Good day and welcome to the Third Quarter 2015 Financial Results Conference Call and Webcast for Zoetis. Hosting the call today is John O'Connor, Vice President of Investor Relations for Zoetis. The presentation materials and additional financial tables are currently posted on the Investor Relations section of zoetis.com. The presentation slides can be managed by you, the viewer, and will not be forwarded automatically. In addition, a replay of this call will be available approximately two hours after the conclusion of this call via dial-in or on the Investor Relations section of zoetis.com. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. In the interest of time, we ask that you limit yourself to one question and then queue up again with any follow-ups. It is now my pleasure to turn the floor over to John O'Connor. John, you may begin.

Thank you, operator. Good morning and welcome to the Zoetis third quarter 2015 earnings call. I'm joined today by Juan Ramón Alaix, our Chief Executive Officer, and Paul Herendeen, our Chief Financial Officer. Before we begin, I'll remind you that the slides presented on this call are available on the Investor Relations section of our website and that our remarks today will include forward-looking statements and actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward-looking statement in today's press release and our SEC filings including, but not limited to, our 2014 Annual Report on Form 10-K and our Reports on Form 10-Q. Our remarks today will also include references to certain financial measures which were not prepared in accordance with Generally Accepted Accounting Principles, or US GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable US GAAP measures is included in the financial tables that accompany our earnings press release and in the company's 8-K filing dated today, November 3, 2015. We also cite operational results which exclude the impact of foreign exchange. With that, I will turn the call over to Juan Ramón. Juan Ramón Alaix - President, Chief Executive Officer & Director: Thank you, John. And good morning, everyone. Today I will discuss our performance for the third quarter and make comments about the acquisition of PHARMAQ, which we announced last night. Paul will then update you on our guidance for 2015, 2016 and 2017. All of the growth rates I'm discussing today are operational, excluding the impact of foreign exchange currency. I am very pleased to report that this quarter we continued to deliver strong revenue and adjusted net income growth based on our…

And we'll take our first question from Erin Wilson with Bank of America Merrill Lynch. Please go ahead.

Great. Thanks for taking my questions. How would you characterize the underlying demand trends across the U.S. livestock market? How should we think about the quarterly progression here given the buying patterns you alluded to in the press release? And if you could comment on poultry dynamics as well. And then part two of my question would be, as far as the acquisition goes, can you speak to underlying profitability of the business and potential synergies and cost savings associated with the PHARMAQ deal and your capacity for future business development initiatives? Thanks. Juan Ramón Alaix - President, Chief Executive Officer & Director: Thank you, Erin. And let me answer the first question on the demand in the U.S. Definitely, there are different drivers depending on the different types of animal proteins, cattle, pork, swine. I would say that the cattle, it's still facing maybe some limited production, although the demand has been reduced slightly. Because of the limited production, it seems most of the producers are rebuilding their herd and sending less animals to the slaughterhouses. At the same time, in some markets we have seen that the demand for beef has been changing slightly, but we remain very positive in terms of the cattle business in the U.S. In terms of poultry, the demand continues very strong. And I think we expect also that not a significant impact in terms of the avian flu affecting the meat part of the poultry segment, although this is affecting the egg production. And in swine, in 2015 we have seen a significant increase in the supply because of the PDV is not affecting and the farmer have been able to increase significantly the number of animals. And this also has been making a pressure in terms of prices. But for the…

We'll take our next question from Kevin Ellich with Piper Jaffray. Please go ahead. Kevin K. Ellich - Piper Jaffray & Co (Broker): Good morning. Thanks for taking the question. Juan Ramón, wondering if you could talk about the strength that you saw in some of the developing markets, like Brazil and China. I think we saw 12% operational growth and 24% in China. And then I guess just going back to the acquisition, Paul, could you talk a little bit about the profitability of PHARMAQ and I guess the justification for the valuation or how you guys think about valuation for deals like this? Thanks. Juan Ramón Alaix - President, Chief Executive Officer & Director: Thank you, Kevin, for the question. Let me start with China. China remains a market with a significant growth potential. And we mentioned that several times that the consumption there is increasing very fast because of the increase of middle class, but also very important for our industry, they are changing also the way they are raising animals. So in the past in China, there was significant part of animals, I'm talking about pigs, that they were small productions or even backyard production. We have seen that it's a significant shift from this kind of production to more sophisticated production and this is what is generating a significant opportunity for animal health industry that can provide the quality of a product that can increase the productivity in these farms. We have been also investing in China since many years. We have in China the infrastructure to maximize any new products that we are bringing to the market. We have been launching new products in China, some of them as a result of a JV that we formed a couple of years ago. And we…

Our next question comes from Louise Chen with Guggenheim Partners.

