Pfizer that governs the parties' respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.
In general, under the agreement:
•Pfizer will be responsible for any U.S. federal, state, local or foreign income taxes and any U.S. state or local non-income taxes (and any related interest, penalties or audit adjustments and including those taxes attributable to our business) reportable on a consolidated, combined or unitary return that includes Pfizer or any of its subsidiaries (and us and/or any of our subsidiaries) for any periods or portions thereof ending on or prior to December 31, 2012. We will be responsible for the portion of any such taxes for periods or portions thereof beginning on or after January 1, 2013, as would be applicable to us if we filed the relevant tax returns on a standalone basis.
•We will be responsible for any U.S. federal, state, local or foreign income taxes and any U.S. state or local non-income taxes (and any related interest, penalties or audit adjustments) that are reportable on returns that include only us and/or any of our subsidiaries, for all tax periods whether before or after the completion of the separation from Pfizer.
•Pfizer will be responsible for certain specified foreign taxes directly resulting from certain aspects of the separation from Pfizer.
We will not generally be entitled to receive payment from Pfizer in respect of any of our tax attributes or tax benefits or any reduction of taxes of Pfizer. Neither party's obligations under the agreement will be limited in amount or subject to any cap. The agreement also assigns responsibilities for administrative matters, such as the filing of returns, payment of taxes due, retention of records and conduct of audits, examinations or similar proceedings. In addition, the agreement provides for cooperation and information sharing with respect to tax matters.
Pfizer is primarily responsible for preparing and filing any tax return with respect to the Pfizer affiliated group for U.S. federal income tax purposes and with respect to any consolidated, combined, unitary or similar group for U.S. state or local or foreign income tax purposes or U.S. state or local non-income tax purposes that includes Pfizer or any of its subsidiaries, including those that also include us and/or any of our subsidiaries. We are generally responsible for preparing and filing any tax returns that include only us and/or any of our subsidiaries.
The party responsible for preparing and filing a given tax return will generally have exclusive authority to control tax contests related to any such tax return.
C. Deferred Taxes
Deferred taxes arise as a result of basis differentials between financial statement accounting and tax amounts.
The components of our deferred tax assets and liabilities follow:
As of December 31,
20222021
(MILLIONS OF DOLLARS)
Assets (Liabilities)
Prepaid/deferred items$192 $109 
Inventories22 10 
Capitalized R&D for tax111 — 
Identifiable intangible assets(154)(187)
Property, plant and equipment(204)(183)
Employee benefits61 58 
Restructuring and other charges1 3 
Legal and product liability reserves14 14 
Net operating loss/credit carryforwards112 132 
Unremitted earnings(4)(7)
All other9 5 
Subtotal160 (46)
Valuation allowance(129)(174)
Net deferred tax asset/(liability)(a)(b)
$31 $(220)
(a)    The change in the total net deferred tax asset/(liability) from December 31, 2021 to December 31, 2022 is primarily attributable to an increase in deferred tax assets related to prepaid/deferred items as a result of a prepayment from a related foreign entity in Belgium and an increase in deferred tax assets related to the capitalization and amortization of research & development costs for U.S. tax purposes.
(b)    In 2022, included in Noncurrent deferred tax assets ($173 million) and Noncurrent deferred tax liabilities ($142 million). In 2021, included in Noncurrent deferred tax assets ($100 million) and Noncurrent deferred tax liabilities ($320 million).
We have carryforwards, primarily related to net operating losses, which are available to reduce future foreign, U.S. federal, and U.S. state income taxes payable with either an indefinite life or expiring at various times from 2023 to 2042.
Valuation allowances are provided when we believe that our deferred tax assets are not recoverable based on an assessment of estimated future taxable income that incorporates ongoing, prudent and feasible tax planning strategies. On the basis of this evaluation, as of December 31, 2022 and 2021, a valuation allowance of $129 million and $174 million, respectively, has been recorded to reflect only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth.
In general, it is our practice and intention to permanently reinvest the majority of the earnings of the company’s non-U.S. subsidiaries. As of December 31, 2022, the cumulative amount of such undistributed earnings was approximately $7.4 billion, for which we have not provided U.S. and local income taxes, such as U.S. state income taxes, local withholding taxes, and taxes on currency gains and losses. Since these earnings are intended to be indefinitely reinvested overseas as of December 31, 2022, we cannot predict the time or manner of a potential repatriation. As such, other than the deferred tax liability associated with the one-time mandatory deemed repatriation tax on such undistributed earnings imposed by the Tax Cuts and Jobs Act of 2017, it is not practicable to estimate the additional deferred tax liability associated with the potential repatriation of the unremitted earnings.
D. Tax Contingencies
We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involve complex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation or litigation. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates could materially affect our financial statements in the period of settlement or when the statute of limitations expire. We treat these events as discrete items in the period of resolution.
For a description of our accounting policies associated with accounting for income tax contingencies, see Note 3. Significant Accounting Policies: Deferred Tax Assets and Liabilities and Income Tax Contingencies. For a description of the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies: Estimates and Assumptions.
Uncertain Tax Positions
As tax law is complex and often subject to varied interpretations, it is uncertain whether some of our tax positions will be sustained upon audit. As of December 31, 2022, 2021 and 2020, we had approximately $192 million, $188 million and $187 million, respectively, in net liabilities associated with uncertain tax positions, excluding associated interest and penalties. As of December 31, 2022, 2021 and 2020, we had approximately $11
million, $3 million and $3 million, respectively, in assets associated with uncertain tax benefits recorded in Noncurrent deferred tax assets and Other noncurrent assets.
•Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in our financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. These unrecognized tax benefits relate primarily to issues common among multinational corporations. Substantially all of these unrecognized tax benefits, if recognized, would impact our effective income tax rate.
The reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follows:
(MILLIONS OF DOLLARS)202220212020
Balance, January 1$(189)$(188)$(182)
Increases based on tax positions taken during a prior period(a)
(20)(1)(6)
Decreases based on tax positions taken during a prior period(a)
9 7 6 
Increases based on tax positions taken during the current period(a)
(4)(9)(9)
Settlements7 — — 
Lapse in statute of limitations(a)
3 2 3 
Balance, December 31(b)
$(194)$(189)$(188)
(a)    Primarily included in Provision for taxes on income.
(b)    In 2022, included in Noncurrent deferred tax assets and Other noncurrent assets ($2 million) and Other taxes payable ($192 million). In 2021, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($188 million). In 2020, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($187 million).
•Interest related to our unrecognized tax benefits is recorded in accordance with the laws of each jurisdiction and is recorded in Provision for taxes on income in our Consolidated Statements of Income. We recorded net interest expense of $4 million, $1 million and $2 million in 2022, 2021 and 2020, respectively. Gross accrued interest totaled $16 million, $12 million and $11 million as of December 31, 2022, 2021 and 2020, respectively, and were included in Other taxes payable. As of December 31, 2022, 2021 and 2020, gross accrued penalties totaled $3 million and were included in Other taxes payable.
Status of Tax Audits and Potential Impact on Accruals for Uncertain Tax Positions
We are subject to taxation in the U.S. including various states, and foreign jurisdictions. The U.S. is one of our major tax jurisdictions, and we are currently under audit for tax years 2017 through 2019. The company has effectively settled its U.S. federal income tax obligations through 2016. For U.S. state tax purposes, tax years 2015 through 2022 are open for examination (see B. Tax Matters Agreement for years prior to 2013).
In addition to the open audit years in the U.S., we have open audit years in other major foreign tax jurisdictions, such as Canada (2018-2022), Asia-Pacific (2011-2022, primarily reflecting Australia, China and Japan), Europe (2012-2022, primarily reflecting France, Germany, Italy, Spain and the U.K.) and Latin America (2006-2022, primarily reflecting Brazil and Mexico).
Any settlements or statute of limitations expirations could result in a significant decrease in our uncertain tax positions. We do not expect that within the next twelve months any of our gross unrecognized tax benefits, exclusive of interest, could significantly decrease as a result of settlements with taxing authorities or the expiration of the statutes of limitations. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and any variation from such estimates could materially affect our financial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution. Finalizing audits with the relevant taxing authorities can include formal administrative and legal proceedings, and, as a result, it is difficult to estimate the timing and range of possible change related to our uncertain tax positions, and such changes could be significant.
v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases
10. Leases
We have facilities, vehicles and equipment under various non-cancellable operating leases with third parties. These leases generally have remaining terms ranging from 1 to 15 years, inclusive of renewal options that are reasonably certain of exercise.
Supplemental information for operating leases is as follows:
As of December 31,
(MILLIONS OF DOLLARS, EXCEPT LEASE TERM AND DISCOUNT RATE AMOUNTS)20222021
Supplemental Balance Sheet information for operating leases
Operating lease right of use assets$220 $181 
Operating lease liabilities
Operating lease liabilities - current (in Other current liabilities)
$43 $41 
Operating lease liabilities - noncurrent186 151 
Total operating lease liabilities$229 $192 
Weighted-average remaining lease term—operating leases (years)7.726.55
Weighted-average discount rate—operating leases2.78 %2.81 %
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Supplemental Income Statement information for operating leases
Operating lease expense$51 $50 $46 
Variable lease payments not included in the measurement of lease liabilities12 19 20 
Short-term lease payments not included in the measurement of lease liabilities12 9 7 
Supplemental Cash Flow information for operating leases
Cash paid for amounts included in the measurement of lease liabilities$51 $47 $42 
Lease obligations obtained in exchange for right-of-use assets (non-cash)99 39 47 
Future minimum lease payments under non-cancellable operating lease contracts as of December 31, 2022 are as follows:
TotalLess:
AfterLeaseImputed
(MILLIONS OF DOLLARS)202320242025202620272027PaymentsInterestTotal
Maturities$52 $45 $37 $31 $26 $89 $280 $(51)$229 
v3.22.4
Inventories
 12 Months Ended
Dec. 31, 2022
Inventory Disclosure [Abstract]  
Inventories
11. Inventories
The components of inventory follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Finished goods$1,090 $888 
Work-in-process825 696 
Raw materials and supplies430 339 
Inventories$2,345 $1,923 
v3.22.4
Property, Plant and Equipment
 12 Months Ended
Dec. 31, 2022
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment The components of property, plant and equipment follow:
Useful LivesAs of December 31,
(MILLIONS OF DOLLARS)(Years)20222021
Land—$26 $22 
Buildings
33 1/3 - 50
1,197 1,103 
Machinery, equipment and fixtures
3 - 20
3,013 2,627 
Construction-in-progress—814 742 
5,050 4,494 
Less: Accumulated depreciation2,297 2,072 
Property, plant and equipment
$2,753 $2,422 
Depreciation expense was $272 million in 2022, $244 million in 2021 and $211 million in 2020.
v3.22.4
Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets he components of, and changes in, the carrying amount of goodwill follow:
(MILLIONS OF DOLLARS)U.S.InternationalTotal
Balance, December 31, 2020$1,425 $1,269 $2,694 
Adjustments(1)4 3 
Other(b)
— (15)(15)
Balance, December 31, 2021$1,424 $1,258 $2,682 
Additions(a)
61 44 105 
Other(b)
— (41)(41)
Balance, December 31, 2022$1,485 $1,261 $2,746 
(a)     For 2022, primarily relates to the acquisitions of Basepaws and Jurox. See Note 5. Acquisitions and Divestitures.
(b)     Includes adjustments for foreign currency translation.
The gross goodwill balance was $3,282 million as of December 31, 2022 and $3,218 million as of December 31, 2021. Accumulated goodwill impairment losses (generated entirely in fiscal 2002) were $536 million as of December 31, 2022 and 2021.
B. Other Intangible Assets
The components of identifiable intangible assets follow:
As of December 31, 2022As of December 31, 2021
IdentifiableIdentifiable
GrossIntangible Assets,GrossIntangible Assets,
CarryingAccumulatedLess AccumulatedCarryingAccumulatedLess Accumulated
(MILLIONS OF DOLLARS)AmountAmortizationAmortizationAmountAmortizationAmortization
Finite-lived intangible assets:
Developed technology rights$1,918 $(975)$943 $1,933 $(949)$984 
Brands and tradenames395 (237)158 426 (260)166 
Other337 (233)104 473 (335)138 
Total finite-lived intangible assets2,650 (1,445)1,205 2,832 (1,544)1,288 
Indefinite-lived intangible assets:
Brands and tradenames91 — 91 91 — 91 
In-process research and development77 — 77 88 — 88 
Product rights7 — 7 7 — 7 
Total indefinite-lived intangible assets175 — 175 186 — 186 
Identifiable intangible assets$2,825 $(1,445)$1,380 $3,018 $(1,544)$1,474 
Developed Technology Rights
Developed technology rights represent the amortized cost associated with developed technology, which has been acquired from third parties and which can include the right to develop, use, market, sell and/or offer for sale the product, compounds and intellectual property that we have acquired with respect to products, compounds and/or processes that have been completed. These assets include technologies related to the care and treatment of dogs, cats, horses, cattle, swine, poultry, fish and sheep.
Brands and Tradenames
Brands and tradenames represent the amortized or unamortized cost associated with product name recognition, as the products themselves do not receive patent protection and legal trademark and tradenames. The more significant finite-lived brands are Platinum Performance, Lutalyse, and Basepaws and the most significant indefinite-lived brand is the Linco family of products. The more significant finite-lived trademarks and tradenames are finite-lived trademarks and tradenames acquired from Abaxis. The more significant components of indefinite-lived trademarks and tradenames are indefinite-lived trademarks and tradenames acquired from SmithKlineBeecham.
In-Process Research and Development
IPR&D assets represent R&D assets that have not yet received regulatory approval in a major market. The majority of these IPR&D assets were acquired in connection with our acquisition of an Irish biologic therapeutics company.
IPR&D assets are required to be classified as indefinite-lived assets until the successful completion or abandonment of the associated R&D effort. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until approval is obtained in a major market, typically either the U.S. or the EU, or in a series of other countries, subject to certain specified conditions and management judgment. At that time, we will determine the useful life of the asset, reclassify the asset out of IPR&D and begin amortization. If the associated R&D effort is abandoned, the related IPR&D assets will be written-off and we will record an impairment charge.
There can be no certainty that IPR&D assets ultimately will yield a successful product.
Product Rights
Product rights represent product registration and application rights that were acquired from Pfizer in 2014.
C. Amortization
The weighted average life of our total finite-lived intangible assets is approximately 9 years. Total amortization expense for finite-lived intangible assets was $193 million in 2022, $204 million in 2021 and $230 million in 2020.
The annual amortization expense expected for the years 2023 through 2027 is as follows:
(MILLIONS OF DOLLARS)20232024202520262027
Amortization expense$181 $166 $154 $147 $142 
v3.22.4
Benefit Plans
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Benefit Plans
Our employees ceased to participate in the Pfizer U.S. qualified defined benefit and U.S. retiree medical plans effective December 31, 2012 and liabilities associated with our employees under these plans were retained by Pfizer. Pfizer continued to credit certain employees' service with Zoetis generally through December 31, 2017 (or termination of employment from Zoetis, if earlier) for certain early retirement benefits with respect to Pfizer's U.S. defined benefit pension and retiree medical plans. In connection with an employee matters agreement between Pfizer and Zoetis, Zoetis is responsible for payment of three-fifths of the total cost of the service credit continuation ($38 million) for these plans and Pfizer is responsible for the remaining two-fifths of the total cost ($25 million). The $25 million capital contribution from Pfizer and corresponding contra-equity account (which is being reduced as the service credit continuation is incurred) is included in Employee benefit plan contribution from Pfizer Inc. in the Consolidated Statements of Equity. The balance in the contra-equity account was $0 million and $3 million as of December 31, 2022 and 2021, respectively. The amount of the service cost continuation payment to be paid by Zoetis to Pfizer was determined and fixed based on an actuarial assessment of the value of the grow-in benefits and is being paid in equal installments over a period of 10 years. As of December 31, 2022, there are no remaining payments due to Pfizer. Pension and postretirement benefit expense associated with the extended service for certain employees in the U.S. plans totaled $6 million per year in 2022 and 2021.
Pension expense associated with the U.S. and certain significant international locations (inclusive of service cost grow-in benefits discussed above) totaled $12 million in 2022, $14 million in 2021 and $14 million in 2020.
A.    International Pension Plans
Information about the dedicated pension plans, including the plans transferred to us as part of the separation from Pfizer, is provided in the tables below.
Obligations and Funded Status––Dedicated Plans
The following table provides an analysis of the changes in the benefit obligations, plan assets and funded status of our dedicated pension plans (including those transferred to us):
As of and for the
Year Ended December 31,
(MILLIONS OF DOLLARS)20222021
Change in benefit obligation:
Projected benefit obligation, beginning$159 $164 
Service cost6 8 
Interest cost2 2 
Changes in actuarial assumptions and other(27)(1)
Settlements and curtailments(3)(2)
Benefits paid(1)(2)
Adjustments for foreign currency translation(13)(9)
Other––net(1)(1)
Benefit obligation, ending122 159 
Change in plan assets:
Fair value of plan assets, beginning92 85 
Actual return on plan assets(4)11 
Company contributions4 5 
Settlements and curtailments(3)(1)
Benefits paid(1)(2)
Adjustments for foreign currency translation(9)(5)
Other––net(1)(1)
Fair value of plan assets, ending78 92 
Funded status—Projected benefit obligation in excess of plan assets at end of year(a)
$(44)$(67)
(a)    Included in Other noncurrent liabilities.
Changes in the benefit obligation resulted in a net gain of $27 million in 2022 and $1 million in 2021.
Actuarial gains were $6 million ($3 million, net of tax) at December 31, 2022 and actuarial losses were $21 million ($16 million, net of tax) at December 31, 2021. The actuarial gains and losses primarily represent the cumulative difference between the actuarial assumptions and actual return on plan assets, changes in discount rates and changes in other assumptions used in measuring the benefit obligations. These actuarial gains and losses are recognized in Accumulated other comprehensive loss. The actuarial losses will be amortized into net periodic benefit costs over an average period of 6.5 years.
Information related to the funded status of selected plans follows:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Pension plans with an accumulated benefit obligation in excess of plan assets:
Fair value of plan assets$7 $24 
Accumulated benefit obligation40 72 
Pension plans with a projected benefit obligation in excess of plan assets:
Fair value of plan assets58 84 
Projected benefit obligation103 152 
Net Periodic Benefit Costs––Dedicated Plans
The following table provides the net periodic benefit cost associated with dedicated pension plans (including those transferred to us):
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Service cost$6 $8 $8 
Interest cost2 2 2 
Expected return on plan assets(3)(3)(3)
Amortization of net losses1 1 2 
Net periodic benefit cost$6 $8 $9 
Actuarial Assumptions––Dedicated Plans
The following table provides the weighted average actuarial assumptions for the dedicated pension plans (including those transferred to us):
As of December 31,
(PERCENTAGES)202220212020
Weighted average assumptions used to determine benefit obligations:
Discount rate3.7 %1.4 %1.2 %
Rate of compensation increase3.5 %3.4 %3.1 %
Cash balance credit interest rate1.7 %1.5 %1.5 %
Weighted average assumptions used to determine net benefit cost for the year ended December 31:
Discount rate1.4 %1.2 %1.3 %
Expected return on plan assets3.3 %3.8 %3.8 %
Rate of compensation increase3.4 %3.1 %3.1 %
Cash balance credit interest rate1.5 %1.5 %1.5 %
The assumptions above are used to develop the benefit obligations at the end of the year and to develop the net periodic benefit cost for the following year. Therefore, the assumptions used to determine the net periodic benefit cost for each year are established at the end of each previous year, while the assumptions used to determine the benefit obligations are established at each year-end. The net periodic benefit cost and the benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The assumptions are revised based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits.
Actuarial and other assumptions for pension plans can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For a description of the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies—Estimates and Assumptions.
Plan Assets—Dedicated Plans
The components of plan assets follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Cash and cash equivalents$2 $1 
Equity securities: Equity commingled funds29 36 
Debt securities: Government bonds38 45 
Other investments9 10 
Total(a)
$78 $92 
(a)    Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 3. Significant Accounting Policies—Fair Value). Investment plan assets are valued using Level 1 or Level 2 inputs.
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies—Estimates and Assumptions.
Specifically, the following methods and assumptions were used to estimate the fair value of our pension assets:
•    Equity commingled funds––observable market prices (Level 1).
•    Government bonds and other investments––principally observable market prices (Level 2).
