Over the past 12 months, both Zoetis (ZTS) and Regeneron Pharmaceuticals (REGN), two healthcare giants, have underperformed the broader market. Unfavorable factors led to weaker-than-expected financial performance. However, recent developments have significantly improved their outlook compared to six months ago, positioning them for a strong rebound this year.
Zoetis, a leading animal health company, boasts a diverse product portfolio covering fish, poultry, and livestock, with companion animal care being its most critical segment. Last year, the company faced intense scrutiny over safety concerns related to its two key growth drivers—Librela, used to treat osteoarthritis pain in dogs, and Solensia, for osteoarthritis pain in cats—as some pets experienced severe side effects, impacting the company’s revenue. However, Zoetis has found a solution. Its next-generation treatments for canine and feline osteoarthritis pain, Lenivia and Portela, have been approved in multiple countries. With veterinarians concerned about the side effects of Librela and Solensia, they are expected to shift to these new drugs, helping Zoetis maintain a strong market share in this field. Additionally, the new drugs are long-acting formulations that reduce dosing frequency, which is expected to improve this year’s financial performance. The company can also rely on established growth drivers such as Apoquel, a treatment for canine allergic itch, which has performed well despite increasing competition and still holds significant market potential. This is one of the key reasons why Zoetis could rebound in 2026.
Regeneron Pharmaceuticals’ best-selling drug, Eylea, used to treat various eye diseases such as wet age-related macular degeneration, has faced fierce market competition. However, the company has made significant progress in addressing these challenges. Its high-dose version, Eylea HD, has been approved for market launch, and its range of indications expanded further last year. With these advancements, Regeneron can provide the drug to more patients with a more convenient dosing regimen. The reduction in injection frequency has become a key selling point, driving its stock price higher over the past six months or so. At the same time, the company can still rely on its major growth driver, Dupixent, which treats conditions such as eczema and chronic obstructive pulmonary disease. Additionally, this biotechnology company has several exciting pipeline products, including drugs in the weight management field. Regeneron is poised to maintain strong growth momentum this year and deliver returns that exceed market averages.