Hi. Thanks for taking my questions. So first question I had here was just on the potential for cost cuts greater than $300 million. And then a second question is just on the PHARMAQ deal again here. My understanding is that Permira had brought this company for meaningfully less two years ago. I'm just curious your thoughts here on your valuation for the company. Thanks. Juan Ramón Alaix - President, Chief Executive Officer & Director: In terms of cost cuts, I think we are on track to deliver what we announced, the $300 million by 2017. And the teams are working very hard. So we have made significant progress. And as you remember, there were some elements of this program related to SKU rationalization, also the reduction of some of the manufacturing plants and also the reduction or the change in some of the markets in where we were operating direct and we will be now operating through distributor. But still, this market is representing a small part of our portfolio because 95% of the revenues are still generated through our direct interaction with customers. So the report here is that we are doing very well and we plan to meet or exceed the $300 million. In terms of PHARMAQ, Paul will cover this question. Paul S. Herendeen - Chief Financial Officer & Executive Vice President: Yeah, sure. Permira bought the company back in 2013. A couple of interesting tidbits. We would've loved to have owned this company back in 2013 and tried to own this company back in 2013 and we were not able to acquire it back in 2013. And so what has happened since then, and I think you have to take your hat off to the team at PHARMAQ and Permira for backing that team to do what they needed to do to substantially build the value of that company over the last several years. What did they do? They advanced the pipeline, which for us is a very important factor. And while they were doing that, they continued to deliver growth in their base business and build that company. So that company is worth a heck of a lot more today than it was in 2013, number one. And number two, I would argue that it is worth more in our hands than it's worth in other people's hands because of our opportunities to drive geographic revenue for this part of our company that is not available to a stand-alone. Juan Ramón Alaix - President, Chief Executive Officer & Director: Next question, please?

Our next question comes from Alex Arfaei with BMO Capital Markets.

Good morning. Thanks for taking the questions and congrats on the strong quarter. Paul, sorry to keep going back to this, but I think it's an important question. How profitable is PHARMAQ and what is your expected profitability for this business given increased scale as part of Zoetis? And also, gross margin was higher than we expected. How much of that was FX as opposed to product mix? Thank you. Paul S. Herendeen - Chief Financial Officer & Executive Vice President: Yeah, with respect to the profitability of PHARMAQ, the business is profitable. It is supporting and has been supporting a substantial investment in R&D and continues to be a profitable business. Not sure we want to get into providing the entire P&L for PHARMAQ and, say, oh, here's exactly what they're doing. But suffice it to say that we think that the company, as part of Zoetis, fits with our model of long-term revenue growth and driving that over an extended period of time. And clearly we see a lot of value there. I don't want to provide a P&L for PHARMAQ for 2014. I don't think it would tell you the whole story. The salient points again, and I'll keep coming back to this, is a base business that is growing very rapidly, a base business that has supported the investment of R&D and helped them develop a pipeline that we see a great deal of value in as we go forward. With respect to gross margins, one thing you've got to take into consideration, I called it out in my remarks, is that FX has a favorable impact on our reported gross margin. And that was I believe roughly 100 basis points – someone will correct me if I get that wrong, but I believe it was…