The long-term target asset allocations and the percentage of the fair value of plans assets for dedicated benefit plans follow:
As of December 31,
Target allocation
percentagePercentage of Plan Assets
(PERCENTAGES)202220222021
Cash and cash equivalents
0-10%
2.3 %1.5 %
Equity securities
0-60%
37.7 %39.3 %
Debt securities
15-100%
48.0 %48.7 %
Other investments
0-100%
12.0 %10.5 %
Total
100%
100 %100 %
Zoetis utilizes long-term asset allocation ranges in the management of our plans’ invested assets. Long-term return expectations are developed with input from outside investment consultants based on the company’s investment strategy, which takes into account historical experience, as well as the impact of portfolio diversification, active portfolio management, and the investment consultant’s view of current and future economic and financial market conditions. As market conditions and other factors change, the targets may be adjusted accordingly and actual asset allocations may vary from the target allocations.
The long-term asset allocation ranges reflect the asset class return expectations and tolerance for investment risk within the context of the respective plans’ long-term benefit obligations. These ranges are supported by an analysis that incorporates historical and expected returns by asset class, as well as volatilities and correlations across asset classes and our liability profile. This analysis, referred to as an asset-liability analysis, also provides an estimate of expected returns on plan assets, as well as a forecast of potential future asset and liability balances.
The investment consultants review investment performance with Zoetis on a quarterly basis in total, as well as by asset class, relative to one or more benchmarks.
Cash Flows—Dedicated Plans
Our plans are generally funded in amounts that are at least sufficient to meet the minimum requirements set forth in applicable employee benefit laws and local tax and other laws.
We expect to contribute approximately $5 million to our dedicated pension plans in 2023. Benefit payments are expected to be approximately $4 million for 2023, $5 million for 2024, $6 million for 2025, $11 million for 2026 and $7 million for 2027. Benefit payments are expected to be approximately $49 million in the aggregate for the five years thereafter. These expected benefit payments reflect the future plan benefits subsequent to 2023 projected to be paid from the plans or from the general assets of Zoetis entities under the current actuarial assumptions used for the calculation of the projected benefit obligation and, therefore, actual benefit payments may differ from projected benefit payments.
B.    Postretirement Plans
Postretirement benefit expense associated with these U.S. retiree medical plans totaled $4 million per year in 2022, 2021 and 2020 (inclusive of service cost grow-in benefits discussed above).
C.    Defined Contribution Plans
Zoetis has a voluntary defined contribution plan, the Zoetis Savings Plan (ZSP) that allows participation by substantially all U.S. employees. Zoetis matches 100% of employee contributions, up to a maximum of 5% of each employee’s eligible compensation. The ZSP also includes a profit-sharing feature that provides for an additional contribution ranging between 0 and 8 percent of each employee’s eligible compensation. All eligible employees receive the profit-sharing contribution regardless of the amount they choose to contribute to the ZSP. The profit-sharing contribution is a discretionary amount provided by Zoetis and is determined on an annual basis. Employees can direct their contributions and the company's matching and profit-sharing contributions into any of the funds offered. These funds provide participants with a cross section of investing options, including the Zoetis stock fund. The matching and profit-sharing contributions are cash funded.
Employees are permitted to diversify all or any portion of their company matching or profit-sharing contribution. Once the contributions have been paid, Zoetis has no further payment obligations. Contribution expense, associated with the ZSP, totaled $57 million in 2022, $54 million in 2021 and $48 million in 2020.
Employees in the U.S. who meet certain eligibility requirements participate in a supplemental (non-qualified) savings plan sponsored by Zoetis. The (benefit)/cost of the supplemental savings plan was $(9) million in 2022, $12 million in 2021 and $11 million in 2020. Benefit payments for this plan are expected to be approximately $4 million in 2023 and $39 million thereafter.
v3.22.4
Share-Based Payments
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Share-Based Payments
The Zoetis 2013 Equity and Incentive Plan (Equity Plan) provides long-term incentives to our employees and non-employee directors. The principal types of share-based awards available under the Equity Plan may include, but are not limited to, stock options, restricted stock and restricted stock units (RSUs), deferred stock units (DSUs), performance-vesting restricted stock units (PSUs), and other equity-based or cash-based awards.
Thirty million shares of stock were approved and registered with the Securities and Exchange Commission for grants to participants under the Equity Plan. The shares reserved may be used for any type of award under the Equity Plan. At December 31, 2022, the aggregate number of remaining shares available for future grant under the Equity Plan was approximately 14 million shares.
A. Share-Based Compensation Expense
The components of share-based compensation expense follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Stock options / stock appreciation rights$10 $9 $9 
RSUs / DSUs34 33 31 
PSUs18 16 19 
Share-based compensation expense—total(a)
$62 $58 $59 
Tax benefit for share-based compensation expense(8)(7)(7)
Share-based compensation expense, net of tax$54 $51 $52 
(a)    For each of the years ended December 31, 2022, 2021 and 2020, we capitalized less than $1 million of share-based compensation expense to inventory.
B. Stock Options
Stock options represent the right to purchase shares of our common stock within a specified period of time at a specified price. The exercise price for a stock option will be not less than 100% of the fair market value of the common stock on the date of grant. Stock options granted may include those intended to be “incentive stock options” within the meaning of Section 422 of the U.S. Internal Revenue Code of 1986 (the Code).
Stock options are accounted for using a fair-value-based method at the date of grant in the Consolidated Statements of Income. The values determined through this fair-value-based method generally are amortized on a straight-line basis over the vesting term.
Eligible employees may receive Zoetis stock option awards. Zoetis stock option awards generally vest after three years of continuous service from the date of grant and have a contractual term of 10 years.
The fair-value-based method for valuing each Zoetis stock option grant on the grant date uses the Black-Scholes-Merton option-pricing model, which incorporates a number of valuation assumptions noted in the following table, shown at their weighted-average values:
Year Ended December 31,
202220212020
Expected dividend yield(a)
0.64 %0.62 %0.55 %
Risk-free interest rate(b)
1.81 %0.53 %1.41 %
Expected stock price volatility(c)
27.64 %27.94 %24.33 %
Expected term(d) (years)
4.95.05.5
(a)    Determined using a constant dividend yield during the expected term of the Zoetis stock option.
(b)     Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
(c)     Determined using an equal weighting between historical volatility of the Zoetis stock price and implied volatility. The selection of the blended historical and implied volatility approach was based on our assessment that this calculation of expected volatility is more representative of future stock price trends.
(d)     Determined using expected exercise and post-vesting termination patterns.
The following table provides an analysis of stock option activity for the year ended December 31, 2022:
Weighted-Average
RemainingAggregate
Weighted-AverageContractual Term
Intrinsic Value(a)
SharesExercise Price(Years)(Millions)
Outstanding, December 31, 20212,132,567 $80.19 
Granted235,900 201.23 
Exercised(263,174)57.10 
Forfeited(37,687)168.69 
Outstanding, December 31, 20222,067,606 $95.32 5.0$122 
Exercisable, December 31, 20221,317,387 $54.48 3.3$121 
(a)    Market price of underlying Zoetis common stock less exercise price.
As of December 31, 2022, there was approximately $10 million of unrecognized compensation costs related to nonvested stock options, which will be recognized over an expected remaining weighted-average period of one year.
The following table summarizes data related to stock option activity:
Year Ended/As of December 31,
(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS)202220212020
Weighted-average grant date fair value per stock option$51.13 $37.81 $34.22 
Aggregate intrinsic value on exercise31 87 114 
Cash received upon exercise15 36 57 
Tax benefits realized related to exercise 19 34 39 
C. Restricted Stock Units (RSUs)
Restricted stock units represent the right to receive a share of our common stock that is subject to a risk of forfeiture until the restrictions lapse at the end of the vesting period subject to the recipient's continued employment. RSUs accrue dividend equivalent units and are paid in shares of our common stock upon vesting (or cash determined by reference to the value of our common stock).
RSUs are accounted for using a fair-value-based method that utilizes the closing price of Zoetis common stock on the date of grant. Zoetis RSUs generally vest after three years of continuous service from the grant date and the values are amortized on a straight-line basis over the vesting term.
The following table provides an analysis of RSU activity for the year ended December 31, 2022:
Weighted-Average
RSUsGrant Date Fair Value
Nonvested, December 31, 2021809,884 $125.71 
Granted
207,009 200.18 
Vested
(364,085)90.36 
Reinvested dividend equivalents
4,981 157.96 
Forfeited
(37,191)164.12 
Nonvested, December 31, 2022620,598 $169.24 
As of December 31, 2022, there was approximately $45 million of unrecognized compensation costs related to nonvested RSUs, which will be recognized over an expected remaining weighted-average period of one year.
D. Deferred Stock Units (DSUs)
Deferred stock units, which were granted to non-employee compensated Directors in 2013 and 2014, represent the right to receive shares of our common stock at a future date. The DSU awards will be automatically settled and paid in shares within 60 days following the Director’s separation from service on the Board of Directors.
DSUs are accounted for using a fair-value-based method that utilizes the closing price of Zoetis common stock on the date of grant. DSUs vested immediately as of the grant date and the values were expensed at the time of grant into Selling, general and administrative expenses.
For the years ended December 31, 2022 and 2021, there were no DSUs granted. As of December 31, 2022 and 2021, there were 65,071 and 64,599 DSUs outstanding, respectively, including dividend equivalents.
E. Performance-Vesting Restricted Stock Units (PSUs)
Performance-vesting restricted stock units, which are granted to eligible senior management, represent the right to receive a share of our common stock that is subject to a risk of forfeiture until the restrictions lapse, which include continued employment through the end of the vesting period and the attainment of performance goals. PSUs represent the right to receive shares of our common stock in the future (or cash determined by reference to the value of our common stock).
PSUs are accounted for using a Monte Carlo simulation model. The units underlying the PSUs will be earned and vested over a three-year performance period, based upon the total shareholder return of the company in comparison to the total shareholder return of the companies comprising the S&P 500 index at the start of the performance period, excluding companies that during the performance period are acquired or are no longer publicly traded (Relative TSR). The weighted-average fair value was estimated based on volatility assumptions of Zoetis common stock and an average of peer companies, which were 28.4% and 38.1%, respectively, in 2022, and 28.9% and 38.1%, respectively, in 2021. Depending on the company’s Relative TSR performance at the end of the performance period, the recipient may earn between 0% and 200% of the target number of units. Vested units, including dividend equivalent units, are paid in shares of the company’s common stock. PSU values are amortized on a straight-line basis over the vesting term.
On October 3, 2019, the Company announced the retirement of Juan Ramón Alaix as Chief Executive Officer (“CEO”) effective December 31, 2019. As a result of Mr. Alaix’s retirement as CEO, a transition services letter agreement was entered into between the Company and Mr. Alaix. The letter agreement stipulates that any nonvested equity awards as of his retirement date would continue to vest according to their original vesting schedule. As a result of this change, 37,265 of nonvested PSUs granted as part of his 2018 and 2019 equity grants were modified resulting in $8 million to be recognized through December 31, 2020. During the years ended December 31, 2020 and 2019, the company recognized $6 million and $2 million, respectively, of expense related to share-based compensation in connection with Mr. Alaix's retirement.
The following table provides an analysis of PSU activity for the year ended December 31, 2022:
Weighted-Average
PSUsGrant Date Fair Value
Nonvested, December 31, 2021342,386 $160.68 
Granted
104,113 235.52 
Vested
(174,711)110.75 
Reinvested dividend equivalents
2,115 204.49 
Forfeited
(20,859)217.48 
Nonvested, December 31, 2022253,044 $221.59 
Shares issued, December 31, 2022
342,570 $101.57 
As of December 31, 2022, there was approximately $25 million of unrecognized compensation costs related to nonvested PSUs, which will be recognized over an expected remaining weighted-average period of 1.2 years.
F. Other Equity-Based or Cash-Based Awards
Our Compensation Committee is authorized to grant awards in the form of other equity-based awards or other cash-based awards, as deemed to be consistent with the purposes of the Equity Plan.
v3.22.4
Stockholders' Equity
 12 Months Ended
Dec. 31, 2022
Stockholders' Equity Attributable to Parent [Abstract]  
Stockholders' Equity
Zoetis is authorized to issue 6 billion shares of common stock and 1 billion shares of preferred stock.
In December 2018, our Board of Directors authorized a $2.0 billion share repurchase program. This program was completed as of June 30, 2022. In December 2021, our Board of Directors authorized an additional $3.5 billion share repurchase program. As of December 31, 2022, there was $2.6 billion remaining under this authorization. Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs.
Accumulated other comprehensive loss
Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, follow:
Currency Translation AdjustmentsBenefit PlansAccumulated Other
Cash Flow Net InvestmentOther CurrencyActuarialComprehensive
(MILLIONS OF DOLLARS)HedgesHedgesTranslation Adj(Losses)/GainsLoss
Balance, December 31, 2019$— $21 $(724)$(23)$(726)
Other comprehensive (loss)/gain, net of tax(15)(58)69 — 

(4)
Balance, December 31, 2020(15)(37)(655)(23)(730)
Other comprehensive gain/(loss), net of tax19 42 (101)6 (34)
Balance, December 31, 20214 5 (756)(17)(764)
Other comprehensive gain/(loss), net of tax86 36 (188)13 

(53)
Balance, December 31, 2022$90 $41 $(944)$(4)$(817)
v3.22.4
Earnings Per Share
 12 Months Ended
Dec. 31, 2022
Earnings Per Share [Abstract]  
Earnings per Share following table presents the calculation of basic and diluted earnings per share:
Year Ended December 31,
(MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA)202220212020
Numerator
Net income before allocation to noncontrolling interests$2,111 $2,034 $1,636 
Less: net loss attributable to noncontrolling interests(3)(3)(2)
Net income attributable to Zoetis Inc.$2,114 $2,037 $1,638 
Denominator
Weighted-average common shares outstanding468.891 474.348 475.502 
Common stock equivalents: stock options, RSUs, DSUs and PSUs1.494 2.369 3.067 
Weighted-average common and potential dilutive shares outstanding470.385 476.717 478.569 
Earnings per share attributable to Zoetis Inc. stockholders—basic$4.51 $4.29 $3.44 
Earnings per share attributable to Zoetis Inc. stockholders—diluted$4.49 $4.27 $3.42 
The number of stock options outstanding under the company's Equity Plan that were excluded from the computation of diluted earnings per share, as the effect would have been antidilutive, were not material for the years ended December 31, 2022, 2021 and 2020.
v3.22.4
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
18. Commitments and Contingencies
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business. For a discussion of our tax contingencies, see Note 8. Tax Matters.
A. Legal Proceedings
Our non-tax contingencies include, among others, the following:
•    Product liability and other product-related litigation, which can include injury, consumer, off-label promotion, antitrust and breach of contract claims.
•    Commercial and other matters, which can include product-pricing claims and environmental claims and proceedings.
•    Patent litigation, which typically involves challenges to the coverage and/or validity of our patents or those of third parties on various products or processes.
•    Government investigations, which can involve regulation by national, state and local government agencies in the U.S. and in other countries.
Certain of these contingencies could result in losses, including damages, fines and/or civil penalties, and/or criminal charges, which could be substantial.
We believe that we have strong defenses in these types of matters, but litigation is inherently unpredictable and excessive verdicts do occur. We do not believe that any of these matters will have a material adverse effect on our financial position. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid.
We have accrued for losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.
Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions.
The principal matters to which we are a party are discussed below. In determining whether a pending matter is significant for financial reporting and disclosure purposes, we consider both quantitative and qualitative factors in order to assess materiality, such as, among other things, the amount of damages and the nature of any other relief sought in the proceeding, if such damages and other relief are specified; our view of the merits of the claims and of the strength of our defenses; whether the action purports to be a class action and our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; any experience that we or, to our knowledge, other companies have had in similar proceedings; whether disclosure of the action would be important to a reader of our financial statements, including whether disclosure might change a reader’s judgment about our financial statements in light of all of the information about the company that is available to the reader; the potential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, with respect to patent matters, we consider, among other things, the financial significance of the product protected by the patent.
Ulianopolis, Brazil
In February 2012, the Municipality of Ulianopolis (State of Para, Brazil) filed a complaint against Fort Dodge Saúde Animal Ltda. (FDSAL), a Zoetis entity, and five other large companies alleging that waste sent to a local waste incineration facility for destruction, but that was not ultimately destroyed as the facility lost its operating permit, caused environmental impacts requiring cleanup.
The Municipality is seeking recovery of cleanup costs purportedly related to FDSAL's share of all waste accumulated at the incineration facility awaiting destruction, and compensatory damages to be allocated among the six defendants. We believe we have strong arguments against the claim, including defense strategies against any claim of joint and several liability.
At the request of the Municipal prosecutor, in April 2012, the lawsuit was suspended for one year. Since that time, the prosecutor has initiated investigations into the Municipality's actions in the matter as well as the efforts undertaken by the six defendants to remove and dispose of their individual waste from the incineration facility. On October 3, 2014, the Municipal prosecutor announced that the investigation remained ongoing and outlined the terms of a proposed Term of Reference (a document that establishes the minimum elements to be addressed in the preparation of an Environmental Impact Assessment), under which the companies would be liable to withdraw the waste and remediate the area.
On March 5, 2015, we presented our response to the prosecutor’s proposed Term of Reference, arguing that the proposed terms were overly general in nature and expressing our interest in discussing alternatives to address the matter. The prosecutor agreed to consider our request to engage a technical consultant to conduct an environmental diagnostic of the contaminated area. On May 29, 2015, we, in conjunction with the other defendant companies, submitted a draft cooperation agreement to the prosecutor, which outlined the proposed terms and conditions for the engagement of a technical consultant to conduct the environmental diagnostic. On August 19, 2016, the parties and the prosecutor agreed to engage the services of a third-party consultant to conduct a limited environmental assessment of the site. The site assessment was conducted during June 2017, and a written report summarizing the results of the assessment was provided to the parties and the prosecutor in November 2017. The report noted that waste is still present on the site and that further (Phase II) environmental assessments are needed before a plan to manage that remaining waste can be prepared. On April 1, 2019, the defendants met with the Prosecutor to discuss the conclusions set forth in the written report. Following that discussion, on April 10, 2019, the Prosecutor issued a procedural order requesting that the defendants prepare and submit a technical proposal outlining the steps needed to conduct the additional Phase II environmental assessments. The defendants presented the technical proposal to the Prosecutor on October 21, 2019. On March 3, 2020, the Prosecutor notified the defendants that he submitted the proposal to the Ministry of the Environment for its review and consideration by the Prosecutor. On July 15, 2020, the Prosecutor recommended certain amendments to the proposal for the Phase II testing. On September 28, 2020, the parties and the Prosecutor agreed to the final terms and conditions concerning the cooperation agreement with respect to the Phase II testing. Due to the ongoing issues presented by the coronavirus (COVID-19) pandemic, the parties have been unable to secure a start date for the Phase II testing and have no timeline at this point when testing will begin.
Lascadoil Contamination in Animal Feed
An investigation by the U.S. Food and Drug Administration (FDA) and the Michigan Department of Agriculture into the alleged contamination of the feed supply of certain turkey and hog feed mills in Michigan led to the recall of certain batches of soy oil (intended for use as an animal feed additive) that had originated with Shur-Green Farms LLC, a producer of soy oil, and that had been contaminated with lascadoil, an industrial by-product of certain Zoetis manufacturing processes. The contaminated feed is believed to have caused the deaths of approximately 50,000 turkeys and the contamination (but not death) of at least 20,000 hogs in August 2014. The investigation posited that Shur-Green inadvertently contaminated soy oil with lascadoil which it purchased from Zoetis for use as a bio-fuel ingredient, and then sold the contaminated soy oil to fat recycling vendors, who in turn unknowingly sold to feed mills for use in animal feed.
During the course of its investigation, the FDA identified the process used to manufacture Zoetis’ Avatec® (lasalocid sodium) and Bovatec® (lasalocid sodium) products as the possible source of the lascadoil, since lascadoil contains small amounts of lasalocid, the active ingredient found in both products. Zoetis sold the industrial lascadoil byproduct to Shur-Green, through its broker, Heritage Interactive Services, LLC. Under the terms of the sale agreement, the lascadoil could only be incinerated or resold for use in biofuel, and the agreement expressly prohibited the reselling of lascadoil for use as a component in food. The FDA inspected the Zoetis site where Avatec and Bovatec are manufactured, and found no evidence that Zoetis was involved in the contamination of the animal feed.
