Zoetis (ZTS) 10-Q 3 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 02, 2016	Oct. 31, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 2, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Trading Symbol	ZTS
Entity Registrant Name	Zoetis Inc.
Entity Central Index Key	1,555,280
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity common Stock, Shares Outstanding		493,832,541

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Millions, $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Income Statement [Abstract]
Revenue		$ 1,241	$ 1,214	$ 3,611	$ 3,491
Costs and expenses:
Cost of Sales	[1]	410	421	1,198	1,242
Selling, general and administrative expenses	[1]	345	374	1,003	1,107
Research and development expenses	[1]	90	91	268	255
Amortization of intangible assets	[1]	21	15	64	45
Restructuring charges/(benefits) and certain acquisition-related costs		4	13	(15)	280
Interest expense, net of capitalized interest		41	29	125	86
Other (income)/deductions—net		(3)	(2)	(29)	0
Income before provision for taxes on income	[2]	333	273	997	476
Provision for taxes on income		96	83	332	157
Net income before allocation to noncontrolling interests		237	190	665	319
Less: Net (loss)/income attributable to noncontrolling interests		(2)	1	(2)	2
Net income attributable to Zoetis Inc.		$ 239	$ 189	$ 667	$ 317
Earnings per share attributable to Zoetis Inc. stockholders:
Basic (in dollars per share)		$ 0.48	$ 0.38	$ 1.34	$ 0.63
Diluted (in dollars per share)		$ 0.48	$ 0.38	$ 1.34	$ 0.63
Weighted-average common shares outstanding:
Basic (in shares)		495.2	499.2	496.3	500.2
Diluted (in shares)		497.9	501.7	498.8	502.5
Dividends paid per common share (in dollars per share)		$ 0	$ 0.083	$ 0.190	$ 0.166
[1]	Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to finite-lived acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, general and administrative expenses or Research and development expenses, as appropriate, in the condensed consolidated statements of income.
[2]	Defined as income before provision for taxes on income.

CONDENSED CONSOLIDATED STATEME3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Statement of Comprehensive Income [Abstract]
Net income before allocation to noncontrolling interests		$ 237	$ 190	$ 665	$ 319
Other comprehensive income/(loss), net of taxes and reclassification adjustments:
Unrealized gains/(losses) on derivatives, net	[1]	1	(3)	(2)	(3)
Foreign currency translation adjustments, net		49	(57)	114	(200)
Benefit plans: Actuarial (losses)/gains, net	[1]	(1)	0	2	1
Total other comprehensive income/(loss), net of tax		49	(60)	114	(202)
Comprehensive income before allocation to noncontrolling interests		286	130	779	117
Less: Comprehensive income/(loss) attributable to noncontrolling interests		1	(2)	0	(1)
Comprehensive income attributable to Zoetis Inc.		$ 285	$ 132	$ 779	$ 118
[1]	Presented net of reclassification adjustments and tax impacts, which are not significant 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 condensed consolidated statements of income.

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Assets
Cash and cash equivalents	$ 651	$ 1,154
Accounts receivable, less allowance for doubtful accounts of $35 in 2016 and $34 in 2015	915	937
Inventories	1,563	1,467
Assets held for sale	0	71
Other current assets	235	201
Total current assets	3,364	3,830
Property, plant and equipment, less accumulated depreciation of $1,341 in 2016 and $1,208 in 2015	1,382	1,307
Goodwill	1,497	1,455
Identifiable intangible assets, less accumulated amortization	1,282	1,190
Noncurrent deferred tax assets	119	82
Other noncurrent assets	71	49
Total assets	7,715	7,913
Liabilities and Equity
Short-term borrowings	0	5
Current portion of long-term debt	0	400
Accounts payable	241	293
Dividends payable	0	47
Accrued expenses	457	676
Accrued compensation and related items	204	234
Income taxes payable	95	63
Liabilities associated with assets held for sale	0	4
Other current liabilities	42	59
Total current liabilities	1,039	1,781
Long-term debt, net of discount and issuance costs	4,467	4,463
Noncurrent deferred tax liabilities	266	264
Other taxes payable	93	63
Other noncurrent liabilities	252	251
Total liabilities	6,117	6,822
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value: 1,000,000,000 authorized, none issued	0	0
Common stock, $0.01 par value: 6,000,000,000 authorized; 501,891,243 and 501,808,229 shares issued; 494,240,780 and 497,400,113 shares outstanding at October 2, 2016, and December 31, 2015, respectively	5	5
Treasury stock, at cost, 7,650,463 and 4,408,116 shares of common stock at October 2, 2016, and December 31, 2015, respectively	(351)	(203)
Additional paid-in capital	1,014	1,012
Retained earnings	1,423	876
Accumulated other comprehensive loss	(506)	(622)
Total Zoetis Inc. equity	1,585	1,068
Equity attributable to noncontrolling interests	13	23
Total equity	1,598	1,091
Total liabilities and equity	$ 7,715	$ 7,913

CONDENSED CONSOLIDATED BALANCE5

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (PARENTHETICAL) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 35	$ 34
Accumulated depreciation	$ 1,341	$ 1,208
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000,000	1,000,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	6,000,000,000	6,000,000,000
Common stock issued, shares	501,891,243	501,808,229
Common stock, shares outstanding	494,240,780	497,400,113
Treasury stock, shares	7,650,463	4,408,116

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - 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
Beginning balance at Dec. 31, 2014		$ 1,337	$ 5		$ 0		$ 958	$ 709	$ (361)	$ 26
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		319						317		2
Other comprehensive income/(loss)		(202)							(201)	(1)
Share-based compensation awards	[2]	31			(2)		33
Treasury stock acquired	[3]	(148)			(148)
Employee benefit plan contribution from Pfizer Inc.	[4]	2					2
Dividends declared		(85)						(83)		(2)
Ending balance at Sep. 27, 2015		1,254	5		(150)		993	943	(562)	25
Beginning balance at Dec. 31, 2015		1,091	5		(203)		1,012	876	(622)	23
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		665						667		(2)
Other comprehensive income/(loss)		114							114	0
Share-based compensation awards	[2]	51			77			(26)
Treasury stock acquired	[3]	(225)			(225)
Employee benefit plan contribution from Pfizer Inc.	[4]	2					2
Divestitures	[5]	(6)							2	(8)
Dividends declared		(94)						(94)
Ending balance at Oct. 02, 2016		$ 1,598	$ 5		$ (351)		$ 1,014	$ 1,423	$ (506)	$ 13
[1]	As of October 2, 2016, and September 27, 2015, there were 494,240,780 and 498,333,086 outstanding shares of common stock, respectively, and 7,650,463 and 3,240,447 shares of treasury stock, respectively. Treasury stock is recognized at the cost to reacquire the shares. For additional information, see Note 13. Stockholders' Equity.
[2]	Includes the issuance of shares of Zoetis Inc. common stock and the reissuance of treasury stock in connection with the vesting of employee share-based awards. Upon reissuance of treasury stock, differences between the proceeds from reissuance and the cost of the treasury stock that result in gains are recorded in Additional paid-in capital. Losses are recorded in Additional paid-in capital to the extent that they can offset previous gains. If no such credit exists, the differences are recorded in Retained earnings. 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 12. Share-Based Payments and Note. 13. Stockholders' Equity.
[3]	Reflects the acquisition of treasury shares in connection with the share repurchase program. For additional information, see Note 13. 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 11. Benefit Plans.
[5]	Reflects the divestiture of our share of our Taiwan joint venture. See Note 4B. Acquisitions and Divestitures: Divestitures.