We'll go next to John Kreger with William Blair. John C. Kreger - William Blair & Co. LLC: Hi. Thanks very much. Switching gears to SIMPARICA, are you still comfortable that product gets on the market in the U.S. next year? And does your guidance assume a 2016 launch? And then maybe a just quick follow-up. You mentioned France had some tough comparisons, with antibiotic regulations kicking in a year ago. Are there any other regions where you're watching closely for perhaps more restrictive regs around production antibiotics? Thanks. Juan Ramón Alaix - President, Chief Executive Officer & Director: So let me start with SIMPARICA, John. We expect the U.S. launch in SIMPARICA next year. We'll always depend on FDA approval, but we are preparing for this launch in the U.S. and also the launch in the European market. In terms of France, France we reported that last year there was a change of legislation. So the change in the legislation was mainly eliminating rebates on sales of antibiotic and then customers bought in anticipation of this new legislation. Definitely we are monitoring any kind of changes in terms of restriction on the use of antibiotics. There are movements, mainly in Western Europe, and we are tracking all that and this has been incorporated in our guidance for 2015, 2016 and 2017. Still, we consider that today there are no alternatives to treat animals that are sick other than antibiotics. And in many cases, the only way to achieve the productivity that customers need, we also need to prevent diseases with antibiotics. What we have seen in many markets, including the U.S., mainly a reduction of antibiotics which are medically important for human. But again, we don't see these changing significantly our revenues in the U.S., mostly because they will be moving to other antibiotics that we also have in our portfolio. Next question, please?

Our next question comes from Chris Schott with JPMorgan. Please go ahead. And we'll go to David Risinger with Morgan Stanley. Please go ahead, your line is open. David R. Risinger - Morgan Stanley & Co. LLC: Yes, thanks very much. Congrats on all the news flow. My question relates to 2017 revenue and your guidance. Could you just remind us for some of the key new product launches, what you're incorporating into your 2017 guidance for those major new product introductions and then also whether you are excluding any new product launches from the 2017 guidance? Thanks very much. Paul S. Herendeen - Chief Financial Officer & Executive Vice President: Yeah. Hi, David. It's Paul. Thanks for the question. This is both 2016 and 2017 and following on from the last question, SIMPARICA is included in our 2016 and 2017 guidance. And we're expecting the o-U.S. launch of SIMPARICA and then anticipating the U.S. launch of SIMPARICA, so that's in both 2016 and 2017. IL-31 is also in 2016 and 2017, but point out that we're currently operating under a conditional license and expecting to have a full license in the latter part of 2016. So the impact on 2016 is pretty modest. And then you see it included in our 2017 under a full license, so it's in there as well. And with respect to the question of is there anything – well, just to be super clear. And of course this now includes PHARMAQ as part of our guidance in 2016 and 2017 as well. We only add in products to our guidance when they achieve a high probability of regulatory and technical success and these are the only new products that we have included in 2016 and 2017. Next question, please?

Yes, and I will try Chris Schott with JPMorgan. Please go ahead.

Great. Can you guys hear me now? Paul S. Herendeen - Chief Financial Officer & Executive Vice President: Yes.

Okay. Sorry about that. Just had two questions. First, can you just elaborate on the priorities for business development following yesterday's deal? I guess my question is, just how many more assets like PHARMAQ or Abbott are out there? Is it a large universe, or is that a fairly targeted group of companies or divisions of companies you can target? And the second question was just on APOQUEL. I appreciate the comments earlier. But when we think about 2016 growth for APOQUEL, is capacity a rate-limiting factor or is it really just how quickly you can build demand for next year? Thanks so much. Juan Ramón Alaix - President, Chief Executive Officer & Director: Let me start with the easiest answer, which is APOQUEL. In 2016, we don't expect to have any limitation in terms of capacity and it's just the time for introducing the product in more customers in those markets in where we have already introduced the product and also launching in new markets. But we don't expect to have capacity issues. We have solved the API, we have a second source of API also in 2016 and now the manufacturing group is working to produce all the tablets that will be available to customers in 2016. In terms of BD, opportunities like PHARMAQ are unique, so I don't think that we'll find so many opportunities like PHARMAQ in the market. But there may be some assets that can be attractive to us, not many, but it will be maybe in some countries maybe some companies that will be for sale in the future. But, again, so we need to understand that because of our market share, we're facing some limitations in terms of antitrust that we need to incorporate in our evaluation. But we have been demonstrating…

Our next question is from Mark Schoenebaum with Evercore ISI. Please go ahead.