On March 10, 2015, plaintiffs Restaurant Recycling, LLC (Restaurant Recycling) and Superior Feed Ingredients, LLC (Superior), both of whom are in the fat recycling business, filed a complaint in the Seventeenth Circuit Court for the State of Michigan against Shur-Green Farms alleging negligence and breach of warranty claims arising from their purchase of soy oil allegedly contaminated with lascadoil. Plaintiffs resold the allegedly contaminated soy oil to turkey feed mills for use in feed ingredient. Plaintiffs also named Zoetis as a defendant in the complaint alleging that Zoetis failed to properly manufacture its products and breached an implied warranty that the soy oil was fit for use at turkey and hog mills. Zoetis was served with the complaint on June 3, 2015, and we filed our answer, denying all allegations, on July 15, 2015. On August 10, 2015, several of the turkey feed mills filed a joint complaint against Restaurant Recycling, Superior, Shur-Green Farms and others, alleging claims for negligence, misrepresentation, and breach of warranty, arising out of their alleged purchase and use of the contaminated soy oil. The complaint raises only one count against Zoetis for negligence. We filed an answer to the complaint on November 2, 2015, denying the allegation. On May 16, 2016, two additional turkey producers filed a complaint in the Seventeenth Circuit Court for the State of Michigan against the company, Restaurant Recycling, Superior, Shur-Green Farms and others, alleging claims for negligence and breach of warranties. We filed an answer to the complaint on June 20,
2016, denying the allegations. The Court has consolidated all three cases in Michigan for purposes of discovery and disposition. On July 28, 2017, we filed a motion for summary disposition on the grounds that no genuine issues of material fact exist and that Zoetis is entitled to judgment as a matter of law. On October 19, 2017, the Court granted our motion and dismissed all claims against Zoetis. On October 31, 2017, the plaintiffs filed motions for reconsideration of the Court’s decision granting summary disposition. The Court denied all such motions on December 6, 2017, for the same reasons cited in the Court’s original decision. On December 27, 2017, the plaintiffs filed a request with the Michigan Court of Appeals seeking an interlocutory (or interim) appeal of the lower Court’s decision, which we opposed on January 17, 2018. On July 5, 2018, the Court of Appeals denied the plaintiffs’ request for an interlocutory appeal. The case was remanded back to the lower Court, where it was scheduled to proceed to trial by jury. We have been advised that the remaining parties have reached an agreement to settle the dispute, and on June 24, 2020, the remaining parties jointly stipulated to the dismissal of all remaining claims. On July 13, 2020, Plaintiffs filed a claim of appeal with Michigan Court of Appeals seeking reversal of the lower Court’s decision granting Zoetis’ motion for summary disposition. Plaintiffs’ filed their appeal brief on October 29, 2020, and we filed our reply brief on December 3, 2020. The Court of Appeals heard oral arguments on December 7, 2021.
On September 15, 2022, the Court of Appeals affirmed the lower Court’s ruling in favor of Zoetis. The plaintiffs do not have an automatic right to appeal the decision of the Court of Appeals; rather, they must petition the Supreme Court of Michigan for leave to appeal further. On October 27, 2022, the plaintiffs filed an application to the Michigan Supreme Court for leave to appeal the Court of Appeals' opinion. We opposed the plaintiff's application for leave to file an appeal on November 22, 2022. The plaintiffs filed a reply to our opposition on December 16, 2022. On January 31, 2023, the Michigan Supreme Court denied the plaintiffs' request for leave to file an appeal, effectively ending the matter.
Belgium Excess Profit Tax Regime
On February 14, 2019, the General Court of the European Union (General Court) annulled the January 11, 2016 decision of the European Commission (EC) that selective tax advantages granted by Belgium under its "excess profit" tax scheme constitute illegal state aid. As a result of the 2016 decision, the company recorded a net tax charge of approximately $35 million in the first half of 2016. On May 8, 2019, the EC filed an appeal to the decision of the General Court. On September 16, 2019, the EC opened separate in-depth investigations to assess whether Belgium excess profit rulings granted to 39 multinational companies, including Zoetis, constituted state aid for those companies. On September 16, 2021, the European Court of Justice upheld the EC’s decision that the Belgium excess profit ruling system is considered an aid scheme and referred the case back to the General Court to rule on open questions. On May 24, 2022, the General Court resumed all proceedings involved with the Excess Profit Rulings cases, including Zoetis. On June 23, 2022, as requested by the General Court, the company provided observations in relations to (i) the impact of the Court of Justice’s decision that the Belgium excess profit ruling system is considered an aid scheme and (ii) the impact of recent case laws by the General Court with regards to the existence of a selective advantage. On December 16, 2022, the company submitted observations on the conclusions drawn from the November 8, 2022 Fiat Chrysler Finance Europe and Ireland v Commission judgement, as requested by the General Court. A hearing has been scheduled by the General Court for February 15, 2023. The company has not reflected any potential benefits in its consolidated financial statements as of December 31, 2022 as a result of the 2019 annulment. We will continue to monitor the developments of the appeal and its ultimate resolution.
B. Guarantees and Indemnifications
In the ordinary course of business and in connection with the sale of assets and businesses, we indemnify our counterparties against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2022, recorded amounts for the estimated fair value of these indemnifications were not material.
C. Purchase Commitments
As of December 31, 2022, we have agreements totaling $321 million to purchase goods and services that are enforceable and legally binding and include amounts relating to contract manufacturing, information technology services and potential milestone payments deemed reasonably likely to occur. Payments for these obligations are expected to be approximately $173 million in 2023 and $148 million thereafter.
v3.22.4
Segment Information
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Segment Information
We manage our operations through two geographic regions. Each operating segment has responsibility for its commercial activities. Within each of these operating segments, we offer a diversified product portfolio, including parasiticides, vaccines, dermatology, anti-infectives, other pharmaceutical products, medicated feed additives and animal health diagnostics, for both companion animal and livestock customers.
In 2021, certain costs associated with information technology that specifically support our global manufacturing operations, which were previously reported in Other unallocated, are now reported in Corporate. In addition, in the first quarter of 2021, the company realigned certain management responsibilities. These changes did not impact the determination of our operating segments, however they resulted in the reallocation of certain costs between segments. These changes primarily include the following: (i) certain diagnostics costs, which were previously reported in Corporate, are now reported in our U.S. results; and (ii) certain other miscellaneous costs, which were previously reported in our U.S. results, are now reported in Corporate.
Operating Segments
Our operating segments are the U.S. and International. Our chief operating decision maker uses the revenue and earnings of the two operating segments, among other factors, for performance evaluation and resource allocation.
Other Costs and Business Activities
Certain costs are not allocated to our operating segment results, such as costs associated with the following:
•    Other business activities, includes our CSS contract manufacturing results, our human health business, and expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the international commercial segment.
•    Corporate, includes enabling functions such as information technology, facilities, legal, finance, human resources, business development, certain diagnostic costs and communications, among others. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense.
•    Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition-related activities, where we incur costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs; and (iii) Certain significant items, which comprise substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis, such as restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition, certain asset impairment charges, certain legal and commercial settlements and the impact of divestiture-related gains and losses.
•Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with finance that specifically support our global manufacturing operations; (iii) certain supply chain and global logistics costs; and (iv) procurement costs.
Segment Assets
We manage our assets on a total company basis, not by operating segment. Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $14.9 billion and $13.9 billion at December 31, 2022 and 2021, respectively.
Selected Statement of Income Information                                 
Earnings
Depreciation and Amortization(a)
Year Ended December 31,Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020202220212020
U.S.
Revenue$4,313 $4,042 $3,557 
Cost of Sales803 788 709 
Gross Profit3,510 3,254 2,848 
    Gross Margin81.4 %80.5 %80.1 %
Operating Expenses765 681 602 
Other (income)/deductions-net(18)4 7 
U.S. Earnings2,763 2,569 2,239 $55 $54 $55 
International
Revenue(b)
3,681 3,652 3,035 
Cost of Sales1,083 1,106 971 
Gross Profit2,598 2,546 2,064 
    Gross Margin70.6 %69.7 %68.0 %
Operating Expenses611 602 510 
Other (income)/deductions-net(3)(4)7 
International Earnings1,990 1,948 1,547 86 74 56 
Total operating segments4,753 4,517 3,786 141 128 111 
Other business activities
(424)(406)(372)28 28 27 
Reconciling Items:
Corporate
(1,073)(1,052)(879)132 115 101 
Purchase accounting adjustments
(160)(175)(198)159 175 199 
Acquisition-related costs
(5)(12)(18)— — — 
Certain significant items(c)
(56)(73)(43)— — — 
Other unallocated
(379)(311)(280)5 2 3 
Total Earnings(d)
$2,656 $2,488 $1,996 $465 $448 $441 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
(c)    For 2022, certain significant items primarily represents inventory and asset impairment charges related to customer relationships, developed technology rights and property, plant and equipment in our diagnostics, poultry, cattle and swine businesses and the consolidation of manufacturing sites in China of $47 million, as well as employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets of $4 million.
For 2021, certain significant items primarily included certain asset impairment charges of $46 million, as well as employee termination costs associated with our international operations and other costs associated with cost-reduction and productivity initiatives of $24 million.
For 2020, certain significant items primarily included certain asset impairment charges of $37 million and CEO transition-related costs of $16 million, partially offset by a net gain resulting from a cash payment received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites of $18 million.
    (d)    Defined as income before provision for taxes on income.
B. Geographic Information
Property, plant and equipment, less accumulated depreciation, by geographic region follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
U.S.$1,820 $1,638 
International933 784 
Property, plant and equipment, less accumulated depreciation$2,753 $2,422 
v3.22.4
Schedule II - Valuation and Qualifying Accounts
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
Schedule II - Valuation and Qualifying Accounts Schedule II—Valuation and Qualifying Accounts
Balance,Balance,
Beginning ofEnd of
(MILLIONS OF DOLLARS)PeriodAdditionsDeductionsPeriod
Year Ended December 31, 2022
Allowance for doubtful accounts$17 $4 $(2)$19 
Year Ended December 31, 2021
Allowance for doubtful accounts$20 $1 $(4)$17 
Year Ended December 31, 2020
Allowance for doubtful accounts$21 $3 $(4)$20 
v3.22.4
Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2022
Accounting Policies [Abstract]  
Recently Adopted Accounting Standards and Recently Issued Accounting Standards
Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021 and December 2022, it issued subsequent amendments to the initial guidance: ASU No. 2021-01 and ASU No. 2022-06, Reference Rate Reform (Topic 848). The new guidance provides temporary optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. Adoption of the guidance is optional and effective as of March 12, 2020, but only available through December 31, 2024. We currently have various hedging transactions that reference LIBOR. We will make specific amendments to our affected contracts and hedge documentation to adopt these standards during the transition period and we do not expect these changes to have a material impact on our consolidated financial statements or related disclosures.
Estimates and Assumptions
Estimates and Assumptions
In preparing the consolidated financial statements, we use certain estimates and assumptions that affect reported amounts and disclosures, including amounts recorded in connection with acquisitions. These estimates and underlying assumptions can impact all elements of our consolidated financial statements. For example, in the Consolidated Statements of Income, estimates are used when accounting for deductions from revenue (such as rebates, sales allowances, product returns and discounts), determining cost of sales, allocating cost in the form of depreciation and amortization, and estimating restructuring charges and the impact of contingencies. On the Consolidated Balance Sheets, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable, uncertain tax positions, benefit obligations, the impact of contingencies, deductions from revenue and restructuring reserves, all of which also impact the Consolidated Statements of Income.
Our estimates are often based on complex judgments, probabilities and assumptions that we believe to be reasonable but that can be inherently uncertain and unpredictable. If our estimates and assumptions are not representative of actual outcomes, our results could be materially impacted.
As future events and their effects cannot be determined with precision, our estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. We are subject to risks and uncertainties that may cause actual results to differ from estimated amounts, such as changes in competition, litigation, legislation and regulations. We regularly evaluate our estimates and assumptions using historical experience and expectations about the future. We adjust our estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under relevant accounting standards. It is possible that others, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.
Acquisitions
Acquisitions
Our consolidated financial statements include the operations of acquired businesses from the date of acquisition. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired in-process research and development (IPR&D) be recorded on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill. When we acquire net assets that do not constitute a business as defined in U.S. GAAP, no goodwill is recognized.
Amounts recorded for acquisitions can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Lessee, Leases [Policy Text Block]
Leases
We determine if a contract contains a lease at inception. Our current portfolio includes only operating leases which are recorded as a right of use asset, as of the lease commencement date, in an amount equal to the present value of future payments over the lease term. We have elected not to recognize right of use assets and lease liabilities for short-term leases of vehicles and equipment with a lease term of twelve months or less.
Options to extend or terminate a lease are considered in the lease term to the extent that the option is reasonably certain of exercise. A corresponding lease liability is recorded within Other current liabilities and Operating lease liabilities. The present value of future payments is discounted using the rate implicit in the lease, when available. When the implicit rate is not available, as is frequently the case with our lease portfolio, the present value is calculated using our incremental borrowing rate, which is determined on the commencement date. The incremental borrowing rate represents the rate of interest that we would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. As we do not borrow on a collateralized basis, our non-collateralized borrowing rate is used as an input in deriving the incremental borrowing rate.
Fixed lease payments are recognized on straight-line basis over the lease term, while variable payments are recognized in the period incurred. Variable lease payments include real estate taxes and charges for other non-lease services due to lessors that are not dependent on an index or rate and utilization based charges associated with fleet vehicles.
Our real estate and fleet lease contracts may include fixed consideration attributable to both lease and non-lease components, including non-lease services provided by the vendor, which are accounted for as a single fixed minimum payment. For leases of certain classes of machinery and equipment, contract consideration is allocated to lease and non-lease components on the basis of relative standalone price.
Foreign Currency Translation Foreign Currency TranslationFor most of our international operations, local currencies have been determined to be the functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at exchange rates in effect at the balance sheet date and we translate functional currency income and expense amounts to their U.S. dollar equivalents at average exchange rates for the period. The U.S. dollar effects that arise from changing translation rates are recorded in Other comprehensive income/(loss), net of tax. The effects of converting non-functional currency assets and liabilities into the functional currency are recorded in Other (income)/deductions––net. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.
Revenue, Deductions form Revenue and the Allowance for Doubtful Accounts
Revenue, Deductions from Revenue and the Allowance for Doubtful Accounts
We recognize revenue from product sales when control of the goods has transferred to the customer, which is typically once the goods have shipped and the customer has assumed title. Revenue reflects the total consideration to which we expect to be entitled (i.e., the transaction price), in exchange for products sold, after considering various types of variable consideration including rebates, sales allowances, product returns and discounts.
Variable consideration is estimated and recorded at the time that related revenue is recognized. Our estimates reflect the amount by which we expect variable consideration to impact revenue recognized and are generally based on contractual terms or historical experience, adjusted as necessary to reflect our expectations about the future. Our customer payment terms generally range from 30 to 90 days.
Estimates of variable consideration utilize a complex series of judgments and assumptions to determine the amount by which we expect revenue to be reduced, for example;
•for sales returns, we perform calculations in each market that incorporate the following, as appropriate: local returns policies and practices; historic returns as a percentage of revenue; estimated shelf life by product; an estimate of the amount of time between shipment and return or lag time; and any other factors that could impact the estimate of future returns, product recalls, discontinuation of products or a changing competitive environment; and
•for revenue incentives, we use our historical experience with similar incentives programs to estimate the impact of such programs on revenue for the current period.
Although the amounts recorded for these deductions from revenue are dependent on estimates and assumptions, historically our adjustments to actual results have not been material. The sensitivity of our estimates can vary by program, type of customer and geographic location.
Accruals for deductions from revenue are recorded as either a reduction in Accounts receivable or within Accrued expenses, depending on the nature of the contract and method of expected payment. Amounts recorded as a reduction in Accounts receivable as of December 31, 2022 and 2021 are approximately $295 million and $216 million, respectively. As of December 31, 2022, and 2021, accruals for deductions from revenue included in Accrued expenses are approximately $285 million and $312 million, respectively.
A deferral of revenue may be required in the event that we have not satisfied all customer obligations for which we have been compensated. The transaction price is allocated to the individual performance obligations on the basis of relative stand-alone selling price, which is typically based on actual sales prices. Revenue associated with unsatisfied performance obligations are contract liabilities, is recorded within Other current liabilities and Other noncurrent liabilities, and is recognized once control of the underlying products has transferred to the customer. Contract liabilities reflected within Other current liabilities as of December 31, 2021 and subsequently recognized as revenue during 2022 were approximately $5 million. Contract liabilities as of December 31, 2022 were approximately $14 million.
We do not disclose the transaction price allocated to unsatisfied performance obligations related to contracts with an original expected duration of one year or less, or for contracts for which we recognize revenue in line with our right to invoice the customer. Estimated future revenue expected to be generated from long-term contracts with unsatisfied performance obligations as of December 31, 2022 is not material.
Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from Revenue. Shipping and handling costs incurred after control of the purchased product has transferred to the customer are accounted for as a fulfillment cost, within Selling, general and administrative expenses.
We also record estimates for bad debts. We periodically assess the adequacy of the allowance for doubtful accounts by evaluating the collectability of outstanding receivables based on factors such as past due history, historical and expected collection patterns, the financial condition of our customers, the robust nature of our credit and collection practices and the economic environment. Amounts recorded for sales deductions and bad debts can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Cost of Sales and Inventories Cost of Sales and InventoriesInventories are carried at the lower of cost or net realizable value. The cost of finished goods, work-in-process and raw materials is determined using average actual cost. We regularly review our inventories for impairment and adjustments are recorded when necessary.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses
Selling, general and administrative costs are expensed as incurred. Among other things, these expenses include the internal and external costs of marketing, advertising, and shipping and handling as well as certain costs related to business technology, facilities, legal, finance, human resources, business development, public affairs and procurement, among others.
Advertising expenses relating to production costs are expensed as incurred, and the costs of space in publications are expensed when the related advertising occurs. Advertising and promotion expenses totaled approximately $287 million in 2022, $292 million in 2021 and $233 million in 2020.
Shipping and handling costs totaled approximately $82 million in 2022, $80 million in 2021 and $66 million in 2020.
Research and Development Expenses Research and Development ExpensesResearch and development (R&D) costs are expensed as incurred. Research is the effort associated with the discovery of new knowledge that will be useful in developing a new product or in significantly improving an existing product. Development is the implementation of the research findings. Before a compound receives regulatory approval, we record upfront and milestone payments made by us to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a compound receives regulatory approval in a major market, we record any milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the assets are determined to have an indefinite life, we amortize them on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter.
Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets
Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets
Long-lived assets include:
•    Goodwill—goodwill represents the excess of the consideration transferred for an acquired business over the assigned values of its net assets. Goodwill is not amortized.
•    Identifiable intangible assets, less accumulated amortization—these acquired assets are recorded at our cost. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Identifiable intangible assets with indefinite lives that are associated with marketed products are not amortized until a useful life can be determined. Identifiable intangible assets associated with IPR&D projects are not amortized until regulatory approval is obtained. The useful life of an amortizing asset generally is determined by identifying the period in which substantially all of the cash flows are expected to be generated.
•    Property, plant and equipment, less accumulated depreciation––these assets are recorded at our cost and are increased by the cost of any significant improvements after purchase. Property, plant and equipment assets, other than land and construction-in-progress, are depreciated on a straight-line basis over the estimated useful life of the individual assets. Depreciation begins when the asset is ready for its intended use. For tax purposes, accelerated depreciation methods are used as allowed by tax laws.
Amortization expense related to finite-lived identifiable intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property are included in Amortization of intangible assets as they benefit multiple business functions. Amortization expense related to intangible assets that are associated with a single function and depreciation of property, plant and equipment are included in Cost of sales, Selling, general and administrative expenses and Research and development expenses, as appropriate.
We review all of our long-lived assets for impairment indicators throughout the year and we perform detailed testing whenever impairment indicators are present. In addition, we perform impairment testing for goodwill and indefinite-lived assets at least annually. When necessary, we record charges for impairments. Specifically:
•    For finite-lived identifiable intangible assets, such as developed technology rights, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators are present, we calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate.
•    For indefinite-lived identifiable intangible assets, such as brands and IPR&D assets, we test for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If we conclude it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the indefinite-lived intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized. We record an impairment loss, if any, for the excess of book value over fair value. In addition, in all cases of an impairment review other than for IPR&D assets, we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate.