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (PARENTHETICAL) - shares	Oct. 02, 2016	Dec. 31, 2015	Sep. 27, 2015	Dec. 31, 2014	[1]
Statement of Stockholders' Equity [Abstract]
Common stock, shares outstanding	494,240,780	497,400,113	498,333,086
Treasury stock, shares	7,650,463	4,408,116	3,240,447	20,000
[1]	Shares may not add due to rounding.

CONDENSED CONSOLIDATED STATEME8

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015
Operating Activities
Net income before allocation to noncontrolling interests		$ 665	$ 319
Adjustments to reconcile net income before noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization expense	[1],[2]	177	144
Share-based compensation expense		28	31
Restructuring, net of payments		(15)	207
Asset write-offs and asset impairments		2	48
Gains on sales of assets		(27)	0
Provision for losses on inventory		65	59
Deferred taxes		(52)	(81)
Employee benefit plan contribution from Pfizer Inc.		2	2
Other non-cash adjustments		13	11
Other changes in assets and liabilities, net of acquisitions and divestitures
Accounts receivable		44	(150)
Inventories		(133)	(201)
Other assets		(53)	(64)
Accounts payable		(56)	30
Other liabilities		(291)	(37)
Other tax accounts, net		58	68
Net cash provided by operating activities		427	386
Investing Activities
Purchases of property, plant and equipment		(156)	(143)
Acquisitions		(88)	(229)
Net proceeds from sales of assets		89	2
Other investing activities		0	(8)
Net cash used in investing activities		(155)	(378)
Financing Activities
Increase (decrease) in short-term borrowings, net		(5)	2
Principal payments on long-term debt		(400)	0
Payment of contingent consideration related to previously acquired assets		(28)	0
Share-based compensation-related proceeds, net of taxes paid on withholding shares and excess tax benefits	[3]	24	4
Purchases of treasury stock	[4]	(225)	(150)
Cash dividends paid		(141)	(127)
Net cash used in financing activities		(775)	(271)
Effect of exchange-rate changes on cash and cash equivalents		0	(27)
Net decrease in cash and cash equivalents		(503)	(290)
Cash and cash equivalents at beginning of period		1,154	882
Cash and cash equivalents at end of period		651	592
Cash paid during the period for:
Income taxes		295	175
Interest, net of capitalized interest		140	117
Non-cash transactions:
Purchases of property, plant and equipment		16	12
Contingent purchase price consideration		$ 29	$ 22
[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]	Effective 2016, excess tax benefits are reflected within operating activities. See Note 3. Significant Accounting Policies for additional information.
[4]	Reflects the acquisition of treasury shares in connection with the share repurchase program. For additional information, see Note 13. Stockholders' Equity.

Organization

Organization	9 Months Ended
	Oct. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	Organization Zoetis Inc. (including its subsidiaries, collectively, Zoetis, the company, we, us or our) is a global leader in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. 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: cattle, swine, poultry, sheep and fish (collectively, livestock) and dogs, cats and horses (collectively, companion animals); and within five major product categories: anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals.

Basis of Presentation

Basis of Presentation	9 Months Ended
	Oct. 02, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (U.S. GAAP) can be condensed or omitted. Balance sheet amounts and operating results for subsidiaries operating outside the United States are as of and for the three and nine-month periods ended August 28, 2016 , and August 23, 2015 . We follow a 13-week quarterly accounting cycle pursuant to which the first three quarters end on a Sunday and the fiscal year always ends on December 31 for our operations in the United States and on November 30 for subsidiaries operating outside the United States. As a result of this convention, the first quarter of fiscal 2016 had six additional days and the fourth quarter of fiscal 2016 will have five less days compared with the respective quarters of fiscal 2015. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. We are responsible for the unaudited condensed consolidated financial statements included in this Form 10-Q. The condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. The information included in this interim report should be read in conjunction with the financial statements and accompanying notes included in our 2015 Annual Report on Form 10-K. Certain reclassifications have been made to prior year data to conform to current year presentation.

Significant Accounting Policies

Significant Accounting Policies	9 Months Ended
	Oct. 02, 2016
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies New Accounting Standards In October 2016, the Financial Accounting Standards Board (FASB) issued an accounting standards update that will require the recognition of the income tax consequences of an intra-entity asset transfer, other than inventory, when the transfer occurs as opposed to when the asset is sold to an outside third party. The provisions of the new standard are effective beginning January 1, 2018, for annual and interim reporting periods. Early adoption is permitted beginning on January 1, 2017. The new standard requires a modified retrospective adoption approach, as of the beginning of the period of adoption. We are continuing to assess the potential impact that adopting this new standard will have on our consolidated financial statements. In March 2016, the FASB issued an accounting standards update which simplifies the accounting for employee share-based payments. The new standard requires the immediate recognition of all excess tax benefits and deficiencies in the income statement, and requires classification of excess tax benefits as an operating activity as opposed to a financing activity in the statements of cash flows. The standard also clarifies that all cash payments made to taxing authorities on the employees' behalf for shares withheld should be presented as financing activities on the statements of cash flows and provides for a policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The provisions of the new standard are effective beginning January 1, 2017, and early adoption is permitted if all amendments are adopted in the same period. We elected to early adopt the new standard effective January 1, 2016. Excess tax benefits of $7 million generated during the first nine months of 2016 are reflected as a component of Provision for taxes on income as presented in the condensed consolidated statements of income. We have elected to apply the change in cash flow classification for excess tax benefits on a prospective basis. Cash payments made to taxing authorities on the behalf of company employees are reflected as a financing outflow in the condensed consolidated statements of cash flows, consistent with prior years. We continue to include the impact of estimated forfeitures when determining share-based compensation expense. In February 2016, the FASB issued an accounting standards update which requires lessees to recognize most leases on the balance sheet with a corresponding right of use asset. Leases will be classified as financing or operating which will drive the expense recognition pattern. For lessees, the income statement presentation and expense recognition pattern for financing and operating leases is similar to the current model for capital and operating leases, respectively. Accounting for lessors remains largely unchanged. Companies may elect to exclude short-term leases. The update also requires additional disclosures that will better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The provisions of the new standard are effective beginning January 1, 2019, for annual and interim reporting periods. Early adoption is permitted beginning on January 1, 2017. The new standard requires a modified retrospective adoption approach, at the beginning of the earliest comparative period presented in the financial statements. We continue to assess the potential impact that adopting this new guidance will have on our consolidated financial statements. In July 2015, the FASB issued an accounting standards update to simplify the measurement of inventory by requiring that inventory be measured at the lower of cost or net realizable value, rather than at the lower of cost or market, with market being defined as either replacement cost, net realizable value or net realizable value less a normal profit margin. The provisions of the new standard are effective beginning January 1, 2017, for annual and interim reporting periods. The guidance will be adopted prospectively and early adoption is permitted. We plan to adopt this guidance as of January 1, 2017, the required effective date, and do not expect this guidance to have a significant impact on our consolidated financial statements. In February 2015, the FASB issued an accounting standards update that provides revised guidance on whether to consolidate certain legal entities, such as limited partnerships, limited liability corporations and securitization structures. We adopted this guidance effective January 1, 2016. This guidance did not have a significant impact on our consolidated financial statements. In May 2014, the FASB issued an accounting standards update that outlines a new, single comprehensive model for companies to use in accounting for revenue arising from contracts with customers. This update supersedes most current revenue recognition guidance under U.S. GAAP. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes a five-step model for determining how, when and how much revenue should be recognized. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We plan to adopt this guidance as of January 1, 2018, the required effective date. The new standard allows for either full retrospective or modified retrospective transition upon adoption. We continue to assess the transition method we will elect for adoption as well as the potential impact that adopting this new guidance will have on our consolidated financial statements.

