Zoetis intros new flu vaccine and flea fighter for dogs

Products that prevent diseases in animals are in hot demand these days--a trend that Zoetis ($ZTS) demonstrated earlier this month, when it shelled out $765 million to buy Pharmaq, one of the world's leaders in vaccines for farmed fish. But Zoetis is also working hard to expand its presence in preventive health through its own internal research efforts, and that work seems to have paid off with two new product approvals.

On November 13, Zoetis received a conditional approval from the USDA to market the first vaccine against canine influenza virus (CIV) H3N2, the strain of dog flu that hit 25 states earlier this year. The conditional license offers Zoetis the freedom to sell the vaccine while it completes its final efficacy studies, at which point it will be able to market it more actively.

The H3N2 strain of dog flu has sickened more than 1,000 dogs since it was first detected in Chicago in March. There is a vaccine on the market, from both Zoetis and Merck ($MRK), but that protects against a different strain, H3N8. Although some veterinarians were recommending Merck's vaccine to dog owners during the height of the outbreak, they couldn't promise protection against the new strain, saying only that the product might lessen the severity of symptoms.

"Following the initial outbreak of CIV H3N2 in Chicago, Zoetis researchers immediately prioritized development of a vaccine," said Shelley Stanford, director of the companion animal division's veterinary professional services group at Zoetis, in a press release. The vaccine will be administered in two doses, three weeks apart.

Four days after the USDA blessed the dog flu vaccine, the European Commission granted approval for Zoetis' Simparica (sarolaner), a once-monthly chewable tablet for dogs that protects them from fleas, ticks and sarcoptic mange. Simparica is also up for approval with the FDA and Zoetis expects a verdict in the first half of 2016, according to a spokeswoman for the company.

Simparica marks the entrance of Zoetis into the ultracompetitive market for chewable flea-and-tick products, which are quickly upstaging mainstay topical drugs such as Sanofi's ($SNY) Frontline. Sanofi's animal-health unit, Merial, has been charting knockout sales of NexGard, a chewable replacement for Frontline that it launched in 2014. Merck also entered the market last year, with Bravecto, which has racked up strong sales.

Zoetis has remained committed to the goal of strengthening its presence in preventive animal health, even as it has spent much of the last year paring down its product portfolio in a bid to cut costs. The company, under pressure from hedge fund investor Bill Ackman of Pershing Square Capital, cut 5,000 SKUs as it works to boost its operating profit margin from 25% to 34% by 2017.

CEO Juan Ramón Alaix told investors earlier this year he was also changing the company's approach to research, focusing on a small portfolio of products that were likely to deliver high returns. Vaccines was one product group he said would remain a priority.

- here's the flu vaccine release
- get more on Simparica here