•    For goodwill, we test for impairment on at least an annual basis, or more frequently if necessary, either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or by performing a periodic quantitative assessment. If we choose to perform a qualitative analysis and conclude it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed. We determine the implied fair value of goodwill
by subtracting the fair value of all the identifiable net assets other than goodwill from the fair value of the reporting unit and record an impairment loss for the excess, if any, of book value of goodwill over the implied fair value. In 2022 and 2021, we performed a periodic quantitative impairment assessment as of September 30, 2022 and 2021, respectively, which did not result in the impairment of goodwill associated with any of our reporting units. Impairment reviews can involve a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Software Capitalization and Depreciation Software Capitalization and DepreciationWe capitalize certain costs incurred in connection with obtaining or developing internal-use software, including payroll and payroll-related costs for employees who are directly associated with the internal-use software project, external direct costs of materials and services and interest costs while developing the software. Capitalized software costs are included in Property, plant and equipment and are amortized using the straight-line method over the estimated useful life of 5 to 10 years. Capitalization of such costs ceases when the project is substantially complete and ready for its intended purpose. Costs incurred during the preliminary project and post-implementation stages, as well as software maintenance and training costs, are expensed in the period in which they are incurred. The company capitalized $57 million and $73 million of internal-use software for the years ended December 31, 2022 and 2021, respectively. Depreciation expense for capitalized software was $69 million in 2022, $52 million in 2021 and $46 million in 2020.
Restructuring Charges and Certain Acquisition-Related Costs
Restructuring Charges and Certain Acquisition-Related Costs
We may incur restructuring charges in connection with acquisitions when we implement plans to restructure and integrate the acquired operations or in connection with cost-reduction and productivity initiatives. Included in Restructuring charges and certain acquisition-related costs are all restructuring charges and certain costs associated with acquiring and integrating an acquired business. Transaction costs and integration costs are expensed as incurred. Termination costs are a significant component of restructuring charges and are generally recorded when the actions are probable and estimable.
Amounts recorded for restructuring charges and other associated costs can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Earnings per Share
Earnings per Share
Basic earnings per share is computed by dividing net income attributable to Zoetis by the weighted-average number of common shares outstanding during the period. Diluted earnings per share adjusts the weighted-average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (stock options, restricted stock units, and performance-vesting restricted stock units) were exercised or converted into common stock, calculated using the treasury stock method.
Cash Equivalents Cash EquivalentsCash equivalents include items almost as liquid as cash, such as money market funds, certificates of deposit and time deposits with maturity periods of three months or less when purchased.
Fair Value
Fair Value
Certain assets and liabilities are required to be measured at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, we use fair value extensively in the initial recognition of net assets acquired in a business combination. Fair value is estimated using an exit price approach, which requires, among other things, that we determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.
When estimating fair value, depending on the nature and complexity of the asset or liability, we may use one or all of the following approaches:
•    Income approach, which is based on the present value of a future stream of net cash flows.
•    Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
•    Cost approach, which is based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence.
These fair value methodologies depend on the following types of inputs:
•    Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
•    Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable (Level 2 inputs).
•    Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Accounts Receivable Accounts Receivable The recorded amounts of accounts receivable approximate fair value because of their relatively short-term nature. As of December 31, 2022 and 2021, Accounts receivable, less allowance for doubtful accounts, of $1,215 million and $1,133 million, respectively, includes approximately $71 million and $47 million, respectively, of other receivables, such as trade notes receivable and royalty receivables, among others.
Deferred Tax Assets and Liabilities and Income Tax Contingencies ferred Tax Assets and Liabilities and Income Tax Contingencies
Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws. We provide a valuation allowance when we believe that our deferred tax assets are not recoverable based on an assessment of estimated future taxable income that incorporates ongoing, prudent and feasible tax planning strategies.
We account for income tax contingencies using a benefit recognition model. If we consider that a tax position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50% likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing authority that has full knowledge of all relevant information. Under the benefit recognition model, if the initial assessment fails to result in the recognition of a tax benefit, we regularly monitor our position and subsequently recognize the tax benefit: (i) if there are changes in tax law, analogous case law or there is new information that sufficiently raise the likelihood of prevailing on the technical merits of the position to more likely than not; (ii) if the statute of limitations expires; or (iii) if there is a completion of an audit resulting in a favorable settlement of that tax year with the appropriate agency. We regularly re-evaluate our tax positions based on the results of audits of federal, state and foreign income tax filings, statute of limitations expirations, changes in tax law or receipt of new information that would either increase or decrease the technical merits of a position relative to the “more-likely-than-not” standard. Liabilities associated with uncertain tax positions are classified as current only when we expect to pay cash within the next 12 months. Interest and penalties, if any, are recorded in Provision for taxes on income and are classified on our Consolidated Balance Sheets with the related tax liability.
Amounts recorded for valuation allowances and income tax contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
B
Benefit Plans
Benefit Plans
All dedicated benefit plans are pension plans. For our dedicated benefit plans, we recognize the overfunded or underfunded status of defined benefit plans as an asset or liability on the Consolidated Balance Sheets and the obligations generally are measured at the actuarial present value of all benefits attributable to employee service rendered, as provided by the applicable benefit formula. Pension obligations may include assumptions such as long-term rate of return on plan assets, expected employee turnover, participant mortality, and future compensation levels. Plan assets are measured at fair value. Net periodic benefit costs are recognized, as required, into Cost of sales, Selling, general and administrative expenses and Research and development expenses, as appropriate.
Amounts recorded for benefit plans can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Asset Retirement Obligations
Asset Retirement Obligations
We record accruals for the legal obligations associated with the retirement of tangible long-lived assets, including obligations under the doctrine of promissory estoppel and those that are conditioned upon the occurrence of future events. These obligations generally result from the acquisition, construction, development and/or normal operation of long-lived assets. We recognize the fair value of these obligations in the period in which they are incurred by increasing the carrying amount of the related asset. Over time, we recognize expense for the accretion of the liability and for the amortization of the asset.
As of December 31, 2022 and 2021, accruals for asset retirement obligations are $25 million and are primarily included in Other noncurrent liabilities.
Amounts recorded for asset retirement obligations can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Legal and Environmental Contingencies
Legal and Environmental Contingencies
We are subject to numerous contingencies arising in the ordinary course of business, such as product liability and other product-related litigation, commercial litigation, patent litigation, environmental claims and proceedings, government investigations and guarantees and indemnifications. We record accruals for these contingencies to the extent that we conclude that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount within the range, we accrue that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, we accrue the lowest amount in the range. We record anticipated recoveries under existing insurance contracts when recovery is assured.
Amounts recorded for contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Our non-tax contingencies include, among others, the following:
•    Product liability and other product-related litigation, which can include injury, consumer, off-label promotion, antitrust and breach of contract claims.
•    Commercial and other matters, which can include product-pricing claims and environmental claims and proceedings.
•    Patent litigation, which typically involves challenges to the coverage and/or validity of our patents or those of third parties on various products or processes.
•    Government investigations, which can involve regulation by national, state and local government agencies in the U.S. and in other countries.
Certain of these contingencies could result in losses, including damages, fines and/or civil penalties, and/or criminal charges, which could be substantial.
We believe that we have strong defenses in these types of matters, but litigation is inherently unpredictable and excessive verdicts do occur. We do not believe that any of these matters will have a material adverse effect on our financial position. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid.
We have accrued for losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions.
Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions.
The principal matters to which we are a party are discussed below. In determining whether a pending matter is significant for financial reporting and disclosure purposes, we consider both quantitative and qualitative factors in order to assess materiality, such as, among other things, the amount of damages and the nature of any other relief sought in the proceeding, if such damages and other relief are specified; our view of the merits of the claims and of the strength of our defenses; whether the action purports to be a class action and our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; any experience that we or, to our knowledge, other companies have had in similar proceedings; whether disclosure of the action would be important to a reader of our financial statements, including whether disclosure might change a reader’s judgment about our financial statements in light of all of the information about the company that is available to the reader; the potential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, with respect to patent matters, we consider, among other things, the financial significance of the product protected by the patent.
Share-Based Payments
Share-Based Payments
Our compensation programs can include share-based payment plans. All grants under share-based payment programs are accounted for at fair value and such amounts generally are amortized on a straight-line basis over the vesting term to Cost of sales, Selling, general and administrative expenses, and Research and development expenses, as appropriate. We include the impact of estimated forfeitures when determining share-based compensation expense.
Amounts recorded for share-based compensation can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Estimates and Assumptions.
Foreign Exchange and Interest Rate Risk A significant portion of our revenue, earnings and net investment in foreign affiliates is exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk is also managed through the use of various derivative financial instruments. These derivative financial instruments serve to manage the exposure of our net investment in certain foreign operations to changes in foreign exchange rates and protect net income against the impact of translation into U.S. dollars of certain foreign exchange-denominated transactions.For foreign currency forward-exchange contracts not designated as hedging instruments, we recognize the gains and losses that are used to offset the same foreign currency assets or liabilities immediately into earnings along with the earnings impact of the items they generally offset. These contracts essentially take the opposite currency position of that reflected in the month-end balance sheet to counterbalance the effect of any currency movement. The vast majority of the foreign currency forward-exchange contracts mature within 60 days and all mature within three years.
Guarantees and Indemnifications In the ordinary course of business and in connection with the sale of assets and businesses, we indemnify our counterparties against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of December 31, 2022, recorded amounts for the estimated fair value of these indemnifications were not material.
v3.22.4
Tax Matters Accounting Policy (Policies)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Tax Uncertainties, Policy [Policy Text Block] We are subject to income tax in many jurisdictions, and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. All of our tax positions are subject to audit by the local taxing authorities in each tax jurisdiction. These tax audits can involve complex issues, interpretations and judgments and the resolution of matters may span multiple years, particularly if subject to negotiation or litigation. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variation from such estimates could materially affect our financial statements in the period of settlement or when the statute of limitations expire. We treat these events as discrete items in the period of resolution.For a description of our accounting policies associated with accounting for income tax contingencies, see Note 3. Significant Accounting Policies: Deferred Tax Assets and Liabilities and Income Tax Contingencies. For a description of the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies: Estimates and Assumptions.
v3.22.4
Revenue (Tables)
 12 Months Ended
Dec. 31, 2022
Revenue Recognition and Deferred Revenue [Abstract]  
Revenue from External Customers by Geographic Areas Revenue by geographic area
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States$4,313 $4,042 $3,557 
Australia289 259 207 
Brazil330 312 258 
Canada238 232 210 
Chile141 136 100 
China382 357 266 
France126 132 118 
Germany176 183 159 
Italy111 115 90 
Japan173 186 177 
Mexico136 133 116 
Spain118 128 112 
United Kingdom235 234 178 
Other developed markets468 467 388 
Other emerging markets758 778 656 
7,994 7,694 6,592 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Revenue from External Customers by Major Species Revenue by major species
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
U.S.
Companion animal$3,341 $2,990 $2,391 
Livestock972 1,052 1,166 
4,313 4,042 3,557 
International
Companion animal1,862 1,699 1,261 
Livestock1,819 1,953 1,774 
3,681 3,652 3,035 
Total
Companion animal5,203 4,689 3,652 
Livestock2,791 3,005 2,940 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Revenue from External Customers by Species Revenue by species
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Companion Animal:
Dogs and Cats$4,939 $4,426 $3,437 
Horses264 263 215 
5,203 4,689 3,652 
Livestock:
Cattle1,440 1,557 1,558 
Swine565 659 621 
Poultry476 507 537 
Fish212 187 148 
Sheep and other98 95 76 
2,791 3,005 2,940 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
Schedule of Significant Product Revenues Revenue by product category
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Parasiticides$1,860 $1,635 $1,173 
Vaccines1,718 1,673 1,476 
Dermatology1,329 1,180 941 
Anti-infectives1,081 1,215 1,206 
Other pharmaceuticals1,043 966 821 
Medicated feed additives360 420 460 
Animal health diagnostics353 374 305 
Other non-pharmaceuticals250 231 210 
7,994 7,694 6,592 
Contract manufacturing & human health86 82 83 
Total Revenue$8,080 $7,776 $6,675 
v3.22.4
Acquisitions and Divestitures (Tables)
 12 Months Ended
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]  
Schedule of Business Acquisitions, by Acquisition The table below presents the preliminary fair values allocated to the assets and liabilities of Jurox as of the acquisition date:
(MILLIONS OF DOLLARS)Amounts
Cash and cash equivalents$20 
Accounts receivable8 
Inventories(a)
20 
Other current assets1 
Property, plant and equipment(b)
28 
Identifiable intangible assets(c)
134 
Other noncurrent assets1 
Accounts payable2 
Other current liabilities12 
Other noncurrent liabilities2 
Total net assets acquired196 
Goodwill(d)
44 
Total consideration$240 
(a)        Acquired inventory is comprised of finished goods, work in process and raw materials. The fair value of finished goods was determined based on net realizable value adjusted for the costs of the selling effort, a reasonable profit allowance for the selling effort, and estimated holding costs. The fair value of work in process was determined based on net realizable value adjusted for costs to complete the manufacturing process, costs of the selling effort, a reasonable profit allowance for the remaining manufacturing and selling effort, and an estimate of holding costs. The fair value of raw materials was determined to approximate book value.
(b)    Property, plant and equipment is comprised of buildings, machinery and equipment, land, construction in progress and furniture and fixtures. The fair value was primarily determined using a reproduction/replacement cost approach which measures the value of an asset by estimating the cost to acquire or construct comparable assets adjusted for age and condition of the asset.
(c)    Identifiable intangible assets consist of developed technology rights. The fair value of identifiable intangible assets was determined using the income approach, which includes a forecast of expected future cash flows. For additional information regarding identifiable intangible assets, see Note 13. Goodwill and Other Intangible Assets.
(d)        Goodwill represents the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. It is allocated to our International segment and is primarily attributable to cost and revenue synergies including market share capture, elimination of cost redundancies and gain of cost efficiencies, and intangible assets such as assembled workforce which are not separately recognizable. The primary strategic purpose of the acquisition was to enhance the company’s existing product portfolio. The goodwill recorded is not deductible for tax purposes.
v3.22.4
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)
 12 Months Ended
Dec. 31, 2022
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring and Related Costs
The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives are as follows:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Restructuring charges and certain acquisition-related costs:
Integration costs(a)
$4 $10 $17 
Transaction costs(b)
1 — — 
Restructuring charges(c)(d):
Employee termination costs3 17 8 
Asset impairment charges2 13 — 
Exit costs1 3 — 
Total Restructuring charges and certain acquisition-related costs
$11 $43 $25 
(a)    Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes, as well as product transfer costs.
(b)    Transaction costs represent external costs directly related to acquiring businesses and primarily includes expenditures for banking, legal, accounting and other similar services.
(c)    The restructuring charges for the year ended December 31, 2022 are primarily related to employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, as well as asset impairment charges primarily related to the consolidation of manufacturing sites in China.
    The restructuring charges for the year ended December 31, 2021 are primarily related to the realignment of our international operations and other cost-reduction and productivity initiatives.
    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.
(d)    The restructuring charges are associated with the following:
•For the year ended December 31, 2022, Manufacturing/research/corporate of $2 million and International of $4 million.
•For the year ended December 31, 2021, Manufacturing/research/corporate of $21 million and International of $12 million.
•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.
The components of, and changes in, our restructuring accruals are as follows:
EmployeeAsset
TerminationImpairmentExit
(MILLIONS OF DOLLARS)CostsChargesCostsAccrual
Balance, December 31, 2019$45 $— $— $45 
Provision8 — — 8 
Utilization and other(a)
(32)— — (32)
Balance, December 31, 2020$21 $— $— $21 
Provision17 13 3 33 
Non-cash activity— (13)— (13)
Utilization and other(a)
(15)— (1)(16)
Balance, December 31, 2021(b)
$23 $— $2 $25 
Provision3 2 1 6 
Non-cash activity— (2)— (2)
Utilization and other(a)
(12)— (2)(14)
Balance, December 31, 2022(b)(c)
$14 $— $1 $15 
(a)    Includes adjustments for foreign currency translation.
(b)    At December 31, 2022 and 2021, included in Accrued Expenses ($5 million and $14 million, respectively) and Other noncurrent liabilities ($10 million and $11 million, respectively).
(c)    Includes contractual obligations of $7 million, of which payments are expected to be approximately $6 million in 2023 and $1 million thereafter.
v3.22.4
Other (Income)/Deductions - Net Other (Income)/Deductions - Net (Tables)
 12 Months Ended
Dec. 31, 2022
Other Income and Expenses [Abstract]  
Components of Other (Income)/Deductions—Net
The components of Other (income)/deductions—net follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Royalty-related income$(4)$(10)$(12)
Interest income(50)(6)(12)
Identifiable intangible asset impairment charges(a)
39 27 26 
Net loss/(gain) on sale of assets(b)
— 3 (19)
Impairment of an equity investment— — 4 
Other asset impairment charges7 3 4 
Foreign currency loss(c)
62 27 21 
Other, net(14)4 5 
Other (income)/deductions—net$40 $48 $17 
(a)    For 2022, primarily represents asset impairment charges related to customer relationships and developed technology rights in our diagnostics, poultry, cattle and swine businesses. For 2021, primarily represents asset impairment charges related to developed technology rights and trademarks in our dairy cattle, diagnostics and aquatic health businesses. For 2020, primarily represents asset impairment charges related to developed technology rights in our precision animal health and aquatic health businesses.
(b)    For 2020, represents income resulting from payments received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites.
(c)    Primarily driven by costs related to hedging and exposures to certain developed and emerging market currencies.
v3.22.4
Tax Matters (Tables)
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Schedule of Income before Income Tax, Domestic and Foreign The components of Income before provision for taxes on income follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States$1,645 $1,308 $1,109 
International1,011 1,180 887 
Income before provision for taxes on income
$2,656 $2,488 $1,996 
Schedule Of Components Of Provision For Income Taxes The components of Provision for taxes on income based on the location of the taxing authorities follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
United States:
Current income taxes:
Federal$514 $311 $232 
State and local81 35 36 
Deferred income taxes:
Federal(198)(84)(29)
State and local(49)(10)(14)
Total U.S. tax provision
348 252 225 
International:
Current income taxes235 188 154 
Deferred income taxes(38)14 (19)
Total international tax provision197 202 135 
Provision for taxes on income$545 $454 $360 
Schedule of Effective Income Tax Rate Reconciliation
The reconciliation of the U.S. statutory income tax rate to our effective tax rate follows:
Year Ended December 31,
202220212020
U.S. statutory income tax rate21 %21 %21 %
State and local taxes, net of federal benefits
0.9 0.8 0.9 
Unrecognized tax benefits and tax settlements and resolution of certain tax positions(a)
0.1 0.1 0.1 
Foreign Derived Intangible Income(0.2)(1.1)— 
U.S. Research and Development Tax Credit (0.7)(0.6)(0.7)
Share-based payments(0.6)(0.9)(1.3)
Non-deductible / non-taxable items
0.1 0.3 0.4 
Taxation of non-U.S. operations(0.4)(1.3)(1.6)
All other—net0.3 (0.1)(0.8)
Effective tax rate 20.5 %18.2 %18.0 %
(a)    For a discussion about unrecognized tax benefits and tax settlements and resolution of certain tax positions, see D. Tax Contingencies.
Our effective income tax rate was 20.5%, 18.2% and 18.0% in 2022, 2021 and 2020, respectively.
The higher effective tax rate for 2022, compared with 2021, was attributable to a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs), a lower benefit in the U.S. related to foreign-derived intangible income and lower net discrete tax benefits in 2022. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items.
The higher effective tax rate for 2021, compared with 2020, was primarily attributable to changes in the jurisdictional mix of earnings, which includes the impact of the location of earnings, repatriation costs, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items, as well as higher net discrete tax benefits in 2020, partially offset by a benefit in the U.S. related to foreign-derived intangible income in 2021.
In 2022, the company implemented an initiative to maximize its cash position in the U.S. This initiative resulted in a tax benefit in the U.S. in connection with a prepayment from a related foreign entity in Belgium which qualifies as foreign-derived intangible income; however, this income tax benefit has been deferred for 2022 and will be recognized in future periods. This deferred benefit is included in Other current assets on our Consolidated Balance Sheets as of December 31, 2022 in the amount of $38 million.
On August 16, 2022, the U.S. Inflation Reduction Act of 2022 (the “IRA”) was enacted which, among other changes, implements a 15% alternative minimum tax on financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. The alternative minimum tax and excise tax are effective for taxable years beginning after December 31, 2022 and the incentives to promote clean energy have various different effective dates. We do not currently expect the IRA to have a material impact on our financial results, including our annual estimated effective tax rate.
Schedule of Deferred Tax Assets and Liabilities
The components of our deferred tax assets and liabilities follow:
As of December 31,
20222021
(MILLIONS OF DOLLARS)
Assets (Liabilities)
Prepaid/deferred items$192 $109 
Inventories22 10 
Capitalized R&D for tax111 — 
Identifiable intangible assets(154)(187)
Property, plant and equipment(204)(183)
Employee benefits61 58 
Restructuring and other charges1 3 
Legal and product liability reserves14 14 
Net operating loss/credit carryforwards112 132 
Unremitted earnings(4)(7)
All other9 5 
Subtotal160 (46)
Valuation allowance(129)(174)
Net deferred tax asset/(liability)(a)(b)
$31 $(220)
(a)    The change in the total net deferred tax asset/(liability) from December 31, 2021 to December 31, 2022 is primarily attributable to an increase in deferred tax assets related to prepaid/deferred items as a result of a prepayment from a related foreign entity in Belgium and an increase in deferred tax assets related to the capitalization and amortization of research & development costs for U.S. tax purposes.