Acquisitions and Divestitures

Acquisitions and Divestitures	9 Months Ended
	Oct. 02, 2016
Business Combinations [Abstract]
Acquisitions and Divestitures	Acquisitions and Divestitures A. Acquisitions Acquisition of Pharmaq On November 9, 2015, we completed the acquisition of Pharmaq, a privately held Norwegian aquaculture company. We acquired 100% of the issued share capital of Pharmaq for an aggregate cash purchase price of $765 million , adjusted to reflect cash, working capital and net indebtedness as of the closing date for net cash consideration transferred to the seller of $668 million . The acquisition expands the Zoetis aquaculture portfolio. The transaction was accounted for as a business combination, with the assets acquired and liabilities assumed measured at their respective acquisition date fair values as summarized below: (MILLIONS OF DOLLARS) Cash and cash equivalents $ 16 Accounts receivable (a) 21 Inventories (b) 42 Other current assets 2 Property, plant and equipment 11 Intangible assets (c) 550 Accounts payable (4 ) Accrued expenses (d) (38 ) Accrued compensation and related items (4 ) Long-term debt (d) (89 ) Noncurrent deferred tax liabilities (e) (139 ) Other non-current liabilities (2 ) Total net assets acquired 366 Goodwill (f) 302 Total consideration $ 668 (a) Accounts receivable were measured at fair value as of the acquisition date and are substantially comprised of gross trade receivables of $21 million , $1 million of which is expected to be uncollectible. (b) Inventories recorded as of the acquisition date reflect fair value adjustments of $17 million which relates primarily to finished goods. The fair value was calculated based on estimated selling profit margin. (c) The acquisition date fair value of intangible assets acquired was determined using the income approach and consists of the following: $160 million related to currently marketed vaccine products, $30 million related to currently marketed therapeutics, $80 million related to customer relationships and $280 million related to in-process research and development (IPR&D). The most significant IPR&D project acquired, with an acquisition date fair value of $150 million , relates to the salmon rickettsial syndrome (SRS) vaccine. The vaccine was commercially launched, subsequent to the acquisition, during November 2015. Other significant acquired IPR&D projects relate to a vaccine for pancreatic disease, “PD” and Alphaflux, a therapeutic drug for the treatment of sea lice and vaccine technology for new species including Tilapia and Pangasius, were assigned acquisition date fair values of $50 million , $40 million , and $40 million , respectively. Vaccine developed technology and customer relationships will be amortized over a 15 year useful life while therapeutic developed technology will be amortized over 10 years. (d) Pharmaq callable bonds and derivative contracts were recorded at acquisition date fair value and settled immediately following the closing. (e) The Pharmaq acquisition was structured as a stock purchase therefore we assumed the historical tax bases of its assets and liabilities. We also established net deferred tax assets and liabilities associated with the fair value adjustments recorded as part of the opening balance sheet. The components of the Pharmaq net deferred tax liability are included within amounts reported in Note 7. Income Taxes . (f) Goodwill of $302 million is the excess of consideration transferred over the value of net assets acquired and was allocated to our existing reportable segments and is primarily attributable to corporate synergies related to platform functions. The primary strategic purpose of the acquisition was to enhance the company’s existing product portfolio by enabling Zoetis to further expand into aquaculture. The goodwill recorded is not deductible for tax purposes. All amounts recorded are subject to final valuation; however, any difference between such amounts and the final fair value determination for net assets acquired is not expected to be material to our consolidated financial statements. 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. Acquisition of Abbott Animal Health On February 10, 2015, we completed the purchase of certain assets of Abbott Animal Health (AAH), a subsidiary of Abbott Laboratories (Abbott). AAH is a companion animal health business focused on the veterinary surgical suite. The purchase expands our companion animal product portfolio to include veterinarian solutions for anesthesia, pain management, and diabetes monitoring. The $254 million purchase price included net cash of $229 million and an additional contingent payment of $25 million (acquisition date fair value of $22 million ) which was due to Abbott within one year of the acquisition date, subject to certain deductions in the event of sales disruptions due to supply issues. The $25 million payment was made to Abbott in February 2016. The transaction was accounted for as a business combination, with the net assets acquired measured at their respective acquisition date fair values. Final amounts recorded for the acquisition include $12 million of inventory, $8 million of IPR&D associated with oncology and osteoarthritis projects, $5 million of trade names related to diabetes and pain management products, $16 million of developed technology assets associated with pain management and surgical products, $23 million of other intangible assets including a favorable supply agreement and product exclusivity rights and property, plant and equipment of less than $1 million . Trade names and developed technology assets will be amortized over 15 years while other intangible assets acquired have a weighted average useful life of 5 years. Goodwill of $187 million is the excess of consideration transferred over the fair value of assets acquired and was allocated to our reportable segments and is predominantly attributable to synergies expected to be realized through the integration of AAH operations into the existing Zoetis business. The goodwill recorded is deductible for tax purposes. The valuation was finalized during the first quarter of 2016. Final amounts noted above reflect a net increase of $14 million in intangible assets from the preliminary valuation, offset by a decrease in goodwill and inventory fair value adjustments. B. Divestitures On April 28, 2016, we completed the sale of our 55 percent ownership share of a Taiwan joint venture, including a manufacturing site in Hsinchu, Taiwan to Yung Shin Pharmaceutical Industrial Co., Ltd., a pharmaceutical company with an animal health business and headquarters in Taiwan. The sale also included a portfolio of products in conjunction with our comprehensive operational efficiency program. These products include medicated feed additives, anti-infective medicines and nutritional premixes for livestock, sold primarily in Taiwan and in international markets. We received $13 million in cash upon closing. The assets and liabilities related to this sale had been previously included within held for sale classification as of December 31, 2015. On February 17, 2016, we completed the sale of our manufacturing site in Haridwar, India to the India-based pharmaceutical company Zydus Cadila (Cadila Healthcare Ltd.). The agreement also included the sale of a portfolio of our products in conjunction with our comprehensive operational efficiency program. These products included medicated feed additives, anti-infectives, parasiticides, and nutritionals for livestock, sold primarily in India. These assets had been previously included within held for sale classification as of December 31, 2015. On February 12, 2016, we completed the sale of two of our manufacturing sites in the United States: Laurinburg, North Carolina, and Longmont, Colorado, to Huvepharma NV (Huvepharma), a European animal health company. Huvepharma also assumed the assets and operations and the lease of our manufacturing and distribution site in Van Buren, Arkansas. The agreement included the sale of a portfolio of products in conjunction with our comprehensive operational efficiency program. These products included medicated feed additives, water soluble therapeutics and nutritionals for livestock sold in the U.S. and international markets. The related assets had been previously included within held for sale classification as of December 31, 2015. During the first nine months of 2016, we received total cash proceeds of approximately $88 million related to the divestitures of our share of our Taiwan joint venture and the India and U.S. manufacturing sites noted above. During the first quarter of 2016, we recognized a net pre-tax gain of approximately $33 million , partially offset by a net pre-tax loss of approximately $6 million recognized during the second quarter of 2016. Gains and losses related to divestitures are recorded within Other (income)/deductions— net . The divestiture transactions required transitional supply and service agreements, including technology transfers, where necessary and appropriate, as well as other customary ancillary agreements.

