Zoetis Inc (ZTS.N), formerly the animal health subsidiary of U.S. pharmaceuticals giant Pfizer Inc (PFE.N), posted a stronger-than-expected quarterly profit, driven by growth in sales of pet products in the United States.
Animal health is considered an attractive business for drugmakers as there are fewer worries about patent expiries and regulatory interventions, and a growing middle-class population in emerging markets means more people can afford pets.
However, the worst drought in the United States in more than half a century has hit sales across the industry.
Zoetis said sales of livestock products rose just 2 percent, compared with a 13 percent rise in pet products sales.
"Coming on the heels of weak/mixed results from other animal health businesses, we view today's update as a positive," J.P. Morgan analyst Chris Schott said in a note.
Eli Lilly and Co's (LLY.N) animal health division posted weak first-quarter results and the company said livestock products had run into a cyclical slump globally.
The company, which sells drugs, vaccines and diagnostics for livestock and pets, forecast 2013 adjusted earnings of $1.36 to $1.42 per share, largely in line with the average analyst estimate of $1.38.
Zoetis's net income for the first quarter rose 26 percent to $140 million, or 28 cents per share, from $111 million, or 22 cents per share, a year earlier.
Excluding items, earnings were 36 cents per share. Analysts expected 33 cents, according to Thomson Reuters I/B/E/S.
The results were the first for Zoetis since it went public in February. The company raised $2.2 billion in the largest IPO by a U.S. company since Facebook Inc (FB.O).
Revenue for the quarter rose 4 percent to $1.09 billion, compared with analysts' average estimate of $1.08 billion.
Zoetis expects 2013 revenue of $4.43 billion to $4.53 billion, while analysts expect $4.53 billion on average.
The company's shares rose as much as 6 percent to $34.72 in morning trade, before easing back to $33.16. The stock gained 4 percent since the IPO up to Monday's close of $32.66.
Zoetis's pet products include Revolution, a heartworm and flea-control medicine for cats and dogs, and Palladia, the first drug to be approved by the FDA for treating cancer in dogs.
The company, which is the largest player in the $22 billion animal health industry, has also developed the first vaccine for the pandemic H1N1 influenza virus in the United States.
Zoetis, which has a market capitalization of $16.33 billion, competes with the animal health businesses of Merck & Co (MRK.N), Eli Lilly, Sanofi SA (SASY.PA), and Novartis AG NOVN.VX.
Pfizer, the world's biggest drugmaker, divested Zoetis as part of its plan to focus on its core prescription drugs business. Pfizer also sold its infant nutrition business to Nestle SA NESN.VX for $11.9 billion last year.
The Zoetis business began in 1952 as the agriculture division of Pfizer and has steadily grown through in-house research and almost a dozen acquisitions, including the animal health units of rival drugmakers.
(Reporting by Esha Dey in Bangalore; Editing by Saumyadeb Chakrabarty)