(b)    In 2022, included in Noncurrent deferred tax assets ($173 million) and Noncurrent deferred tax liabilities ($142 million). In 2021, included in Noncurrent deferred tax assets ($100 million) and Noncurrent deferred tax liabilities ($320 million).
Schedule of Unrecognized Tax Benefits Roll Forward
The reconciliation of the beginning and ending amounts of gross unrecognized tax benefits follows:
(MILLIONS OF DOLLARS)202220212020
Balance, January 1$(189)$(188)$(182)
Increases based on tax positions taken during a prior period(a)
(20)(1)(6)
Decreases based on tax positions taken during a prior period(a)
9 7 6 
Increases based on tax positions taken during the current period(a)
(4)(9)(9)
Settlements7 — — 
Lapse in statute of limitations(a)
3 2 3 
Balance, December 31(b)
$(194)$(189)$(188)
(a)    Primarily included in Provision for taxes on income.
(b)    In 2022, included in Noncurrent deferred tax assets and Other noncurrent assets ($2 million) and Other taxes payable ($192 million). In 2021, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($188 million). In 2020, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($187 million).
v3.22.4
Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments The components of our long-term debt are as follows:
As of December 31,
(MILLIONS OF DOLLARS)20222021
3.250% 2013 senior notes due 2023
$1,350 $1,350 
4.500% 2015 senior notes due 2025
750 750 
5.400% 2022 senior notes due 2025
600 — 
3.000% 2017 senior notes due 2027
750 750 
3.900% 2018 senior notes due 2028
500 500 
2.000% 2020 senior notes due 2030
750 750 
5.600% 2022 senior notes due 2032
750 — 
4.700% 2013 senior notes due 2043
1,150 1,150 
3.950% 2017 senior notes due 2047
500 500 
4.450% 2018 senior notes due 2048
400 400 
3.000% 2020 senior notes due 2050
500 500 
8,000 6,650 
Unamortized debt discount / debt issuance costs(66)(60)
Less current portion of long-term debt1,350 — 
Cumulative fair value adjustment for interest rate swap contracts(32)2 
Long-term debt, net of discount and issuance costs$6,552 $6,592 
Schedule of Maturities of Long-term Debt The following table provides the principal amount of debt outstanding as of December 31, 2022 by scheduled maturity date. The table also provides the expected interest payments on these borrowings as of December 31, 2022.
After
(MILLIONS OF DOLLARS)202320242025202620272027Total
Maturities$1,350 $— $1,350 $— $750 $4,550 $8,000 
Interest payments $294 $272 $272 $206 $206 $2,211 $3,461 
Schedule of Derivative Instruments The aggregate notional amount of derivative instruments are as follows:
Notional
As of December 31,
(MILLIONS)20222021
Derivatives not Designated as Hedging Instruments
     Foreign currency forward-exchange contracts$1,753 $1,749 
Derivatives Designated as Hedging Instruments
     Foreign exchange derivative instruments (in foreign currency):
         Euro650 650 
         Danish krone600 600 
         Swiss franc25 25 
     Forward-starting interest rate swaps $50 $550 
     Fixed-to-floating interest rate swap contracts$250 $200 
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value The classification and fair values of derivative instruments are as follows:
Fair Value of Derivatives
As of December 31,
(MILLIONS OF DOLLARS)Balance Sheet Location20222021
Derivatives Not Designated as Hedging Instruments:
   Foreign currency forward-exchange contractsOther current assets$22 $16 
   Foreign currency forward-exchange contractsOther current liabilities (21)(15)
Total derivatives not designated as hedging instruments1 1 
Derivatives Designated as Hedging Instruments:
   Forward-starting interest rate swap contractsOther non-current assets$10 $17 
   Forward-starting interest rate swap contractsOther non-current liabilities— (5)
   Foreign exchange derivative instrumentsOther current assets21 12 
   Foreign exchange derivative instrumentsOther non-current assets19 14 
   Foreign exchange derivative instrumentsOther current liabilities(9)(3)
   Foreign exchange derivative instrumentsOther non-current liabilities(4)— 
   Fixed-to-floating interest rate swap contractsOther non-current assets— 2 
   Fixed-to-float interest rate swap contractsOther non-current liabilities(32)— 
Total derivatives designated as hedging instruments5 37 
Total derivatives$6 $38 
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location The amounts of net losses on derivative instruments not designated as hedging instruments, recorded in Other (income)/deductions - net, are as follows:
Year Ended December 31,
(MILLIONS OF DOLLARS)20222021
Foreign currency forward-exchange contracts$(58)$(20)
Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) The amounts of unrecognized net (losses)/gains on interest rate swap contracts, recorded, net of tax, in Accumulated other comprehensive loss, are as follows:
Year Ended December 31,
(MILLIONS OF DOLLARS)20222021
Forward starting interest rate swap contracts$(2)$18 
Foreign exchange derivative instruments$36 $42 
Schedule of Net Investment Hedges, Statements of Financial Performance and Financial Position, Location Gains on interest rate swap contracts, recognized within Interest expense, net of capitalized interest, are as follows:
Year Ended December 31,
(MILLIONS OF DOLLARS)20222021
Foreign exchange derivative instruments$16 $12 
v3.22.4
Leases (Tables)
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Lease, Cost [Table Text Block] Supplemental information for operating leases is as follows:
As of December 31,
(MILLIONS OF DOLLARS, EXCEPT LEASE TERM AND DISCOUNT RATE AMOUNTS)20222021
Supplemental Balance Sheet information for operating leases
Operating lease right of use assets$220 $181 
Operating lease liabilities
Operating lease liabilities - current (in Other current liabilities)
$43 $41 
Operating lease liabilities - noncurrent186 151 
Total operating lease liabilities$229 $192 
Weighted-average remaining lease term—operating leases (years)7.726.55
Weighted-average discount rate—operating leases2.78 %2.81 %
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Supplemental Income Statement information for operating leases
Operating lease expense$51 $50 $46 
Variable lease payments not included in the measurement of lease liabilities12 19 20 
Short-term lease payments not included in the measurement of lease liabilities12 9 7 
Supplemental Cash Flow information for operating leases
Cash paid for amounts included in the measurement of lease liabilities$51 $47 $42 
Lease obligations obtained in exchange for right-of-use assets (non-cash)99 39 47 
Lessee, Operating Lease, Liability, Maturity [Table Text Block] Future minimum lease payments under non-cancellable operating lease contracts as of December 31, 2022 are as follows:
TotalLess:
AfterLeaseImputed
(MILLIONS OF DOLLARS)202320242025202620272027PaymentsInterestTotal
Maturities$52 $45 $37 $31 $26 $89 $280 $(51)$229 
v3.22.4
Inventories (Tables)
 12 Months Ended
Dec. 31, 2022
Inventory Disclosure [Abstract]  
Components of Inventory The components of inventory follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Finished goods$1,090 $888 
Work-in-process825 696 
Raw materials and supplies430 339 
Inventories$2,345 $1,923 
v3.22.4
Property, Plant and Equipment (Tables)
 12 Months Ended
Dec. 31, 2022
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment The components of property, plant and equipment follow:
Useful LivesAs of December 31,
(MILLIONS OF DOLLARS)(Years)20222021
Land—$26 $22 
Buildings
33 1/3 - 50
1,197 1,103 
Machinery, equipment and fixtures
3 - 20
3,013 2,627 
Construction-in-progress—814 742 
5,050 4,494 
Less: Accumulated depreciation2,297 2,072 
Property, plant and equipment
$2,753 $2,422 
v3.22.4
Goodwill and Other Intangible Assets (Tables)
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Changes in the Carrying Amount of Goodwill
The components of, and changes in, the carrying amount of goodwill follow:
(MILLIONS OF DOLLARS)U.S.InternationalTotal
Balance, December 31, 2020$1,425 $1,269 $2,694 
Adjustments(1)4 3 
Other(b)
— (15)(15)
Balance, December 31, 2021$1,424 $1,258 $2,682 
Additions(a)
61 44 105 
Other(b)
— (41)(41)
Balance, December 31, 2022$1,485 $1,261 $2,746 
(a)     For 2022, primarily relates to the acquisitions of Basepaws and Jurox. See Note 5. Acquisitions and Divestitures.
(b)     Includes adjustments for foreign currency translation.
Components of Identifiable Intangible Assets The components of identifiable intangible assets follow:
As of December 31, 2022As of December 31, 2021
IdentifiableIdentifiable
GrossIntangible Assets,GrossIntangible Assets,
CarryingAccumulatedLess AccumulatedCarryingAccumulatedLess Accumulated
(MILLIONS OF DOLLARS)AmountAmortizationAmortizationAmountAmortizationAmortization
Finite-lived intangible assets:
Developed technology rights$1,918 $(975)$943 $1,933 $(949)$984 
Brands and tradenames395 (237)158 426 (260)166 
Other337 (233)104 473 (335)138 
Total finite-lived intangible assets2,650 (1,445)1,205 2,832 (1,544)1,288 
Indefinite-lived intangible assets:
Brands and tradenames91 — 91 91 — 91 
In-process research and development77 — 77 88 — 88 
Product rights7 — 7 7 — 7 
Total indefinite-lived intangible assets175 — 175 186 — 186 
Identifiable intangible assets$2,825 $(1,445)$1,380 $3,018 $(1,544)$1,474 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense The annual amortization expense expected for the years 2023 through 2027 is as follows:
(MILLIONS OF DOLLARS)20232024202520262027
Amortization expense$181 $166 $154 $147 $142 
Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block] The components of identifiable intangible assets follow:
As of December 31, 2022As of December 31, 2021
IdentifiableIdentifiable
GrossIntangible Assets,GrossIntangible Assets,
CarryingAccumulatedLess AccumulatedCarryingAccumulatedLess Accumulated
(MILLIONS OF DOLLARS)AmountAmortizationAmortizationAmountAmortizationAmortization
Finite-lived intangible assets:
Developed technology rights$1,918 $(975)$943 $1,933 $(949)$984 
Brands and tradenames395 (237)158 426 (260)166 
Other337 (233)104 473 (335)138 
Total finite-lived intangible assets2,650 (1,445)1,205 2,832 (1,544)1,288 
Indefinite-lived intangible assets:
Brands and tradenames91 — 91 91 — 91 
In-process research and development77 — 77 88 — 88 
Product rights7 — 7 7 — 7 
Total indefinite-lived intangible assets175 — 175 186 — 186 
Identifiable intangible assets$2,825 $(1,445)$1,380 $3,018 $(1,544)$1,474 
v3.22.4
Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan
The following table provides an analysis of the changes in the benefit obligations, plan assets and funded status of our dedicated pension plans (including those transferred to us):
As of and for the
Year Ended December 31,
(MILLIONS OF DOLLARS)20222021
Change in benefit obligation:
Projected benefit obligation, beginning$159 $164 
Service cost6 8 
Interest cost2 2 
Changes in actuarial assumptions and other(27)(1)
Settlements and curtailments(3)(2)
Benefits paid(1)(2)
Adjustments for foreign currency translation(13)(9)
Other––net(1)(1)
Benefit obligation, ending122 159 
Change in plan assets:
Fair value of plan assets, beginning92 85 
Actual return on plan assets(4)11 
Company contributions4 5 
Settlements and curtailments(3)(1)
Benefits paid(1)(2)
Adjustments for foreign currency translation(9)(5)
Other––net(1)(1)
Fair value of plan assets, ending78 92 
Funded status—Projected benefit obligation in excess of plan assets at end of year(a)
$(44)$(67)
(a)    Included in Other noncurrent liabilities.
Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets Information related to the funded status of selected plans follows:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Pension plans with an accumulated benefit obligation in excess of plan assets:
Fair value of plan assets$7 $24 
Accumulated benefit obligation40 72 
Pension plans with a projected benefit obligation in excess of plan assets:
Fair value of plan assets58 84 
Projected benefit obligation103 152 
Schedule of Net Benefit Costs The following table provides the net periodic benefit cost associated with dedicated pension plans (including those transferred to us):
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Service cost$6 $8 $8 
Interest cost2 2 2 
Expected return on plan assets(3)(3)(3)
Amortization of net losses1 1 2 
Net periodic benefit cost$6 $8 $9 
Schedule of Assumptions Used The following table provides the weighted average actuarial assumptions for the dedicated pension plans (including those transferred to us):
As of December 31,
(PERCENTAGES)202220212020
Weighted average assumptions used to determine benefit obligations:
Discount rate3.7 %1.4 %1.2 %
Rate of compensation increase3.5 %3.4 %3.1 %
Cash balance credit interest rate1.7 %1.5 %1.5 %
Weighted average assumptions used to determine net benefit cost for the year ended December 31:
Discount rate1.4 %1.2 %1.3 %
Expected return on plan assets3.3 %3.8 %3.8 %
Rate of compensation increase3.4 %3.1 %3.1 %
Cash balance credit interest rate1.5 %1.5 %1.5 %
Schedule of Allocation of Plan Assets
The components of plan assets follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
Cash and cash equivalents$2 $1 
Equity securities: Equity commingled funds29 36 
Debt securities: Government bonds38 45 
Other investments9 10 
Total(a)
$78 $92 
(a)    Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 3. Significant Accounting Policies—Fair Value). Investment plan assets are valued using Level 1 or Level 2 inputs.
Schedule Of Percentage Of Allocation Of Plan Assets The long-term target asset allocations and the percentage of the fair value of plans assets for dedicated benefit plans follow:
As of December 31,
Target allocation
percentagePercentage of Plan Assets
(PERCENTAGES)202220222021
Cash and cash equivalents
0-10%
2.3 %1.5 %
Equity securities
0-60%
37.7 %39.3 %
Debt securities
15-100%
48.0 %48.7 %
Other investments
0-100%
12.0 %10.5 %
Total
100%
100 %100 %
v3.22.4
Share-Based Payments (Tables)
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Components of Share-based Compensation Expense
The components of share-based compensation expense follow:
Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020
Stock options / stock appreciation rights$10 $9 $9 
RSUs / DSUs34 33 31 
PSUs18 16 19 
Share-based compensation expense—total(a)
$62 $58 $59 
Tax benefit for share-based compensation expense(8)(7)(7)
Share-based compensation expense, net of tax$54 $51 $52 
(a)    For each of the years ended December 31, 2022, 2021 and 2020, we capitalized less than $1 million of share-based compensation expense to inventory.
Share-based Payment Awards, Stock Options, Valuation Assumptions
The fair-value-based method for valuing each Zoetis stock option grant on the grant date uses the Black-Scholes-Merton option-pricing model, which incorporates a number of valuation assumptions noted in the following table, shown at their weighted-average values:
Year Ended December 31,
202220212020
Expected dividend yield(a)
0.64 %0.62 %0.55 %
Risk-free interest rate(b)
1.81 %0.53 %1.41 %
Expected stock price volatility(c)
27.64 %27.94 %24.33 %
Expected term(d) (years)
4.95.05.5
(a)    Determined using a constant dividend yield during the expected term of the Zoetis stock option.
(b)     Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
(c)     Determined using an equal weighting between historical volatility of the Zoetis stock price and implied volatility. The selection of the blended historical and implied volatility approach was based on our assessment that this calculation of expected volatility is more representative of future stock price trends.
(d)     Determined using expected exercise and post-vesting termination patterns.
Stock Option Activity
The following table provides an analysis of stock option activity for the year ended December 31, 2022:
Weighted-Average
RemainingAggregate
Weighted-AverageContractual Term
Intrinsic Value(a)
SharesExercise Price(Years)(Millions)
Outstanding, December 31, 20212,132,567 $80.19 
Granted235,900 201.23 
Exercised(263,174)57.10 
Forfeited(37,687)168.69 
Outstanding, December 31, 20222,067,606 $95.32 5.0$122 
Exercisable, December 31, 20221,317,387 $54.48 3.3$121 
(a)    Market price of underlying Zoetis common stock less exercise price.
As of December 31, 2022, there was approximately $10 million of unrecognized compensation costs related to nonvested stock options, which will be recognized over an expected remaining weighted-average period of one year.
The following table summarizes data related to stock option activity:
Year Ended/As of December 31,
(MILLIONS OF DOLLARS, EXCEPT PER STOCK OPTION AMOUNTS)202220212020
Weighted-average grant date fair value per stock option$51.13 $37.81 $34.22 
Aggregate intrinsic value on exercise31 87 114 
Cash received upon exercise15 36 57 
Tax benefits realized related to exercise 19 34 39 
Restricted Stock Units (RSUs) The following table provides an analysis of RSU activity for the year ended December 31, 2022:
Weighted-Average
RSUsGrant Date Fair Value
Nonvested, December 31, 2021809,884 $125.71 
Granted
207,009 200.18 
Vested
(364,085)90.36 
Reinvested dividend equivalents
4,981 157.96 
Forfeited
(37,191)164.12 
Nonvested, December 31, 2022620,598 $169.24 
Performance-based Units Activity (PSUs) The following table provides an analysis of PSU activity for the year ended December 31, 2022:
Weighted-Average
PSUsGrant Date Fair Value
Nonvested, December 31, 2021342,386 $160.68 
Granted
104,113 235.52 
Vested
(174,711)110.75 
Reinvested dividend equivalents
2,115 204.49 
Forfeited
(20,859)217.48 
Nonvested, December 31, 2022253,044 $221.59 
Shares issued, December 31, 2022
342,570 $101.57 
v3.22.4
Stockholders' Equity (Tables)
 12 Months Ended
Dec. 31, 2022
Stockholders' Equity Attributable to Parent [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss) Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, follow:
Currency Translation AdjustmentsBenefit PlansAccumulated Other
Cash Flow Net InvestmentOther CurrencyActuarialComprehensive
(MILLIONS OF DOLLARS)HedgesHedgesTranslation Adj(Losses)/GainsLoss
Balance, December 31, 2019$— $21 $(724)$(23)$(726)
Other comprehensive (loss)/gain, net of tax(15)(58)69 — 

(4)
Balance, December 31, 2020(15)(37)(655)(23)(730)
Other comprehensive gain/(loss), net of tax19 42 (101)6 (34)
Balance, December 31, 20214 5 (756)(17)(764)
Other comprehensive gain/(loss), net of tax86 36 (188)13 

(53)
Balance, December 31, 2022$90 $41 $(944)$(4)$(817)
v3.22.4
Earnings Per Share (Tables)
 12 Months Ended
Dec. 31, 2022
Earnings Per Share [Abstract]  
Basic and Diluted Earnings Per Share The following table presents the calculation of basic and diluted earnings per share:
Year Ended December 31,
(MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA)202220212020
Numerator
Net income before allocation to noncontrolling interests$2,111 $2,034 $1,636 
Less: net loss attributable to noncontrolling interests(3)(3)(2)
Net income attributable to Zoetis Inc.$2,114 $2,037 $1,638 
Denominator
Weighted-average common shares outstanding468.891 474.348 475.502 
Common stock equivalents: stock options, RSUs, DSUs and PSUs1.494 2.369 3.067 
Weighted-average common and potential dilutive shares outstanding470.385 476.717 478.569 
Earnings per share attributable to Zoetis Inc. stockholders—basic$4.51 $4.29 $3.44 
Earnings per share attributable to Zoetis Inc. stockholders—diluted$4.49 $4.27 $3.42 
v3.22.4
Segment Information (Tables)
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Schedule of Selected Income Statement Information by Segment
Selected Statement of Income Information                                 
Earnings
Depreciation and Amortization(a)
Year Ended December 31,Year Ended December 31,
(MILLIONS OF DOLLARS)202220212020202220212020
U.S.
Revenue$4,313 $4,042 $3,557 
Cost of Sales803 788 709 
Gross Profit3,510 3,254 2,848 
    Gross Margin81.4 %80.5 %80.1 %
Operating Expenses765 681 602 
Other (income)/deductions-net(18)4 7 
U.S. Earnings2,763 2,569 2,239 $55 $54 $55 
International
Revenue(b)
3,681 3,652 3,035 
Cost of Sales1,083 1,106 971 
Gross Profit2,598 2,546 2,064 
    Gross Margin70.6 %69.7 %68.0 %
Operating Expenses611 602 510 
Other (income)/deductions-net(3)(4)7 
International Earnings1,990 1,948 1,547 86 74 56 
Total operating segments4,753 4,517 3,786 141 128 111 
Other business activities
(424)(406)(372)28 28 27 
Reconciling Items:
Corporate
(1,073)(1,052)(879)132 115 101 
Purchase accounting adjustments
(160)(175)(198)159 175 199 
Acquisition-related costs
(5)(12)(18)— — — 
Certain significant items(c)
(56)(73)(43)— — — 
Other unallocated
(379)(311)(280)5 2 3 
Total Earnings(d)
$2,656 $2,488 $1,996 $465 $448 $441 
(a)    Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b)    Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
(c)    For 2022, certain significant items primarily represents inventory and asset impairment charges related to customer relationships, developed technology rights and property, plant and equipment in our diagnostics, poultry, cattle and swine businesses and the consolidation of manufacturing sites in China of $47 million, as well as employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets of $4 million.