Restructuring Charges and Other

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives	9 Months Ended
	Oct. 02, 2016
Restructuring and Related Activities [Abstract]
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives	Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/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 research and development (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: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Restructuring charges/(benefits) and certain acquisition-related costs: Integration costs (a) $ — $ 5 $ 2 $ 9 Restructuring charges/(benefits) (b) : Employee termination costs 3 — (20 ) 237 Asset impairment charges — 8 — 34 Exit costs 1 — 3 — Total Restructuring charges/(benefits) and certain acquisition-related costs $ 4 $ 13 $ (15 ) $ 280 (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) The restructuring charges/(benefits) for the three and nine months ended October 2, 2016 , and September 27, 2015 , primarily relate to our operational efficiency initiative and supply network strategy. The restructuring charges/(benefits) for the three and nine months ended October 2, 2016 , are associated with the following: U.S. ( $0 million and $2 million benefit, respectively), International ( $1 million benefit and $16 million benefit, respectively) and Manufacturing/research/corporate ( $5 million and $1 million , respectively). The restructuring charges for the three and nine months ended September 27, 2015 , are associated with the following: U.S. ( $3 million benefit and $27 million , respectively), International ( $2 million and $117 million , respectively) and Manufacturing/research/corporate ( $9 million and $127 million , respectively). During 2015, we launched a comprehensive operational efficiency program, which was incremental to the previously announced supply network strategy. These initiatives have focused on reducing complexity in our product portfolios through the elimination of approximately 5,000 product stock keeping units (SKUs), changing our selling approach in certain markets, reducing our presence in certain countries, and planning to sell or exit ten manufacturing sites over the long term. As of October 2, 2016 , we divested three U.S. manufacturing sites, one international manufacturing site, and our 55 percent ownership share of a Taiwan joint venture, inclusive of its related manufacturing site, and exited one international manufacturing site. See Note 4B. Acquisitions and Divestitures: Divestitures for additional information. We are also continuing to optimize our resource allocation and efficiency by reducing resources associated with non-customer facing activities and operating more efficiently as a result of less internal complexity and more standardization of processes. As part of these initiatives, we expect to reduce certain positions through divestitures, normal attrition and involuntary terminations by approximately 2,000 to 2,500 , subject to consultations with works councils and unions in certain countries. As of October 2, 2016 , approximately 1,800 positions have been eliminated and additional reductions are expected primarily over the next nine months. Restructuring charges/(benefits) related to these initiatives are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Operational efficiency initiative: Employee termination costs (a) $ 3 $ — $ (26 ) $ 228 Asset impairment — 8 — 33 Exit costs 1 — 4 — 4 8 (22 ) 261 Supply network strategy: Employee termination costs — — 6 9 Asset impairment charges — — — 1 — — 6 10 Total restructuring charges/(benefits) related to the operational efficiency initiative and supply network strategy 4 8 (16 ) 271 Other operational efficiency initiative charges Cost of sales: Inventory write-offs 1 5 1 5 Selling, general and administrative expenses: Accelerated depreciation — — 1 — Consulting fees 4 8 11 28 Other (income)/deductions: Net gain on sale of assets (b) — — (27 ) — Total other operational efficiency initiative charges 5 13 (14 ) 33 Other supply network strategy charges Cost of sales: Accelerated depreciation 2 — 4 — Consulting fees — 3 3 13 Total other supply network strategy charges 2 3 7 13 Total costs associated with the operational efficiency initiative and supply network strategy $ 11 $ 24 $ (23 ) $ 317 (a) For the nine months ended October 2, 2016 , includes a reduction in employee termination accruals primarily as a result of higher than expected voluntary attrition rates experienced in the first half of 2016. (b) For the nine months ended October 2, 2016 , represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of our Taiwan joint venture, as part of our operational efficiency initiative. The components of, and changes in, our restructuring accruals are as follows: Employee Termination Exit (MILLIONS OF DOLLARS) Costs Costs Accrual Balance, December 31, 2015 (a) $ 221 $ 1 $ 222 Provision (20 ) 3 (17 ) Utilization and other (b) (99 ) (2 ) (101 ) Balance, October 2, 2016 (a) $ 102 $ 2 $ 104 (a) At October 2, 2016 , and December 31, 2015 , included in Accrued expenses ( $70 million and $ 162 million , respectively) and Other noncurrent liabilities ( $34 million and $ 60 million , respectively). (b) Includes adjustments for foreign currency translation.

Other (Income)_Deductions - Net

Other (Income)/Deductions - Net	9 Months Ended
	Oct. 02, 2016
Other Income and Expenses [Abstract]
Other (Income)/Deductions - Net	Other (Income)/Deductions—Net The components of Other (income)/deductions—net are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Royalty-related income $ (8 ) $ (5 ) $ (20 ) $ (19 ) Identifiable intangible asset impairment charges (a) 1 — 1 2 Net gain on sale of assets (b) — — (27 ) — Foreign currency loss (c) 5 6 22 18 Other, net (d) (1 ) (3 ) (5 ) (1 ) Other (income)/deductions—net $ (3 ) $ (2 ) $ (29 ) $ — (a) For the three and nine months ended October 2, 2016 , represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015 , represents an impairment of IPR&D assets related to the termination of a canine oncology project. (b) For the nine months ended October 2, 2016 , represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative. (c) Primarily driven by costs related to hedging and exposures to certain emerging market currencies. (d) For the nine months ended October 2, 2016 , primarily represents income associated with certain state business employment tax incentive credits. For the nine months ended September 27, 2015 , primarily represents inventory losses of $3 million sustained as a result of weather damage at storage facilities in Brazil and Australia, partially offset by interest income and other miscellaneous income.