Thank you. It's actually Vlad Nikolenko on behalf of Mark Schoenebaum. Congratulations for the great quarter and smart acquisition of PHARMAQ yesterday. Actually a question more about the macro situation about what else is going on in biotech. There have been a lot of chatter and noise in present from political front about potential regulation of drug prices in the human health. And Zoetis looks like being a victim of overall selloff in biotech. So I just want to hear your perspective on animal front (1:01:30) of potential regulation or even just headline from political noise from human health on animal health and Zoetis' ability to continue increasing prices on something like 2% or 3% per year. And second question is more about long-term guidance, specifically tax rate. So whether revised guidance, additional decrease in the long-term tax rate of 100 basis points to 200 basis points, if it's sustainable or if there is additional limit to decrease tax rate even further? Thank you. Juan Ramón Alaix - President, Chief Executive Officer & Director: Thank you, Vlad. I'll start with the first question on macro environment and then Paul will answer the tax rate. So the first thing, we are not a human health company. And we try from the reading to explain how different is animal health to human health. And the most important difference is that our business is a business-to-business model. We are not dealing with a third-party payer, so our prices are defined by just the pure market dynamics. So we sell what our customers that are also paying are willing to pay for based on the value that we can demonstrate to them. So regulating prices in an industry which is just a market-driven industry will not make any sense, but it's something that we…

We'll go next to Jami Rubin with Goldman Sachs. Jami Rubin - Goldman Sachs & Co.: Thank you. Just a couple of follow-up questions. Most of my questions have been answered. Paul, you said in your remarks that you're surprised your stock price is so low. What is your capacity for embarking on a very large share buyback program? I would think you'd want to put your money where your mouth is and if you think the stock is so cheap, why aren't you guys announcing a big buyback program? And then secondly, Juan Ramón, I'm sorry if I missed this, I was in and out of the call, but you talked about making an aqua health acquisition for the past couple of years. What other areas, where are there holes in your overall business areas or business segments, where do you feel – is it geographical that you'd like to fill in or is it actually product-related? What are the other businesses that you would like to be beef-up in? You were very clear about aqua health for the past couple of years. So what other businesses are you seeking to add to your portfolio? Thanks very much. Paul S. Herendeen - Chief Financial Officer & Executive Vice President: Sure. Jami, thanks for the questions. And I'll start with the share buyback. And here's a thing. We have a share buyback program; I know it's modest. And we continue to buy back shares and have been buying them back since the beginning of the year. And this is a balance between allocating capital to those activities that we think will build the most value over the long term. And for this year it's, again, I think so far a remarkable year. Beginning of the year we allocated capital to…

And we'll take our last question from Doug Tsao with Barclays. Please go ahead.

Hi. Good morning and thanks for taking the questions. Just maybe clarify on APOQUEL. So will you be at a state without any supply constraints by the end of this year, or will that sort of take place in phases over next year? And just in terms of the second source of API, is that going to be a back-up source or is that going to be a source that is going to be regularly contributing towards production? Thank you very much. Juan Ramón Alaix - President, Chief Executive Officer & Director: Thank you, Doug. And in terms of APOQUEL supply, we expect to have a supply for meeting the demands of customers in the U.S. and UK markets at the end of the year. Then we'll continue introducing the product in other markets. And we don't think that supply will be an issue to deliver all customer demand in 2016. The second API source, it will be not just of a back-up, it will be a contributor. And we have the opportunity to double the capacity of the existing capacity that we have. And this is also something that will protect future revenues of future demand for the product. So we are very confident that the API will be enough to produce all the finished product that will be demanded by the customers in 2016.

And it does appear we have no further questions, so I will return the floor to Juan Ramón for closing remarks. Juan Ramón Alaix - President, Chief Executive Officer & Director: So thank you very much for attending this call. And, again, we are very pleased to have the results of this third quarter. But more important, my opinion, it's how confident are we in terms of our future, in terms of revenues and in terms also of adjusted EPS. We are very confident that we'll be delivering very strong results despite of the negative impact of exchange rate. That has been compensated with the introduction of new products and also the performance of the rest of the portfolio. So with that, thank you very much for attending this call.

This does conclude today's teleconference. A replay of today's call will be made available in two hours by dialing 800-283-4605 for U.S. listeners and 402-220-0874 for international. Please disconnect your lines at this time and have a wonderful day.