For 2021, certain significant items primarily included certain asset impairment charges of $46 million, as well as employee termination costs associated with our international operations and other costs associated with cost-reduction and productivity initiatives of $24 million.
For 2020, certain significant items primarily included certain asset impairment charges of $37 million and CEO transition-related costs of $16 million, partially offset by a net gain resulting from a cash payment received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites of $18 million.
    (d)    Defined as income before provision for taxes on income.
Long-lived Assets by Geographic Areas Property, plant and equipment, less accumulated depreciation, by geographic region follow:
As of December 31,
(MILLIONS OF DOLLARS)20222021
U.S.$1,820 $1,638 
International933 784 
Property, plant and equipment, less accumulated depreciation$2,753 $2,422 
v3.22.4
Subsequent Events (Details) - USD ($)
$ in Millions
Feb. 01, 2023
Dec. 31, 2022
Dec. 31, 2021
Aug. 20, 2018
Sep. 12, 2017
Nov. 13, 2015
Jan. 28, 2013
Subsequent Event [Line Items]              
Debt, principal amount   $ 8,000 $ 6,650        
Senior Notes              
Subsequent Event [Line Items]              
Debt, principal amount       $ 1,500 $ 1,250 $ 1,250 $ 3,650
3.250% 2013 senior notes due 2023 | Senior Notes              
Subsequent Event [Line Items]              
Debt, principal amount   $ 1,350 $ 1,350        
3.250% 2013 senior notes due 2023 | Senior Notes | Subsequent Event              
Subsequent Event [Line Items]              
Debt, principal amount $ 1,350            
v3.22.4
Business Description (Details)
Dec. 31, 2022
specie
product_category
country
geographicRegion
Product Information [Line Items]  
Number of regional segments | geographicRegion 2
Number of countries in which entity markets products 45
Number of core animal species | specie 8
Number of major product categories | product_category 7
Product  
Product Information [Line Items]  
Number of countries in which entity markets products 100
v3.22.4
Significant Accounting Policies (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Significant Accounting Policies [Line Items]      
Revenue recognized throughout 2021 $ 5    
Contract liabilities 14    
Advertising and promotion expenses 287 $ 292 $ 233
Cost of sales [1] 2,454 2,303 2,057
Capitalized internal use software 57 73  
Depreciation expense 69 52 46
Accounts receivable, less allowance for doubtful accounts 1,215 1,133  
Other receivables $ 71 47  
Percentage of being realized upon settlement 50.00%    
Accruals for asset retirement obligations, non current $ 25    
Accounts Receivable      
Significant Accounting Policies [Line Items]      
Accruals for sales deductions $ (295) (216)  
Minimum      
Significant Accounting Policies [Line Items]      
Customer payment terms 30 days    
Minimum | Software Development      
Significant Accounting Policies [Line Items]      
Estimated useful life (in years) 5 years    
Maximum      
Significant Accounting Policies [Line Items]      
Customer payment terms 90 days    
Maximum | Software Development      
Significant Accounting Policies [Line Items]      
Estimated useful life (in years) 10 years    
Other current liabilities      
Significant Accounting Policies [Line Items]      
Accruals for sales deductions $ (285) (312)  
Shipping and Handling [Member]      
Significant Accounting Policies [Line Items]      
Cost of sales $ 82 $ 80 $ 66
[1] Exclusive of amortization of intangible assets, except as disclosed in Note 3. Significant Accounting Policies—Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets.
v3.22.4
Revenue - Revenue by Geographic Area (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2022
USD ($)
country
Dec. 31, 2021
USD ($)
country
Dec. 31, 2020
USD ($)
country
Revenue from External Customer [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
Revenue by country, exceeded $ 100 $ 100  
Revenue by country, exceeded, number of countries | country 12,000,000 12,000,000 11,000,000
Contract Manufacturing and Human Health Diagnostics [Member]      
Revenue from External Customer [Line Items]      
Revenues $ 86 $ 82 $ 83
United States      
Revenue from External Customer [Line Items]      
Revenues 4,313 4,042 3,557
AUSTRALIA      
Revenue from External Customer [Line Items]      
Revenues 289 259 207
BRAZIL      
Revenue from External Customer [Line Items]      
Revenues 330 312 258
CANADA      
Revenue from External Customer [Line Items]      
Revenues 238 232 210
CHILE      
Revenue from External Customer [Line Items]      
Revenues 141 136 100
CHINA      
Revenue from External Customer [Line Items]      
Revenues 382 357 266
FRANCE      
Revenue from External Customer [Line Items]      
Revenues 126 132 118
GERMANY      
Revenue from External Customer [Line Items]      
Revenues 176 183 159
ITALY      
Revenue from External Customer [Line Items]      
Revenues 111 115 90
JAPAN      
Revenue from External Customer [Line Items]      
Revenues 173 186 177
MEXICO      
Revenue from External Customer [Line Items]      
Revenues 136 133 116
SPAIN      
Revenue from External Customer [Line Items]      
Revenues 118 128 112
UNITED KINGDOM      
Revenue from External Customer [Line Items]      
Revenues 235 234 178
Other developed markets      
Revenue from External Customer [Line Items]      
Revenues 468 467 388
Other emerging markets      
Revenue from External Customer [Line Items]      
Revenues 758 778 656
Total Geographical Area      
Revenue from External Customer [Line Items]      
Revenues $ 7,994 $ 7,694 $ 6,592
v3.22.4
Revenue - Revenue by Major Species (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Revenue from External Customer [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
Operating Segments | United States Segment      
Revenue from External Customer [Line Items]      
Revenues 4,313 4,042 3,557
Operating Segments | International Segment      
Revenue from External Customer [Line Items]      
Revenues [1] 3,681 3,652 3,035
Livestock      
Revenue from External Customer [Line Items]      
Revenues 2,791 3,005 2,940
Livestock | United States Segment      
Revenue from External Customer [Line Items]      
Revenues 972 1,052 1,166
Livestock | International Segment      
Revenue from External Customer [Line Items]      
Revenues 1,819 1,953 1,774
Companion Animal      
Revenue from External Customer [Line Items]      
Revenues 5,203 4,689 3,652
Companion Animal | United States Segment      
Revenue from External Customer [Line Items]      
Revenues 3,341 2,990 2,391
Companion Animal | International Segment      
Revenue from External Customer [Line Items]      
Revenues 1,862 1,699 1,261
Contract Manufacturing and Human Health Diagnostics [Member]      
Revenue from External Customer [Line Items]      
Revenues $ 86 $ 82 $ 83
[1] Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
v3.22.4
Revenue - Revenue by Species (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Revenue from External Customer [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
Cattle      
Revenue from External Customer [Line Items]      
Revenues 1,440 1,557 1,558
Swine      
Revenue from External Customer [Line Items]      
Revenues 565 659 621
Poultry      
Revenue from External Customer [Line Items]      
Revenues 476 507 537
Fish      
Revenue from External Customer [Line Items]      
Revenues 212 187 148
Other      
Revenue from External Customer [Line Items]      
Revenues 98 95 76
Livestock      
Revenue from External Customer [Line Items]      
Revenues 2,791 3,005 2,940
Dogs and Cats      
Revenue from External Customer [Line Items]      
Revenues 264 263 215
Horses      
Revenue from External Customer [Line Items]      
Revenues 4,939 4,426 3,437
Companion Animal      
Revenue from External Customer [Line Items]      
Revenues 5,203 4,689 3,652
Contract Manufacturing and Human Health Diagnostics [Member]      
Revenue from External Customer [Line Items]      
Revenues $ 86 $ 82 $ 83
v3.22.4
Revenue - Revenue by Product (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Revenue from External Customer [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
Vaccines      
Revenue from External Customer [Line Items]      
Revenues 1,718 1,673 1,476
Other pharmaceuticals      
Revenue from External Customer [Line Items]      
Revenues 1,043 966 821
Dermatology [Member]      
Revenue from External Customer [Line Items]      
Revenues 1,329 1,180 941
Anti-infectives      
Revenue from External Customer [Line Items]      
Revenues 1,081 1,215 1,206
Parasiticides      
Revenue from External Customer [Line Items]      
Revenues 1,860 1,635 1,173
Other non-pharmaceuticals      
Revenue from External Customer [Line Items]      
Revenues 250 231 210
Medicated feed additives      
Revenue from External Customer [Line Items]      
Revenues 360 420 460
Animal health diagnostics      
Revenue from External Customer [Line Items]      
Revenues 353 374 305
Total Products and Services      
Revenue from External Customer [Line Items]      
Revenues 7,994 7,694 6,592
Contract Manufacturing and Human Health Diagnostics [Member]      
Revenue from External Customer [Line Items]      
Revenues $ 86 $ 82 $ 83
v3.22.4
Revenue - Other Revenue Information (Details)
 12 Months Ended
Dec. 31, 2022
product_category
Concentration Risk [Line Items]  
Number of Comprehensive Product Lines 300
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Largest Customer [Member]  
Concentration Risk [Line Items]  
Concentration risk, percentage 14.00%
v3.22.4
Acquisitions and Divestitures (Details) - USD ($)
$ in Millions
 12 Months Ended
Sep. 30, 2022
Dec. 31, 2022
Dec. 31, 2020
Business Combination and Asset Acquisition [Abstract]      
Proceeds from Sale of Buildings     $ 20
Business Acquisition [Line Items]      
Proceeds from Sale of Buildings     $ 20
Jurox      
Business Acquisition [Line Items]      
Business Acquisition, Percentage of Voting Interests Acquired 100.00%    
Business Combination, Consideration Transferred $ 240    
Cash paid to shareholders 240    
Business Combination, Consideration Transferred, Outstanding   $ 5  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents 20    
Accounts receivable 8    
Inventories 20    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other 1    
Property, plant and equipment 28    
Identifiable intangible assets 134    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets 1    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable 2    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other 12    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other 2    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net 196    
Goodwill 44    
Business Combination, Price of Acquisition, Expected 226    
Payments to Acquire Businesses, Net of Cash Acquired $ 215    
v3.22.4
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Components of Costs Incurred (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Restructuring Cost and Reserve [Line Items]      
Employee termination costs $ 6 $ 33 $ 8
Asset write-offs and asset impairments 53 47 43
Exit costs [1],[2] 1 3 0
Total Restructuring charges and certain acquisition-related costs 11 43 25
Employee Severance      
Restructuring Cost and Reserve [Line Items]      
Employee termination costs [1],[2] 3 17 8
Facility Closing      
Restructuring Cost and Reserve [Line Items]      
Employee termination costs 2 13  
Asset write-offs and asset impairments 2 13 0
Direct Cost      
Restructuring Cost and Reserve [Line Items]      
Integration costs [3] 4 10 17
Transaction costs $ 1 $ 0 $ 0
[1] The restructuring charges are associated with the following:
•For the year ended December 31, 2022, Manufacturing/research/corporate of $2 million and International of $4 million.
•For the year ended December 31, 2021, Manufacturing/research/corporate of $21 million and International of $12 million.
•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.
[2] The restructuring charges for the year ended December 31, 2022 are primarily related to employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, as well as asset impairment charges primarily related to the consolidation of manufacturing sites in China.
    The restructuring charges for the year ended December 31, 2021 are primarily related to the realignment of our international operations and other cost-reduction and productivity initiatives.
    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.
[3] Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes, as well as product transfer costs.(b)    Transaction costs represent external costs directly related to acquiring businesses and primarily includes expenditures for banking, legal, accounting and other similar services.
v3.22.4
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Restructuring Benefits and Charges (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Restructuring Reserve [Roll Forward]      
Beginning balance $ 25 [1] $ 21 $ 45
Provision/(benefit) 6 33 8
Utilization and other [2] (14) (16) (32)
Ending balance 15 [1] 25 [1] 21
Restructuring Reserve, Settled without Cash (2) (13) 0
Other current liabilities      
Restructuring Reserve [Roll Forward]      
Accrued expenses 5 14  
Other non-current liabilities      
Restructuring Reserve [Roll Forward]      
Other noncurrent liabilities 10 11  
Employee Severance      
Restructuring Reserve [Roll Forward]      
Beginning balance 23 [1] 21 45
Provision/(benefit) [3],[4] 3 17 8
Utilization and other [2] (12) (15) (32)
Ending balance 14 [1] 23 [1] 21
Restructuring Reserve, Settled without Cash 0 0  
Exit Costs      
Restructuring Reserve [Roll Forward]      
Beginning balance 2 [1] 0 0
Provision/(benefit) 1 3 0
Utilization and other [2] (2) (1) 0
Ending balance 1 [1] 2 [1] $ 0
Restructuring Reserve, Settled without Cash 0 0  
Facility Closing      
Restructuring Reserve [Roll Forward]      
Provision/(benefit) 2 13  
Restructuring Reserve, Settled without Cash (2) $ (13)  
Employee Severance and Exit Costs      
Restructuring Reserve [Roll Forward]      
Contractual obligation 7    
Payments expected in 2022 6    
Payments expected thereafter $ 1    
[1] At December 31, 2022 and 2021, included in Accrued Expenses ($5 million and $14 million, respectively) and Other noncurrent liabilities ($10 million and $11 million, respectively).
[2] Includes adjustments for foreign currency translation.
[3] The restructuring charges are associated with the following:
•For the year ended December 31, 2022, Manufacturing/research/corporate of $2 million and International of $4 million.
•For the year ended December 31, 2021, Manufacturing/research/corporate of $21 million and International of $12 million.
•For the year ended December 31, 2020, Manufacturing/research/corporate of $8 million.
[4] The restructuring charges for the year ended December 31, 2022 are primarily related to employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, as well as asset impairment charges primarily related to the consolidation of manufacturing sites in China.
    The restructuring charges for the year ended December 31, 2021 are primarily related to the realignment of our international operations and other cost-reduction and productivity initiatives.
    The restructuring charges for the year ended December 31, 2020 are primarily related to CEO transition-related costs and other cost-reduction and productivity initiatives.
v3.22.4
Other (Income)/Deductions - Net Other (Income)/Deductions - Net (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Other Income and Expenses [Abstract]      
Royalty-related income $ (4) $ (10) $ (12)
Interest income (50) (6) (12)
Identifiable intangible asset impairment charges 39 27 26
Net gain on sale of assets 0 3 (19)
Impairment of an equity investment 0 0 4
Other asset impairment charges 7 3 4
Foreign currency loss [1] 62 27 21
Other, net (14) 4 5
Other (income)/deductions—net $ 40 $ 48 $ 17
[1] Primarily driven by costs related to hedging and exposures to certain developed and emerging market currencies.
v3.22.4
Tax Matters (Taxes on Income) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Taxes on Income [Line Items]      
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest [1] $ 2,656 $ 2,488 $ 1,996
Deferred income taxes:      
Total U.S. tax provision $ 545 $ 454 $ 360
International:      
U.S. statutory income tax rate 21.00% 21.00% 21.00%
State and local taxes, net of federal benefits 0.90% 0.80% 0.90%
Unrecognized tax benefits and tax settlements and resolution of certain tax positions [2] 0.10% 0.10% 0.10%
Foreign Derived Intangible Income (0.20%) (1.10%) 0.00%
U.S. Research and Development Tax Credit and U.S. Domestic Production Activities deduction (0.70%) (0.60%) (0.70%)
Stock-based compensation (0.60%) (0.90%) (1.30%)
Non-deductible / non-taxable items 0.10% 0.30% 0.40%
Taxation of non-U.S. operations (0.40%) (1.30%) (1.60%)
All other—net 0.30% (0.10%) (0.80%)
Effective tax rate 20.50% 18.20% 18.00%
Deferred Tax Benefit, FDII $ 38    
International      
International:      
Total international tax provision 197 $ 202 $ 135
United States      
Deferred income taxes:      
Total U.S. tax provision 348 252 225
United States      
Taxes on Income [Line Items]      
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest 1,645 1,308 1,109
Current income taxes:      
Federal 514 311 232
State and local 81 35 36
Deferred income taxes:      
Federal (198) (84) (29)
State and local (49) (10) (14)
International      
Taxes on Income [Line Items]      
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest 1,011 1,180 887
International:      
Current income taxes 235 188 154
Deferred income taxes $ (38) $ 14 $ (19)
[1] Defined as income before provision for taxes on income.
[2] For a discussion about unrecognized tax benefits and tax settlements and resolution of certain tax positions, see D. Tax Contingencies.
v3.22.4
Tax Matters (Deferred Taxes) (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
Taxes on Income [Line Items]        
Unrecognized Tax Benefits $ 194 [1] $ 189 [1] $ 188 [1] $ 182
Prepaid/deferred items 192 109    
Inventories 22      
Inventories   (10)    
Capitalized R&D for tax 111 0    
Identifiable intangible assets (154) (187)    
Property, plant and equipment (204) (183)    
Employee benefits 61 58    
Restructuring and other charges 1 3    
Legal and product liability reserves 14 14    
Net operating loss/credit carryforwards 112 132    
Unremitted earnings (4) (7)    
All other 9      
All other   5    
Subtotal 160 (46)    
Valuation allowance (129) (174)    
Deferred Tax Assets, Net [2],[3] 31      
Net deferred income tax liability [2],[3]   (220)    
Noncurrent deferred tax assets 173 100    
Noncurrent deferred tax liabilities 142 320    
Cumulative amount of undistributed earnings 7,400      
Noncurrent Deferred Tax Assets        
Taxes on Income [Line Items]        
Unrecognized Tax Benefits 2 1 1  
Other Taxes Payable        
Taxes on Income [Line Items]        
Unrecognized Tax Benefits $ 192 $ 188 $ 187  
[1] In 2022, included in Noncurrent deferred tax assets and Other noncurrent assets ($2 million) and Other taxes payable ($192 million). In 2021, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($188 million). In 2020, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($187 million).
[2] In 2022, included in Noncurrent deferred tax assets ($173 million) and Noncurrent deferred tax liabilities ($142 million). In 2021, included in Noncurrent deferred tax assets ($100 million) and Noncurrent deferred tax liabilities ($320 million).
[3] The change in the total net deferred tax asset/(liability) from December 31, 2021 to December 31, 2022 is primarily attributable to an increase in deferred tax assets related to prepaid/deferred items as a result of a prepayment from a related foreign entity in Belgium and an increase in deferred tax assets related to the capitalization and amortization of research & development costs for U.S. tax purposes.
v3.22.4
Tax Matters (Tax Contingencies) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Income Tax Contingency [Line Items]      
Net liabilities associated with uncertain tax positions $ 192 $ 188 $ 187
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance, January 1 (189) [1] (188) [1] (182)
Decreases based on tax positions taken during a prior period [2] 9 7 6
Increases based on tax positions taken during the current period [2] (4) (9) (9)
Settlements 7 0 0
Lapse in statute of limitations(a) 3 2 3
Balance, December 31 [1] (194) (189) (188)
Net interest expense 4 1 2
Gross accrued interest 16 12 11
Gross accrued penalties 3 3 3
Other Noncurrent Assets [Member]      
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance, January 1 (3) (3)  
Balance, December 31 (11) (3) (3)
Noncurrent Deferred Tax Assets      
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance, January 1 (1) (1)  
Balance, December 31 (2) (1) (1)
Other Taxes Payable      
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Balance, January 1 (188) (187)  
Increases based on tax positions taken during a prior period [2] (20) (1) (6)
Balance, December 31 $ (192) $ (188) $ (187)
[1] In 2022, included in Noncurrent deferred tax assets and Other noncurrent assets ($2 million) and Other taxes payable ($192 million). In 2021, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($188 million). In 2020, included in Noncurrent deferred tax assets and Other noncurrent assets ($1 million) and Other taxes payable ($187 million).