Income Taxes

Income Taxes	9 Months Ended
	Oct. 02, 2016
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes A. Taxes on Income The effective tax rate was 28.8% for the three months ended October 2, 2016 , compared with 30.4% for the three months ended September 27, 2015 . The lower effective tax rate for the three months ended October 2, 2016 , was primarily attributable to: • a $7 million discrete tax benefit related to a revaluation of the company’s deferred tax assets and liabilities using the tax rates expected to be in place going forward as a result of the implementation of operational changes; and • the impact of the extent and location of restructuring charges related to the operational efficiency initiative, supply network strategy, asset impairments and gains and losses on asset divestitures, partially offset by: • changes in the jurisdictional mix of earnings, which includes the impact of the location of earnings from operations and repatriation costs. The jurisdictional mix of earnings can vary as a result of repatriation decisions and operating fluctuations in the normal course of business and the impact of non-deductible items. The effective tax rate was 33.3% for the nine months ended October 2, 2016 , compared with 33.0% for the nine months ended September 27, 2015 . The higher effective tax rate for the nine months ended October 2, 2016 , was primarily attributable to: • changes in the jurisdictional mix of earnings, which includes the impact of the location of earnings from operations and repatriation costs. The jurisdictional mix of earnings can vary as a result of repatriation decisions and operating fluctuations in the normal course of business and the impact of non-deductible items; • a $38 million net discrete tax expense recorded in the first half of 2016, related to changes in uncertain tax positions due to the impact of the European Commission’s negative decision on the excess profits rulings in Belgium (see C. Tax Contingencies ), partially offset by a revaluation of the company's deferred tax assets and liabilities using the tax rates expected to be in place going forward as a result of the decision; and • a valuation allowance of $3 million recorded in the second quarter of 2015, partially offset by: • a $7 million discrete tax benefit recorded in the third quarter of 2016, related to a revaluation of the company’s deferred tax assets and liabilities using the tax rates expected to be in place going forward as a result of the implementation of operational changes; • a $10 million and $9 million discrete tax benefit recorded in the first quarter of 2016 and 2015, respectively, related to a revaluation of deferred taxes as a result of a change in statutory tax rates; • a $7 million discrete tax benefit related to the adoption of a new accounting standard in 2016 requiring the excess tax benefits for share-based payments to be recognized as a component of Provision for taxes on income . See Note 3. Significant Accounting Policies ; • the impact of the extent and location of restructuring charges related to the operational efficiency initiative, supply network strategy, asset impairments and gains and losses on asset divestitures; and • a $6 million discrete tax benefit recorded in the second quarter of 2015 related to prior period tax adjustments. B. Deferred Taxes As of October 2, 2016 , the total net deferred income tax liability of $ 147 million is included in Noncurrent deferred tax assets ($ 119 million ) and Noncurrent deferred tax liabilities ($ 266 million ). As of December 31, 2015 , the total net deferred income tax liability of $ 182 million is included in Noncurrent deferred tax assets ($ 82 million ) and Noncurrent deferred tax liabilities ($ 264 million ). C. Tax Contingencies As of October 2, 2016 , the tax liabilities associated with uncertain tax positions of $87 million (exclusive of interest and penalties related to uncertain tax positions of $ 10 million ) are included in Noncurrent deferred tax assets ($ 5 million ) and Other taxes payable ($ 82 million ). As of December 31, 2015 , the tax liabilities associated with uncertain tax positions of $61 million (exclusive of interest and penalties related to uncertain tax positions of $ 7 million ) are included in Noncurrent deferred tax assets ($ 6 million ) and Other taxes payable ($ 55 million ). The increase in tax liabilities associated with uncertain tax positions as of October 2, 2016 , is primarily due to a net tax charge of approximately $22 million . The components of this net charge is a tax liability of $50 million related to the impact of the European Commission’s negative decision on January 11, 2016, regarding the excess profits rulings in Belgium, reduced by a cash settlement of $28 million for the 2013-2014 periods. This charge does not include any benefits associated with a successful appeal of the decision. Aside from the above, our tax liabilities for uncertain tax positions relate primarily to issues common among multinational corporations. Any settlements or statute of limitations expirations could result in a significant decrease in our uncertain tax positions. Substantially all of these unrecognized tax benefits, if recognized, would impact our effective income tax rate. We believe that it is reasonably possible that our reserves for uncertain tax positions could decrease within the next twelve months by approximately $22 million due to the expected remaining payment due related to the impact of the European Commission’s negative decision on the excess profits rulings in Belgium. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of uncertain tax positions 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 changes related to our uncertain tax positions, and such changes could be significant.