[2] Primarily included in Provision for taxes on income.
v3.22.4
Financial Instruments (Credit Facilities) (Details)
Dec. 31, 2022
USD ($)
Dec. 31, 2021
USD ($)
Line of Credit Facility [Line Items]    
Line of credit facility, maximum borrowing capacity $ 51,000,000  
Short-term Debt 2,000,000 $ 0
Revolving Credit Facility    
Line of Credit Facility [Line Items]    
Revolving credit facility, current borrowing capacity 1,000,000,000  
Line of credit facility, maximum borrowing capacity 1,500,000,000  
Borrowings outstanding 0  
Line Of Credit For General Corporate Purpose    
Line of Credit Facility [Line Items]    
Borrowings outstanding $ 2,000,000 $ 0
Operational Efficiency    
Line of Credit Facility [Line Items]    
Maximum total leverage ratio 3.50  
Maximum total leverage ratio, next 12 months 4.00  
v3.22.4
Financial Instruments (Commercial Paper Program and Other Short-Term Borrowings) (Details) - USD ($)
Dec. 31, 2022
Feb. 28, 2013
Short-term Debt [Line Items]    
Commercial paper issued under program $ 0  
Commercial Paper    
Short-term Debt [Line Items]    
Capacity of commercial paper program   $ 1,000,000,000
v3.22.4
Financial Instruments (Senior Notes and Other Long-Term Debt) (Details) - USD ($)
$ in Millions
Oct. 13, 2020
Feb. 01, 2023
Dec. 31, 2022
Nov. 08, 2022
Dec. 31, 2021
May 12, 2020
Aug. 20, 2018
Sep. 12, 2017
Nov. 13, 2015
Jan. 28, 2013
Debt Instrument [Line Items]                    
Debt, principal amount     $ 8,000   $ 6,650          
Current portion of long-term debt     1,350   0          
Senior Notes                    
Debt Instrument [Line Items]                    
Debt, principal amount             $ 1,500 $ 1,250 $ 1,250 $ 3,650
Debt, unamortized discount             $ 4 $ 7 $ 2 $ 10
Debt, purchase price percent due to downgrade of investment grade                   101.00%
Senior Notes | 2018 floating rate (three-month USD LIBOR plus 0.44%) senior notes due 2021                    
Debt Instrument [Line Items]                    
Debt, principal amount         300          
Senior Notes | 3.250% 2018 senior notes due 2021                    
Debt Instrument [Line Items]                    
Debt, principal amount         300          
Senior Notes | 3.900% 2018 senior notes due 2028                    
Debt Instrument [Line Items]                    
Debt, principal amount     500   500          
Debt, stated interest percentage rate               3.90%    
Senior Notes | 4.450% 2018 senior notes due 2048                    
Debt Instrument [Line Items]                    
Debt, principal amount     400   400          
Debt, stated interest percentage rate               4.45%    
Senior Notes | 3.000% 2017 senior notes due 2027                    
Debt Instrument [Line Items]                    
Debt, principal amount     750   750          
Debt, stated interest percentage rate               3.00%    
Senior Notes | 3.950% 2017 senior notes due 2047                    
Debt Instrument [Line Items]                    
Debt, principal amount     500   500          
Debt, stated interest percentage rate               3.95%    
Senior Notes | Senior Notes 2.000% Due 2030                    
Debt Instrument [Line Items]                    
Debt, principal amount     750   750          
Debt, stated interest percentage rate               2.00%    
Senior Notes | Senior Notes 3.000% Due 2050                    
Debt Instrument [Line Items]                    
Debt, principal amount     500   500          
Senior Notes | 2020 Senior Notes                    
Debt Instrument [Line Items]                    
Debt, principal amount           $ 1,250        
Debt, unamortized discount           $ 10        
Senior Notes | 3.450% 2015 senior notes due 2020                    
Debt Instrument [Line Items]                    
Debt, stated interest percentage rate                 3.45%  
Repayment of senior debt $ 500                  
Senior Notes | 3.250% 2013 senior notes due 2023                    
Debt Instrument [Line Items]                    
Debt, principal amount     1,350   1,350          
Debt, stated interest percentage rate                   3.25%
Senior Notes | 3.250% 2013 senior notes due 2023 | Subsequent Event                    
Debt Instrument [Line Items]                    
Debt, principal amount   $ 1,350                
Senior Notes | 4.500% 2015 senior notes due 2025                    
Debt Instrument [Line Items]                    
Debt, principal amount     750   750          
Debt, stated interest percentage rate                 4.50%  
Senior Notes | 4.700% 2013 senior notes due 2043                    
Debt Instrument [Line Items]                    
Debt, principal amount     1,150   1,150          
Debt, stated interest percentage rate                   4.70%
Senior Notes | 2022 Senior Notes                    
Debt Instrument [Line Items]                    
Debt, principal amount       $ 1,350            
Debt, unamortized discount       $ 2            
Senior Notes | 5.600% Senior Notes Due 2032                    
Debt Instrument [Line Items]                    
Debt, principal amount     750   0          
Debt, stated interest percentage rate       5.60%            
Senior Notes | 5.400% Senior Notes Due 2025                    
Debt Instrument [Line Items]                    
Debt, principal amount     $ 600   $ 0          
Debt, stated interest percentage rate       5.40%            
v3.22.4
Financial Instruments (Schedule of Long-term Debt) (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Aug. 20, 2018
Sep. 12, 2017
Nov. 13, 2015
Jan. 28, 2013
Debt Instrument [Line Items]            
Total $ 8,000 $ 6,650        
Unamortized debt discount / debt issuance costs (66) (60)        
Less current portion of long-term debt 1,350 0        
Cumulative fair value adjustment for interest rate swap contracts (32) 2        
Long-term debt, net of discount and issuance costs 6,552 6,592        
Senior Notes            
Debt Instrument [Line Items]            
Total     $ 1,500 $ 1,250 $ 1,250 $ 3,650
Senior Notes | 3.450% 2015 senior notes due 2020            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate         3.45%  
Senior Notes | 2018 floating rate (three-month USD LIBOR plus 0.44%) senior notes due 2021            
Debt Instrument [Line Items]            
Total   300        
Senior Notes | 3.250% 2018 senior notes due 2021            
Debt Instrument [Line Items]            
Total   300        
Senior Notes | 3.250% 2013 senior notes due 2023            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate           3.25%
Total 1,350 1,350        
Senior Notes | 4.500% 2015 senior notes due 2025            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate         4.50%  
Total 750 750        
Senior Notes | 3.000% 2017 senior notes due 2027            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate       3.00%    
Total 750 750        
Senior Notes | 3.900% 2018 senior notes due 2028            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate       3.90%    
Total 500 500        
Senior Notes | 4.700% 2013 senior notes due 2043            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate           4.70%
Total 1,150 1,150        
Senior Notes | 3.950% 2017 senior notes due 2047            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate       3.95%    
Total 500 500        
Senior Notes | 4.450% 2018 senior notes due 2048            
Debt Instrument [Line Items]            
Debt, stated interest percentage rate       4.45%    
Total 400 400        
Fair Value, Inputs, Level 2            
Debt Instrument [Line Items]            
Fair value, debt instrument $ 6,108 $ 7,443        
v3.22.4
Financial Instruments (Fair Value of Debt) (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Fair Value, Inputs, Level 2    
Debt Instrument [Line Items]    
Fair value, debt instrument $ 6,108 $ 7,443
v3.22.4
Financial Instruments (Long-term Debt Maturity) (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Maturities    
2023 $ 1,350  
2024 0  
2025 1,350  
2026 0  
2027 750  
After 2026 4,550  
Total 8,000 $ 6,650
Interest payments    
2023 294  
2024 272  
2025 272  
2026 206  
2027 206  
After 2026 2,211  
Total $ 3,461  
v3.22.4
Financial Instruments (Interest Expense) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Debt Disclosure [Abstract]      
Interest expense, net of capitalized interest $ 221 $ 224 $ 231
Capitalized interest expense $ 21 $ 20 $ 17
v3.22.4
Financial Instruments (Foreign Exchange Risk) (Details)
€ in Millions, kr in Millions, SFr in Millions, $ in Millions
Dec. 31, 2022
USD ($)
Dec. 31, 2022
EUR (€)
Dec. 31, 2022
DKK (kr)
Dec. 31, 2022
CHF (SFr)
Dec. 31, 2021
USD ($)
Dec. 31, 2021
EUR (€)
Dec. 31, 2021
DKK (kr)
Dec. 31, 2021
CHF (SFr)
Cross-currency interest rate swap contracts                
Derivative [Line Items]                
Aggregate notional amount $ 250 € 650 kr 600 SFr 25 $ 200 € 650 kr 600 SFr 25
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Forward                
Derivative [Line Items]                
Aggregate notional amount $ 1,753       $ 1,749      
v3.22.4
Financial Instruments (Interest Rate Risk) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Aug. 20, 2018
Sep. 12, 2017
Nov. 13, 2015
Jan. 28, 2013
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Less current portion of long-term debt $ 1,350 $ 0        
Debt, principal amount 8,000 6,650        
Derivative, Cash Received on Hedge 114          
Senior Notes            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Debt, principal amount     $ 1,500 $ 1,250 $ 1,250 $ 3,650
Senior Notes | 4.500% 2015 senior notes due 2025            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Debt, stated interest percentage rate         4.50%  
Debt, principal amount 750 750        
Senior Notes | Senior Notes 2.000% Due 2030            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Debt, stated interest percentage rate       2.00%    
Debt, principal amount 750 750        
Senior Notes | Senior Notes 3.000% Due 2050            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Debt, principal amount 500 500        
Interest Rate Swap            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Aggregate notional amount 50 $ 550        
Derivatives Designated as Hedging Instruments | Interest Rate Swap            
Derivative Instruments and Hedging Activities Disclosures [Line Items]            
Aggregate notional amount $ 650          
v3.22.4
Financial Instruments (Derivative Notional Amounts) (Details)
€ in Millions, kr in Millions, SFr in Millions, $ in Millions
Dec. 31, 2022
USD ($)
Dec. 31, 2022
EUR (€)
Dec. 31, 2022
DKK (kr)
Dec. 31, 2022
CHF (SFr)
Dec. 31, 2021
USD ($)
Dec. 31, 2021
EUR (€)
Dec. 31, 2021
DKK (kr)
Dec. 31, 2021
CHF (SFr)
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments                
Derivative [Line Items]                
Derivative, notional amount $ 1,753       $ 1,749      
Cross-currency interest rate swap contracts                
Derivative [Line Items]                
Derivative, notional amount 250 € 650 kr 600 SFr 25 200 € 650 kr 600 SFr 25
Interest Rate Swap                
Derivative [Line Items]                
Derivative, notional amount 50       $ 550      
Interest Rate Swap | Derivatives Designated as Hedging Instruments                
Derivative [Line Items]                
Derivative, notional amount $ 650              
v3.22.4
Financial Instruments (Fair Value of Derivative Instruments) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Derivatives, Fair Value [Line Items]      
Total foreign currency forward-exchange contracts $ (6) $ (38)  
Unrecognized net gains/(losses) on derivative instruments [1] 36 42 $ (58)
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments      
Derivatives, Fair Value [Line Items]      
Total foreign currency forward-exchange contracts (1) (1)  
Gain (loss) on derivative contracts not designated as hedging instruments $ (58) (20)  
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Maximum      
Derivatives, Fair Value [Line Items]      
Derivative, Term of Contract 3 years    
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Minimum      
Derivatives, Fair Value [Line Items]      
Derivative, Term of Contract 60 days    
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Other current assets      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts $ (22) (16)  
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Other current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts (21) (15)  
Forward Starting Interest Rate Swap Contract [Member] | Derivatives Designated as Hedging Instruments | Other Noncurrent Assets [Member]      
Derivatives, Fair Value [Line Items]      
Total foreign currency forward-exchange contracts (10) (17)  
Forward Starting Interest Rate Swap Contract [Member] | Derivatives Designated as Hedging Instruments | Other non-current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts 0 (5)  
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments      
Derivatives, Fair Value [Line Items]      
Unrecognized net gains/(losses) on derivative instruments 36 42  
Gains/(losses) on derivative instruments 16 12  
Collateral received 21 23  
Additional Collateral, Aggregate Fair Value $ 8    
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments | Maximum      
Derivatives, Fair Value [Line Items]      
Derivative, Term of Contract 3 years    
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other current assets      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts $ (21) (12)  
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts 9 3  
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other Noncurrent Assets [Member]      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts (19) (14)  
Cross-currency interest rate swap contracts | Derivatives Designated as Hedging Instruments | Other non-current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts 4 0  
Fixed to Floating Interest Rate Swap [Member] | Derivatives Designated as Hedging Instruments | Other non-current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts 0 2  
Forward starting interest rate swap contracts | Derivatives Designated as Hedging Instruments      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts 5 37  
Unrecognized net gains/(losses) on derivative instruments (2) 18  
zts_FixedtoFloatInterestRateSwap | Derivatives Designated as Hedging Instruments | Other non-current liabilities      
Derivatives, Fair Value [Line Items]      
Foreign currency forward-exchange contracts $ 32 $ 0  
[1] Presented net of reclassification adjustments, which are not material in any period presented. Reclassification adjustments related to benefit plans are generally reclassified, as part of net periodic pension cost, into Cost of sales, Selling, general and administrative expenses, and/or Research and development expenses, as appropriate, in the Consolidated Statements of Income.
v3.22.4
Leases (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Lessee, Lease, Description [Line Items]      
Operating lease expense $ 51 $ 50 $ 46
Variable lease payments not included in the measurement of lease liabilities 12 19 20
Short-term lease payments not included in the measurement of lease liabilities 12 9 7
Cash paid for amounts included in the measurement of lease liabilities 51 47 42
Lease obligations obtained in exchange for right-of-use assets (non-cash) 99 39 $ 47
Operating lease right of use assets 220 181  
Operating lease liabilities - current (in Other current liabilities) 43 41  
Operating lease liabilities - noncurrent 186 151  
Total operating lease liabilities $ 229 $ 192  
Weighted-average remaining lease term—operating leases (years) 7 years 8 months 19 days 6 years 6 months 18 days  
Weighted-average discount rate—operating leases 2.78% 2.81%  
2023 $ 52    
2024 45    
2025 37    
2026 31    
2027 26    
After 2025 89    
Total Lease Payments 280    
Less: Imputed Interest (51)    
Debt, principal amount $ 8,000 $ 6,650  
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] Other current liabilities Other current liabilities  
Minimum      
Lessee, Lease, Description [Line Items]      
Lessee, Operating Lease, Term of Contract 1 year    
Maximum      
Lessee, Lease, Description [Line Items]      
Lessee, Operating Lease, Term of Contract 15 years    
v3.22.4
Inventories (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Inventory Disclosure [Abstract]    
Finished goods $ 1,090 $ 888
Work-in-process 825 696
Raw materials and supplies 430 339
Inventories $ 2,345 $ 1,923
v3.22.4
Property, Plant and Equipment (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Property, Plant and Equipment [Line Items]      
Land $ 26 $ 22  
Buildings 1,197 1,103  
Machinery, equipment and fixtures 3,013 2,627  
Construction-in-progress 814 742  
Total property, plant and equipment, gross 5,050 4,494  
Accumulated depreciation 2,297 2,072  
Property, plant and equipment 2,753 2,422  
Depreciation expense $ 272 $ 244 $ 211
Building | Maximum      
Property, Plant and Equipment [Line Items]      
Estimated useful life (in years) 50 years    
Machinery and Equipment | Minimum      
Property, Plant and Equipment [Line Items]      
Estimated useful life (in years) 3 years    
Machinery and Equipment | Maximum      
Property, Plant and Equipment [Line Items]      
Estimated useful life (in years) 20 years    
v3.22.4
Goodwill and Other Intangible Assets (Goodwill) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Goodwill [Roll Forward]    
Beginning balance $ 2,682 $ 2,694
Additions / Adjustments 105 3
Other [1] (41) (15)
Ending balance 2,746 2,682
United States    
Goodwill [Roll Forward]    
Beginning balance 1,424 1,425
Additions / Adjustments 61 (1)
Other [1] 0 0
Ending balance 1,485 1,424
International    
Goodwill [Roll Forward]    
Beginning balance 1,258 1,269
Additions / Adjustments 44 4
Other [1] (41) (15)
Ending balance $ 1,261 $ 1,258
[1] Includes adjustments for foreign currency translation.
v3.22.4
Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]    
Gross goodwill $ 3,282 $ 3,218
Accumulated goodwill impairment losses $ 536  
v3.22.4
Goodwill and Other Intangible Assets (Finite-lived and Indefinite-lived Intangible Assets) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Finite-lived intangible assets, Gross Carrying Amount $ 2,650 $ 2,832  
Finite-lived intangible assets, Accumulated Amortization (1,445) (1,544)  
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization 1,205 1,288  
Indefinite-lived intangible assets: 175 186  
Intangible Assets, Gross Carrying Amount 2,825 3,018  
Identifiable Intangible Assets, Less Accumulated Amortization $ 1,380 1,474  
Weighted average life our finite lived intangible assets 9 years    
Amortization expense of finite-lived intangible assets $ 193 204 $ 230
2019 181    
2020 166    
2021 154    
2022 147    
2023 142    
Brands and tradenames      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Indefinite-lived intangible assets: 91 91  
In Process Research and Development      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Indefinite-lived intangible assets: 77 88  
Product rights      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Indefinite-lived intangible assets: 7 7  
Developed Technology Rights      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Finite-lived intangible assets, Gross Carrying Amount 1,918 1,933  
Finite-lived intangible assets, Accumulated Amortization (975) (949)  
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization 943 984  
Brands and tradenames      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Finite-lived intangible assets, Gross Carrying Amount 395 426  
Finite-lived intangible assets, Accumulated Amortization (237) (260)  
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization 158 166  
Other Intangible Assets      
Finite Lived and Indefinite Lived Intangible Assets [Line Items]      
Finite-lived intangible assets, Gross Carrying Amount 337 473  
Finite-lived intangible assets, Accumulated Amortization (233) (335)  
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization $ 104 $ 138  
v3.22.4
Benefit Plans (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]      
Employee benefit plan contribution from Pfizer Inc. $ 0 $ 3  
Pension and other postretirement benefit expense 12 14 $ 14
Actuarial losses 6 21  
Actuarial losses, net of tax 3 16  
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]      
Service cost 6 8 8
Interest cost 2 2 2
Expected return on plan assets (3) (3) (3)
Amortization of net losses 1 1 2
Net periodic benefit cost 6 8 9
Company contributions 4 5  
Contribution expense $ (57) (54) (48)
Matching percentage 100.00%    
Maximum matching percentage 5.00%    
Additional contribution percentage, minimum 0.00%    
Additional contribution percentage, maximum 8.00%    
Other Pension Plan, Postretirement or Supplemental Plans      
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]      
2020 $ 4    
Contribution expense (9) (12) (11)
Defined Benefit Plan, Expected Future Benefit Payment, Thereafter 39    
United States      
Defined Benefit Plan Disclosure [Line Items]      
Total cost of service credit continuation $ 38    
Installment period 10 years    
Pension and other postretirement benefit expense $ 6 6  
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]      
Postretirement benefit expense 4 $ 4 $ 4
United States | Pfizer      
Defined Benefit Plan Disclosure [Line Items]      
Remaining total cost $ 25    
Foreign Plan      
Defined Benefit Plan Disclosure [Line Items]      
Period of amortization 6 years 6 months    
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract]      
Expected contribution in 2020 $ 5    
2020 4    
2021 5    
2022 6    
2023 11    
2024 7    
Thereafter $ 49    
v3.22.4
Benefit Plans Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]      
Projected benefit obligation, beginning $ 159 $ 164  
Service cost 6 8 $ 8
Interest cost 2 2 2
Changes in actuarial assumptions and other (27) (1)  
Settlements and curtailments (3) (2)  
Benefits paid (1) (2)  
Adjustments for foreign currency translation (13) (9)  
Other––net (1) (1)  
Benefit obligation, ending 122 159 164
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]      
Fair value of plan assets, beginning 92 [1] 85  
Actual return on plan assets (4) 11  
Company contributions 4 5  
Settlements and curtailments (3) (1)  
Benefits paid (1) (2)  
Adjustments for foreign currency translation (9) (5)  
Other––net (1) (1)  
Fair value of plan assets, ending 78 [1] 92 [1] $ 85
Funded status—Projected benefit obligation in excess of plan assets at end of year [2] $ (44) $ (67)  
[1] Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 3. Significant Accounting Policies—Fair Value). Investment plan assets are valued using Level 1 or Level 2 inputs.
[2] .
v3.22.4
Benefit Plans Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Pension plans with an accumulated benefit obligation in excess of plan assets:    
Fair value of plan assets $ 7 $ 24
Accumulated benefit obligation 40 72
Pension plans with a projected benefit obligation in excess of plan assets:    
Projected benefit obligation 103 152
Pension Plan [Member]    
Pension plans with a projected benefit obligation in excess of plan assets:    
Fair value of plan assets $ 58 $ 84
v3.22.4
Benefit Plans Schedule of Assumptions Used (Details)
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Weighted average assumptions used to determine benefit obligations: [Abstract]      
Discount rate 3.70% 1.40% 1.20%
Rate of compensation increase 3.50% 3.40% 3.10%
Cash balance credit interest rate 1.70% 1.50% 1.50%
Weighted average assumptions used to determine net benefit cost for the year ended December 31:      
Discount rate 1.40% 1.20% 1.30%
Expected return on plan assets 3.30% 3.80% 3.80%
Rate of compensation increase 3.40% 3.10% 3.10%
Cash balance credit interest rate 1.50% 1.50% 1.50%
v3.22.4
Benefit Plans Schedule of Allocation of Plan Assets (Details) - USD ($)
$ in Millions
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Defined Benefit Plan Disclosure [Line Items]      
Plan assets $ 78 [1] $ 92 [1] $ 85
Cash and cash equivalents      
Defined Benefit Plan Disclosure [Line Items]      
Plan assets 2 1  
Equity securities: Equity commingled funds      
Defined Benefit Plan Disclosure [Line Items]      
Plan assets 29 36  
Debt securities: Government bonds      
Defined Benefit Plan Disclosure [Line Items]      
Plan assets 38 45  
Other investments      
Defined Benefit Plan Disclosure [Line Items]      
Plan assets $ 9 $ 10  
[1] Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 3. Significant Accounting Policies—Fair Value). Investment plan assets are valued using Level 1 or Level 2 inputs.
v3.22.4
Benefit Plans Schedule Of Percentage Of Allocation Of Plan Assets Table (Details)
Dec. 31, 2022
Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 100.00%  
Cash and cash equivalents, percentage 2.30% 1.50%
Equity securities, percentage 37.70% 39.30%
Debt securities, percentage 48.00% 48.70%
Other investments, percentage 12.00% 10.50%
Total, percentage 100.00% 100.00%
Maximum | Cash and cash equivalents    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 10.00%  
Maximum | Equity securities: Equity commingled funds    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 60.00%  
Maximum | Debt securities: Government bonds    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 100.00%  
Maximum | Other investments    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 100.00%  
Minimum | Cash and cash equivalents    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 0.00%  
Minimum | Equity securities: Equity commingled funds    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 0.00%  
Minimum | Debt securities: Government bonds    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 15.00%  
Minimum | Other investments    
Defined Benefit Plan Disclosure [Line Items]    
Total, percentage 0.00%  
v3.22.4
Share-Based Payments (Narrative) (Details) - USD ($)
 12 Months Ended 15 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares of stock approved and registered with the SEC 30,000,000      
Shares available for future grant 14,000,000      
Period following separation service 60 days      
Expected stock price volatility [1] 27.64% 27.94% 24.33%  
Stock Options        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Exercise price percentage of the fair market value price at date of grant 100.00%      
Award vesting period (in years) 3 years      
Contractual term (in years) 10 years      
Total compensation cost related to nonvested RSU awards not yet recognized, pre-tax $ 10,000,000      
Weighted-average period over which RSU cost is expected to be recognized (in years) 1 year      
Restricted Stock Units (RSUs)        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Award vesting period (in years) 3 years      
Total compensation cost related to nonvested RSU awards not yet recognized, pre-tax $ 45,000,000      
Weighted-average period over which RSU cost is expected to be recognized (in years) 1 year      
Granted (in shares) 207,009      
Shares outstanding 364,085      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value $ 200.18      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number 620,598 809,884    
Deferred Stock Units (DSUs)        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Granted (in shares) 0      
Shares outstanding 65,071 64,599    
PSUs        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total compensation cost related to nonvested RSU awards not yet recognized, pre-tax $ 25,000,000      
Weighted-average period over which RSU cost is expected to be recognized (in years) 1 year 2 months 12 days      
Granted (in shares) 104,113      
Shares outstanding 174,711      
Expected stock price volatility 28.40% 28.90%    
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value $ 235.52      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number 253,044 342,386    
PSUs | Peer Companies        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Expected stock price volatility 38.10% 38.10%    
PSUs | Minimum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percentage of target units 0.00%      
PSUs | Maximum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Percentage of target units 200.00%      
Chief Executive Officer [Member] | PSUs        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number 37,265      
Share-based Payment Arrangement, Plan Modification, Incremental Cost   $ 6,000,000 $ 2,000,000 $ 8,000,000
[1] Determined using an equal weighting between historical volatility of the Zoetis stock price and implied volatility. The selection of the blended historical and implied volatility approach was based on our assessment that this calculation of expected volatility is more representative of future stock price trends.
v3.22.4
Share-Based Payments (Components of share-based compensation expense) (Details) - USD ($)
$ / shares in Units, $ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense—total [1] $ 62 $ 58 $ 59
Tax benefit for share-based compensation expense (8) (7) (7)
Share-based compensation expense, net of tax 54 51 52
Share-based compensation expense capitalized (less than) $ 1 1 1
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price $ 201.23    
Deferred Stock Units (DSUs)      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Granted (in shares) 0    
Stock options / stock appreciation rights      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense $ 10 9 9
RSUs / DSUs      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Share-based compensation expense [2] $ 34 33 31
PSUs      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Granted (in shares) 104,113    
Share-based compensation expense $ 18 $ 16 $ 19
[1] For each of the years ended December 31, 2022, 2021 and 2020, we capitalized less than $1 million of share-based compensation expense to inventory
[2]
v3.22.4
Share-Based Payments (Stock option valuation assumptions) (Details)
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Share-Based Payment Arrangement [Abstract]      
Expected dividend yield [1] 0.64% 0.62% 0.55%
Risk-free interest rate [2] 1.81% 0.53% 1.41%
Expected stock price volatility [3] 27.64% 27.94% 24.33%
Expected term (in years) [4] 4 years 10 months 24 days 5 years 5 years 6 months
[1] Determined using a constant dividend yield during the expected term of the Zoetis stock option.
[2] Determined using the interpolated yield on U.S. Treasury zero-coupon issues.
[3] Determined using an equal weighting between historical volatility of the Zoetis stock price and implied volatility. The selection of the blended historical and implied volatility approach was based on our assessment that this calculation of expected volatility is more representative of future stock price trends.
[4] Determined using expected exercise and post-vesting termination patterns.
v3.22.4
Share-Based Payments (Stock option activity) (Details) - USD ($)
$ / shares in Units, $ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Shares      
Outstanding, Beginning Balance (in shares) 2,132,567    
Granted (in shares) 235,900    
Exercised (in shares) (263,174)    
Forfeited (in shares) (37,687)    
Outstanding, Ending Balance (in shares) 2,067,606 2,132,567  
Weighted-average Exercise Price Per Share      
Outstanding, Beginning Balance (in dollars per share) $ 80.19    
Granted (in dollars per share) 201.23    
Exercised (in dollars per share) 57.10    
Forfeited (in dollars per share) 168.69    
Outstanding, Ending Balance (in dollars per share) $ 95.32 $ 80.19  
Outstanding, Weighted-average Remaining Contractual Term (in years) 5 years    
Outstanding, Aggregate Intrinsic Value [1] $ 122    
Exercisable, December 31, 2022 1,317,387    
Exercisable, Weighted Average Exercise Price Per Share $ 54.48    
Exercisable, Weighted Average Remaining Contractual Term (in years) 3 years 3 months 18 days    
Vested and expected to vest, Aggregate Intrinsic Value [1] $ 121    
Weighted-average grant date fair value per stock option $ 51.13 $ 37.81 $ 34.22
Aggregate intrinsic value on exercise $ 31 $ 87 $ 114
Cash received upon exercise 15 36 57
Share-based Payment Arrangement, Exercise of Option, Tax Benefit $ 19 $ 34 $ 39
[1] Market price of underlying Zoetis common stock less exercise price.
v3.22.4
Share-Based Payments (Nonvested restricted stock activity) (Details) - Restricted Stock Units (RSUs)
 12 Months Ended
Dec. 31, 2022
$ / shares
shares
RSUs  
Nonvested, Beginning Balance (in shares) | shares 809,884
Granted (in shares) | shares 207,009
Vested (in shares) | shares (364,085)
Reinvested dividend equivalents (in shares) | shares 4,981
Forfeited (in shares) | shares (37,191)
Nonvested, Ending Balance (in shares) | shares 620,598
Weighted Average Grant Date Fair Value Per Share  
Nonvested, Beginning Balance (in dollars per share) | $ / shares $ 125.71
Granted (in dollars per share) | $ / shares 200.18
Vested (in dollars per share) | $ / shares 90.36
Reinvested dividend equivalents (in dollars per share) | $ / shares 157.96
Forfeited (in dollars per share) | $ / shares 164.12
Nonvested, Ending Balance (in dollars per share) | $ / shares $ 169.24
v3.22.4
Share-Based Payments (Performance Share Awards (PSAs) Activity) (Details) - PSUs
 12 Months Ended
Dec. 31, 2022
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares, Issued | shares 342,570
RSUs  
Nonvested, Beginning Balance (in shares) | shares 342,386
Granted (in shares) | shares 104,113
Vested (in shares) | shares (174,711)
Reinvested dividend equivalents (in shares) | shares 2,115
Forfeited (in shares) | shares (20,859)
Nonvested, Ending Balance (in shares) | shares 253,044
Weighted Average Grant Date Fair Value Per Share  
Nonvested, Beginning Balance (in dollars per share) | $ / shares $ 160.68
Granted (in dollars per share) | $ / shares 235.52
Vested (in dollars per share) | $ / shares 110.75
Reinvested dividend equivalents (in dollars per share) | $ / shares 204.49
Forfeited (in dollars per share) | $ / shares 217.48
Nonvested, Ending Balance (in dollars per share) | $ / shares 221.59
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ / shares $ 101.57
v3.22.4
Stockholders' Equity - Changes in Common Shares and Treasury Stock (Details) - USD ($)
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
Class of Stock [Line Items]        
Common stock, shares authorized 6,000,000,000      
Preferred stock, authorized (in shares) 1,000,000,000      
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Beginning Balance 501,900,000 501,900,000 501,900,000  
Beginning Balance 29,317,153 26,600,000 26,400,000  
Stock-based compensation   0 0  
Share repurchase program   0 0  
Treasury Stock (700,000) (1,300,000) (1,600,000)  
Ending Balance 501,891,243 501,900,000 501,900,000  
Ending Balance 38,083,184 29,317,153 26,600,000  
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased 2,600,000,000      
December 2018 Share Repurchase Program        
Class of Stock [Line Items]        
Shares authorized under repurchase program       $ 2,000,000,000
December 2021 Share Repurchase Program [Member]        
Class of Stock [Line Items]        
Shares authorized under repurchase program $ 3,500,000,000      
Share Repurchase Program        
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Treasury Stock (9,500,000) (4,000,000.0) (1,800,000)  
v3.22.4
Stockholders' Equity - Accumulated other comprehensive income/ (loss) (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Beginning balance $ (764)      
Other comprehensive (loss)/gain, net of tax (53) $ (34) $ (4)  
Ending balance (817) (764)    
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 4,403 4,544 3,773 $ 2,708
Accumulated Other Comprehensive (Loss)/ Income        
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Other comprehensive (loss)/gain, net of tax (53) (34) (4)  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest (817) (764) (730) (726)
Derivatives Net Unrealized Losses        
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Other comprehensive (loss)/gain, net of tax 86 19 (15)  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest 90 4 (15) $ 0
Accumulated Other Comprehensive Income (Loss), Derivative Qualifying as Hedge, Excluded Component, Including Portion Attributable to Noncontrolling Interest [Member]        
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Beginning balance 5 (37) 21  
Other comprehensive (loss)/gain, net of tax 36 42 (58)  
Ending balance 41 5 (37)  
Currency Translation Adjustment, Net Unrealized Losses        
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Beginning balance (756) (655) (724)  
Other comprehensive (loss)/gain, net of tax (188) (101) 69  
Ending balance (944) (756) (655)  
Benefit Plans, Actuarial Gains/ (Losses)        
Accumulated Other Comprehensive Income (Loss) [Roll Forward]        
Beginning balance (17) (23) (23)  
Other comprehensive (loss)/gain, net of tax 13 6 0  
Ending balance $ (4) $ (17) $ (23)  
v3.22.4
Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Numerator      
Net income before allocation to noncontrolling interests $ 2,111 $ 2,034 $ 1,636
Less: net loss attributable to noncontrolling interests (3) (3) (2)
Net income attributable to Zoetis Inc. $ 2,114 $ 2,037 $ 1,638
Denominator      
Weighted-average common shares outstanding 468,891 474,348 475,502
Common stock equivalents: stock options, RSUs, DSUs and PSUs 1,494 2,369 3,067
Weighted-average common and potential dilutive shares outstanding 470,385 476,717 478,569
Earnings per share attributable to Zoetis Inc. stockholders—basic (in dollars per share) $ 4.51 $ 4.29 $ 3.44
Earnings per share attributable to Zoetis stockholders—diluted (in dollars per share) $ 4.49 $ 4.27 $ 3.42
v3.22.4
Commitments and Contingencies (Details)
$ in Millions
 1 Months Ended 6 Months Ended 12 Months Ended
May 16, 2016
producer
Jun. 03, 2015
count
Aug. 31, 2014
animal
Apr. 30, 2012
Jun. 30, 2016
USD ($)
Dec. 31, 2022
customer
Feb. 29, 2012
defendant
Loss Contingencies [Line Items]              
Number of deaths from contamination of animal feed | animal     50,000        
Number of contaminated animal from contamination of animal feed | animal     20,000        
Number of claims filed | count   1          
Ulianopolis, Brazil              
Loss Contingencies [Line Items]              
Number of additional defendants | defendant             5
Number of claims seeking damages | defendant             6
Number of years lawsuit suspended       1 year      
Lascadoil              
Loss Contingencies [Line Items]              
Number of claims filed 2         3  
European Commission              
Loss Contingencies [Line Items]              
Income Tax Examination, Penalties and Interest Expense | $         $ 35    
v3.22.4
Commitments and Contingencies - Purchase Commitments (Details)
$ in Millions
Dec. 31, 2022
USD ($)
Long-Term Purchase Commitment [Line Items]  
Purchase Obligation, to be Paid, Year One $ 173
Purchase Obligation 321
Long Term Purchase Commitment  
Long-Term Purchase Commitment [Line Items]  
Purchase Obligation $ 148
v3.22.4
Segment Information (Details)
$ in Millions
 12 Months Ended
Dec. 31, 2022
USD ($)
segment
Dec. 31, 2021
USD ($)
Dec. 31, 2020
USD ($)
Segment Reporting Information [Line Items]      
Number of Operating Segments | segment 2    
Assets $ 14,925 $ 13,900  
Proceeds from Sale of Buildings     $ 20
CEO Transition Costs [Member]      
Segment Reporting Information [Line Items]      
Restructuring and Other Cost Productivity Charges     16
Impairment Charges [Member]      
Segment Reporting Information [Line Items]      
Restructuring and Other Cost Productivity Charges 47 46 $ 37
Segment Reconciling Items | Zoetis Initiatives      
Segment Reporting Information [Line Items]      
Restructuring and Other Cost Productivity Charges $ 4 $ 24  
v3.22.4
Segment Information - Income Statement (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Segment Reporting Information [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
Cost of Sales [1] 2,454 2,303 2,057
Other (income)/deductions-net 40 48 17
Earnings [2] 2,656 2,488 1,996
Depreciation and Amortization [2],[3] 465 448 441
Property, plant and equipment, less accumulated depreciation 2,753 2,422  
Other business activities      
Segment Reporting Information [Line Items]      
Earnings (424) (406) (372)
Depreciation and Amortization [3] 28 28 27
United States      
Segment Reporting Information [Line Items]      
Revenues 4,313 4,042 3,557
Property, plant and equipment, less accumulated depreciation 1,820 1,638  
International      
Segment Reporting Information [Line Items]      
Property, plant and equipment, less accumulated depreciation 933 784  
Operating Segments      
Segment Reporting Information [Line Items]      
Earnings 4,753 4,517 3,786
Depreciation and Amortization [3] 141 128 111
Operating Segments | United States Segment      
Segment Reporting Information [Line Items]      
Revenues 4,313 4,042 3,557
Cost of Sales 803 788 709
Gross Profit $ 3,510 $ 3,254 $ 2,848
Gross Margin 81.40% 80.50% 80.10%
Operating Expenses $ 765 $ 681 $ 602
Other (income)/deductions-net (18) (4) (7)
Earnings 2,763 2,569 2,239
Depreciation and Amortization [3] 55 54 55
Operating Segments | International Segment      
Segment Reporting Information [Line Items]      
Revenues [4] 3,681 3,652 3,035
Cost of Sales 1,083 1,106 971
Gross Profit $ 2,598 $ 2,546 $ 2,064
Gross Margin 70.60% 69.70% 68.00%
Operating Expenses $ 611 $ 602 $ 510
Other (income)/deductions-net 3 4 (7)
Earnings 1,990 1,948 1,547
Operating Segments | International      
Segment Reporting Information [Line Items]      
Depreciation and Amortization [3] 86 74 56
Corporate, Non-Segment      
Segment Reporting Information [Line Items]      
Earnings (1,073) (1,052) (879)
Depreciation and Amortization [3] 132 115 101
Segment Reconciling Items      
Segment Reporting Information [Line Items]      
Depreciation and Amortization [3] 0 0 0
Purchase accounting adjustments, earnings (160) (175) (198)
Purchase accounting adjustments, depreciation and amortization [3] 159 175 199
Acquisition-related costs, earnings (5) (12) (18)
Certain significant items, earnings [5] (56) (73) (43)
Certain significant items, depreciation and amortization [3],[5] 0 0 0
Other unallocated, earnings (379) (311) (280)
Other unallocated, deprecation and amortization [3] $ 5 $ 2 $ 3
[1] Exclusive of amortization of intangible assets, except as disclosed in Note 3. Significant Accounting Policies—Amortization of Intangible Assets, Depreciation and Certain Long-Lived Assets.
[2] Defined as income before provision for taxes on income.
[3] Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
[4] Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
[5] For 2022, certain significant items primarily represents inventory and asset impairment charges related to customer relationships, developed technology rights and property, plant and equipment in our diagnostics, poultry, cattle and swine businesses and the consolidation of manufacturing sites in China of $47 million, as well as employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets of $4 million.
For 2021, certain significant items primarily included certain asset impairment charges of $46 million, as well as employee termination costs associated with our international operations and other costs associated with cost-reduction and productivity initiatives of $24 million.
For 2020, certain significant items primarily included certain asset impairment charges of $37 million and CEO transition-related costs of $16 million, partially offset by a net gain resulting from a cash payment received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites of $18 million.
    
v3.22.4
Segment Information - Income Statement Narrative (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Segment Reporting Information [Line Items]      
Revenues $ 8,080 $ 7,776 $ 6,675
CHINA      
Segment Reporting Information [Line Items]      
Revenues 382 357 266
Zoetis Initiatives      
Segment Reporting Information [Line Items]      
Gain (loss) on disposal     18
Segment Reconciling Items | Zoetis Initiatives      
Segment Reporting Information [Line Items]      
Restructuring and Other Cost Productivity Charges 4 24  
International Segment | Operating Segments      
Segment Reporting Information [Line Items]      
Revenues [1] 3,681 3,652 3,035
International Segment | Euro Member Countries, Euro | Operating Segments      
Segment Reporting Information [Line Items]      
Revenues $ 774 $ 814 $ 718
[1] Revenue denominated in euros was $774 million in 2022, $814 million in 2021 and $718 million in 2020.
v3.22.4
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($)
$ / shares in Units, $ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
Quarterly Financial Information Disclosure [Abstract]      
Revenues $ 8,080 $ 7,776 $ 6,675
Total Restructuring charges and certain acquisition-related costs 11 43 25
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest [1] 2,656 2,488 1,996
Provision for taxes on income 545 454 360
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest 2,111 2,034 1,636
Less: net loss attributable to noncontrolling interests (3) (3) (2)
Net Income (Loss) Attributable to Parent $ 2,114 $ 2,037 $ 1,638
Earnings Per Share, Basic $ 4.51 $ 4.29 $ 3.44
Earnings Per Share, Diluted $ 4.49 $ 4.27 $ 3.42
[1] Defined as income before provision for taxes on income.
v3.22.4
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 31, 2022
Dec. 31, 2021
Dec. 31, 2020
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward]      
Balance, Beginning of Period $ 17 $ 20 $ 21
Additions 4 1 3
Deductions (2) (4) (4)
Balance, End of Period $ 19 $ 17 $ 20