Financial Instruments

Financial Instruments	9 Months Ended
	Oct. 02, 2016
Financial Instruments [Abstract]
Financial Instruments	Financial Instruments A. Debt Credit Facilities In December 2012 , we entered into a revolving credit agreement with a syndicate of banks providing for a five -year $1.0 billion senior unsecured revolving credit facility (the credit facility), which became effective in February 2013 upon the completion of the initial public offering and expires in December 2017. Subject to certain conditions, we have the right to increase the credit facility to up to $1.5 billion . The credit facility contains a financial covenant requiring us to not exceed a maximum total leverage ratio (the ratio of consolidated net debt as of the end of the period to consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) for such period) of 3.50:1 . Upon entering into a material acquisition, the maximum total leverage ratio increases to 4.25:1 , and extends until the fourth full consecutive fiscal quarter ended immediately following the consummation of a material acquisition. On November 10, 2015, we designated the acquisition of Pharmaq a material acquisition under the revolving credit agreement. For additional information, see Note 4. Acquisitions and Divestitures . On February 19, 2016, we amended this financial covenant to add back to Adjusted Consolidated EBITDA, any operational efficiency restructuring charge (defined as charges recorded by the company during the second quarter of 2015, related to our operational efficiency program announced on May 5, 2015, in an aggregate amount for all such charges not to exceed $237 million ) and Venezuela-related charges (defined as the write-down, impairment and other charges recorded by the company during the fourth quarter of 2015 relating to Venezuela, in an aggregate amount for all such charges not to exceed $95 million ). The credit facility also contains a financial covenant requiring that we maintain a minimum interest coverage ratio (the ratio of EBITDA at the end of the period to interest expense for such period) of 3.50:1 . In addition, the credit facility contains other customary covenants. We were in compliance with all financial covenants as of October 2, 2016 , and December 31, 2015 . There were no amounts drawn under the credit facility as of October 2, 2016 , or December 31, 2015 . We have additional lines of credit and other credit arrangements with a group of banks and other financial intermediaries for general corporate purposes. We maintain cash and cash equivalent balances in excess of our outstanding short-term borrowings. As of October 2, 2016 , we had access to $81 million of lines of credit which expire at various times through 2017 and are renewed annually. We did not have any borrowings outstanding related to these facilities as of October 2, 2016 . Short-term borrowings outstanding related to these facilities were $4 million as of December 31, 2015 . Commercial Paper Program In February 2013 , we entered into a commercial paper program with a capacity of up to $1.0 billion . As of October 2, 2016 , and December 31, 2015 , there was no commercial paper issued under this program. Short-Term Borrowings As of October 2, 2016 , we did not have any short-term borrowings outstanding. As of December 31, 2015 , short-term borrowings outstanding, including lines of credit, were $ 5 million , with a weighted-average interest rate of 5.2% . Senior Notes and Other Long-Term Debt On November 13, 2015, we issued $1.25 billion aggregate principal amount of our senior notes (2015 senior notes), with an original issue discount of $2 million . On January 28, 2013, we issued $3.65 billion aggregate principal amount of our senior notes (the 2013 senior notes offering) in a private placement, with an original issue discount of $10 million . There was no current portion of long-term debt as of October 2, 2016 . The current portion of long-term debt was $400 million as of December 31, 2015 , with a weighted-average interest rate of 1.150% . The 2013 and 2015 senior notes are governed by an indenture and supplemental indenture (collectively, the indenture) between us and Deutsche Bank Trust Company Americas, as trustee. The indenture contains certain covenants, including limitations on our, and certain of our subsidiaries' ability to incur liens or engage in sale-leaseback transactions. The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets. In addition, the indenture contains other customary terms, including certain events of default, upon the occurrence of which the 2013 and 2015 senior notes may be declared immediately due and payable. Pursuant to the indenture, we are able to redeem the 2013 and 2015 senior notes, in whole or in part, at any time by paying a “make whole” premium, plus accrued and unpaid interest to, but excluding, the date of redemption. Pursuant to our tax matters agreement with Pfizer, we will not be permitted to redeem the 2013 senior notes due 2023 pursuant to this optional redemption provision, except under limited circumstances. Upon the occurrence of a change of control of us and a downgrade of the 2013 and 2015 senior notes below an investment grade rating by each of Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, we are, in certain circumstances, required to make an offer to repurchase all of the outstanding 2013 and 2015 senior notes at a price equal to 101% of the aggregate principal amount of the 2013 and 2015 senior notes together with accrued and unpaid interest to, but excluding, the date of repurchase. The components of our long-term debt are as follows: October 2, December 31, (MILLIONS OF DOLLARS) 2016 2015 1.150% 2013 senior notes due 2016 $ — $ 400 1.875% 2013 senior notes due 2018 750 750 3.450% 2015 senior notes due 2020 500 500 5.100% bank loan due 2021 1 — 3.250% 2013 senior notes due 2023 1,350 1,350 4.500% 2015 senior notes due 2025 750 750 4.700% 2013 senior notes due 2043 1,150 1,150 4,501 4,900 Unamortized debt discount / debt issuance costs (34 ) (37 ) Less current portion of long-term debt — (400 ) Long-term debt $ 4,467 $ 4,463 The fair value of our long-term debt, including the current portion of long-term debt, was $4,760 million and $4,759 million as of October 2, 2016 , and December 31, 2015 , respectively, and has been determined using a third-party matrix-pricing model that uses significant inputs derived from, or corroborated by, observable market data and Zoetis’ credit rating (Level 2 inputs). The principal amount of long-term debt outstanding, as of October 2, 2016 , matures in the following years: After (MILLIONS OF DOLLARS) 2017 2018 2019 2020 2020 Total Maturities $ — $ 750 $ — $ 500 $ 3,251 $ 4,501 Interest Expense Interest expense, net of capitalized interest, was $ 41 million and $125 million for the three and nine months ended October 2, 2016 , respectively, and $29 million and $86 million for the three and nine months ended September 27, 2015 , respectively. Capitalized interest was $1 million and $ 2 million for the three and nine months ended October 2, 2016 , and $1 million and $3 million for the three and nine months ended September 27, 2015 , respectively. B. Derivative Financial Instruments Foreign Exchange 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 derivative financial instruments. These financial instruments serve to protect net income against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions. The aggregate notional amount of foreign exchange derivative financial instruments offsetting foreign currency exposures was $1.2 billion and $1.4 billion , as of October 2, 2016 , and December 31, 2015 , respectively. The derivative financial instruments primarily offset exposures in the Australian dollar, Brazilian real, Canadian dollar, euro, Japanese Yen, and U.K. pound. The vast majority of the foreign exchange derivative financial instruments mature within 60 days and all mature within 180 days. All derivative contracts used to manage foreign currency risk are measured at fair value and are reported as assets or liabilities on the condensed consolidated balance sheet. The company has not designated the foreign currency forward-exchange contracts as hedging instruments. We recognize the gains and losses on forward-exchange contracts 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. Interest Rate Risk The company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rates and to reduce its overall cost of borrowing. In anticipation of issuing fixed-rate debt, we may use forward-starting interest rate swaps that are designated as cash flow hedges to hedge against changes in interest rates that could impact expected future issuances of debt. To the extent these hedges of cash flows related to anticipated debt are effective, any unrealized gains or losses on the forward-starting interest rate swaps are reported in Accumulated other comprehensive loss and are recognized in income over the life of the future fixed-rate notes. When the company discontinues hedge accounting because it is no longer probable that an anticipated transaction will occur within the originally expected period of execution, or within an additional two-month period thereafter, changes to fair value accumulated in other comprehensive income are recognized immediately in earnings. In the first nine months of 2016, we entered into interest rate swaps with an aggregate notional value of $250 million , having a term of ten years and an effective date and mandatory termination date of December 2017. We designated these swaps as cash flow hedges against interest rate exposure related principally to the anticipated future issuance of fixed-rate debt to be used primarily to refinance our 1.875% 2013 senior note due in 2018. Fair Value of Derivative Instruments The classification and fair values of derivative instruments are as follows: Fair Value of Derivatives October 2, December 31, (MILLIONS OF DOLLARS) Balance Sheet Location 2016 2015 Derivatives Not Designated as Hedging Instruments Foreign currency forward-exchange contracts Other current assets $ 4 $ 8 Foreign currency forward-exchange contracts Other current liabilities (18 ) (10 ) Total derivatives not designated as hedging instruments (14 ) (2 ) Derivatives Designated as Hedging Instruments: Interest rate swap contracts Other current liabilities (4 ) — Total derivatives designated as hedging instruments (4 ) — Total derivatives $ (18 ) $ (2 ) We use a market approach in valuing financial instruments on a recurring basis. Our derivative financial instruments are measured at fair value on a recurring basis using Level 2 inputs in the calculation of fair value. The amounts of net gains/(losses) on derivative instruments not designated as hedging instruments, recorded in Other (income)/deductions , are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Foreign currency forward-exchange contracts $ (25 ) $ 18 $ (29 ) $ 24 These amounts were substantially offset in Other (income)/deductions—net by the effect of changing exchange rates on the underlying foreign currency exposures. The amounts of net gains/(losses) on derivative instruments designated as cash flow hedges, recorded, net of tax, in Accumulated other comprehensive loss , are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Interest rate swap contracts $ 1 $ (3 ) $ (2 ) $ (3 )

Inventories

Inventories	9 Months Ended
	Oct. 02, 2016
Inventory Disclosure [Abstract]
Inventories	Inventories The components of inventory are as follows: October 2, December 31, (MILLIONS OF DOLLARS) 2016 2015 Finished goods $ 774 $ 758 Work-in-process 562 384 Raw materials and supplies 227 325 Inventories $ 1,563 $ 1,467

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	9 Months Ended
	Oct. 02, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets A. Goodwill The components of, and changes in, the carrying amount of goodwill are as follows: (MILLIONS OF DOLLARS) U.S. International Total Balance, December 31, 2015 $ 665 $ 790 $ 1,455 Additions / Adjustments (a) (4 ) 20 16 Other (b) — 26 26 Balance, October 2, 2016 $ 661 $ 836 $ 1,497 (a) Primarily includes a $16 million purchase price allocation associated with the acquisition of a veterinary diagnostics business in Denmark and a $12 million purchase price allocation associated with the acquisition of a livestock business in South America, offset by a $13 million reduction in the acquisition date fair value of goodwill associated with the acquisition of certain assets of Abbott Animal Health. See Note 4A. Acquisitions and Divestitures: Acquisitions. (b) Includes adjustments for foreign currency translation. The gross goodwill balance was $2,033 million and $1,991 million as of October 2, 2016 , and December 31, 2015 , respectively. Accumulated goodwill impairment losses were $536 million as of October 2, 2016 , and December 31, 2015 . B. Other Intangible Assets The components of identifiable intangible assets are as follows: As of October 2, 2016 As of December 31, 2015 Identifiable Identifiable Gross Intangible Assets Gross Intangible Assets Carrying Accumulated Less Accumulated Carrying Accumulated Less Accumulated (MILLIONS OF DOLLARS) Amount Amortization Amortization Amount Amortization Amortization Finite-lived intangible assets: Developed technology rights (a) $ 1,083 $ (330 ) $ 753 $ 1,010 $ (274 ) $ 736 Brands 213 (130 ) 83 212 (121 ) 91 Trademarks and trade names 63 (45 ) 18 63 (44 ) 19 Other (a) 231 (127 ) 104 214 (118 ) 96 Total finite-lived intangible assets 1,590 (632 ) 958 1,499 (557 ) 942 Indefinite-lived intangible assets: Brands 36 — 36 36 — 36 Trademarks and trade names 67 — 67 66 — 66 In-process research and development (b) 214 — 214 138 — 138 Product rights 7 — 7 8 — 8 Total indefinite-lived intangible assets 324 — 324 248 — 248 Identifiable intangible assets $ 1,914 $ (632 ) $ 1,282 $ 1,747 $ (557 ) $ 1,190 (a) Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016, the acquisition of intangible assets associated with the purchase of a livestock business in South America in the first quarter of 2016 and an increase in the acquisition date fair value of intangible assets associated with the acquisition of certain assets of Abbott Animal Health, as well as the impact of foreign exchange. See Note 4A. Acquisitions and Divestitures: Acquisitions. (b) Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016. C. Amortization Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as it benefits multiple business functions. Amortization expense related to finite-lived acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, general and administrative expenses or Research and development expenses , as appropriate. Total amortization expense for finite-lived intangible assets was $24 million and $72 million for the three and nine months ended October 2, 2016 , respectively, and $16 million and $47 million for the three and nine months ended September 27, 2015 , respectively.

Benefit Plans

Benefit Plans	9 Months Ended
	Oct. 02, 2016
Compensation and Retirement Disclosure [Abstract]
Benefit Plans	Benefit Plans Our employees ceased to participate in the Pfizer, Inc. U.S. qualified defined benefit plans and the U.S. retiree medical plan effective December 31, 2012, and liabilities associated with our employees under these plans were retained by Pfizer. Pfizer is continuing 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. Pension and postretirement benefit expense associated with the extended service for certain employees in the U.S. plans totaled approximately $2 million in each three month period ended October 2, 2016 , and September 27, 2015 , and $5 million in each nine month period ended October 2, 2016 , and September 27, 2015 . The following table provides the net periodic benefit cost associated with our international defined benefit pension plans: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Service cost $ 3 $ 2 $ 7 $ 6 Interest cost — 1 2 3 Expected return on plan assets (1 ) (1 ) (2 ) (2 ) Amortization of net actuarial loss 1 — 1 1 Curtailment gain — 1 (1 ) 1 Net periodic benefit cost $ 3 $ 3 $ 7 $ 9 Total company contributions to the international pension plans were $1 million and $7 million for the three and nine months ended October 2, 2016 , and $3 million and $6 million for the three and nine months ended September 27, 2015 , respectively. We expect to contribute a total of approximately $9 million to these plans in 2016.

Share-Based Payments

Share-Based Payments	9 Months Ended
	Oct. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Payments	Share-Based Payments The company may grant a variety of share-based payments under the Zoetis 2013 Equity and Incentive Plan (the Equity Plan) to 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. The components of share-based compensation expense are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Stock options / stock appreciation rights $ 3 $ 3 $ 8 $ 14 RSUs / DSUs 5 6 17 15 PSUs 1 1 3 2 Share-based compensation expense—total (a)(b) $ 9 $ 10 $ 28 $ 31 (a) For the nine months ended October 2, 2016 , we capitalized $1 million of share-based compensation expense to inventory; for the three months ended October 2, 2016 , amounts capitalized to inventory were insignificant. For the three and nine months ended September 27, 2015 , we capitalized $1 million of share-based compensation expense to inventory. (b) Includes additional share-based compensation expense as a result of accelerated vesting of the outstanding stock options and the settlement, on a pro-rata basis, of other equity awards of terminated employees in connection with our operational efficiency initiative and supply network strategy for the nine months ended October 2, 2016 , of approximately $1 million , which is included in Restructuring charges/(benefits) and certain acquisition-related costs . For the three months ended October 2, 2016 , and the three and nine months ended September 27, 2015 , the amounts were insignificant. During the nine months ended October 2, 2016 , the company granted 930,441 stock options with a weighted-average exercise price of $42.32 per stock option and a weighted-average fair value of $11.29 per option. 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. The weighted-average fair value was estimated based on the following assumptions: risk-free interest rate of 1.55% ; expected dividend yield of 0.89% ; expected stock price volatility of 26.75% ; and expected term of 6.5 years. In general, stock options vest after P3Y years of continuous service and the values determined through this fair-value based method generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate. During the nine months ended October 2, 2016 , the company granted 732,671 RSUs with a weighted-average grant date fair value of $ 42.10 per RSU. RSUs are accounted for using a fair-value-based method that utilizes the closing price of Zoetis common stock on the date of grant. In general, RSUs 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 into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate. During the nine months ended October 2, 2016 , the company granted 198,445 PSUs with a weighted-average grant date fair value of $50.20 per PSU. 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 (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 23.8% and 25.2% , respectively. 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 are settled in shares of the company’s common stock. PSU values are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Oct. 02, 2016
Equity [Abstract]
Stockholders' Equity	Stockholders' Equity Zoetis is authorized to issue 6 billion shares of common stock and 1 billion shares of preferred stock. In November 2014, the company's Board of Directors authorized a $500 million share repurchase program. Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs. As of October 2, 2016 , there was approximately $75 million remaining under this authorization. Changes in common shares and treasury stock were as follows: (MILLIONS) Common Shares Issued (a) Treasury Stock (a) Balance, December 31, 2014 501.34 0.02 Share-based compensation (b) 0.23 0.04 Share repurchase program — 3.19 Balance, September 27, 2015 501.57 3.24 Balance, December 31, 2015 501.81 4.41 Share-based compensation (b) 0.08 (1.62 ) Share repurchase program — 4.86 Balance, October 2, 2016 501.89 7.65 (a) Shares may not add due to rounding. (b) Includes the issuance of shares of common stock and, beginning in the first quarter of 2016, the reissuance of shares from treasury stock in connection with the vesting of employee share-based awards. Treasury stock also includes the reacquisition of shares associated with the vesting of employee share-based awards to satisfy tax withholding requirements. For additional information regarding share-based compensation, see Note 12. Share-Based Payments . Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, are as follows: Currency Translation Derivatives Adjustment Benefit Plans Accumulated Other Net Unrealized Net Unrealized Actuarial Comprehensive (MILLIONS OF DOLLARS) Gains/(Losses) Gains/(Losses) Gains/(Losses) Loss Balance, December 31, 2015 $ (2 ) $ (604 ) $ (16 ) $ (622 ) Other comprehensive income (loss), net of tax (2 ) 114 2 114 Divestiture of noncontrolling interest (a) — 2 — 2 Balance, October 2, 2016 $ (4 ) $ (488 ) $ (14 ) $ (506 ) (a) Reflects the divestiture of our share of our Taiwan joint venture. See Note 4B. Acquisitions and Divestitures: Divestitures.

Earnings per Share

Earnings per Share	9 Months Ended
	Oct. 02, 2016
Earnings Per Share [Abstract]
Earnings per Share	Earnings per Share The following table presents the calculation of basic and diluted earnings per share: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA) 2016 2015 2016 2015 Numerator Net income before allocation to noncontrolling interests $ 237 $ 190 $ 665 $ 319 Less: net income (loss) attributable to noncontrolling interests (2 ) 1 (2 ) 2 Net income attributable to Zoetis Inc. $ 239 $ 189 $ 667 $ 317 Denominator Weighted-average common shares outstanding 495.2 499.2 496.3 500.2 Common stock equivalents: stock options, RSUs, PSUs and DSUs 2.7 2.5 2.5 2.3 Weighted-average common and potential dilutive shares outstanding 497.9 501.7 498.8 502.5 Earnings per share attributable to Zoetis Inc. stockholders—basic $ 0.48 $ 0.38 $ 1.34 $ 0.63 Earnings per share attributable to Zoetis Inc. stockholders—diluted $ 0.48 $ 0.38 $ 1.34 $ 0.63 There were approximately 1 million stock options outstanding for the each of the three and nine months ended October 2, 2016 , and September 27, 2015 , under the company’s Equity Plan that were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Oct. 02, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	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 7. Income Taxes . 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 United States 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. PregSure ® We have received in total approximately 255 claims in Europe and New Zealand seeking damages related to calves claimed to have died of Bovine Neonatal Pancytopenia (BNP) on farms where PregSure BVD, a vaccine against Bovine Virus Diarrhea (BVD), was used. BNP is a rare syndrome that first emerged in cattle in Europe in 2006. Studies of BNP suggest a potential association between the administration of PregSure and the development of BNP, although no causal connection has been established. The cause of BNP is not known. In 2010 , we voluntarily stopped sales of PregSure BVD in Europe, and recalled the product at wholesalers while investigations into possible causes of BNP continued. In 2011 , after incidences of BNP were reported in New Zealand, we voluntarily withdrew the marketing authorization for PregSure throughout the world. We have settled approximately 168 of these claims for amounts that are not material individually or in the aggregate. Investigations into possible causes of BNP continue and these settlements may not be representative of any future claims resolutions. Ulianopolis, Brazil In February 2012, the Municipality of Ulianopolis (State of Para, Brazil) filed a complaint against Fort Dodge Saúde Animal Ltda. (FDSAL) 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 entered into a cooperation agreement with the prosecutor, pursuant to which a third-party consultant will conduct a limited environmental assessment of the site . Lascadoil Contamination in Animal Feed An investigation by the U.S. Food and Drug Administration (FDA) and the Michigan Department of Agriculture is ongoing to determine how lascadoil, oil for industrial use, made its way into the feed supply of certain turkey and hog feed mills in Michigan. 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. While it remains an open question as to how the lascadoil made its way into the animal feed, the allegations are that lascadoil intended to be sold for reuse as biofuel was inadvertently sold to producers of soy oil, who in turn, unknowingly sold the contaminated soy oil to fat recycling vendors, who then sold the contaminated soy oil to feed mills for use in animal feed. Indeed, related to the FDA investigation, Shur-Green Farms LLC, a producer of soy oil, recalled certain batches of soy oil allegedly contaminated with lascadoil on October 13, 2014. During the course of its investigation, the FDA identified the process used to manufacture Zoetis’ Avatec® (lasalocid sodium) and Bovatec® (lasalocid sodium) products as one possible source of the lascadoil, since lascadoil contains small amounts of lasalocid, the active ingredient found in both products. Zoetis has historically sold any and all industrial lascadoil byproduct to an environmental company specializing in waste disposal. The environmental company is contractually obligated to incinerate the lascadoil or resell it for use in biofuel. Under the terms of the agreement, the environmental company is expressly prohibited from reselling the lascadoil to be used 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, 2015, 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 for purposes of discovery and disposition. We believe we have strong arguments against all claims. Other Matters The European Commission published a decision on alleged competition law infringements by several human health pharmaceutical companies on June 19, 2013. One of the involved legal entities is Alpharma LLC (previously having the name Zoetis Products LLC). Alpharma LLC's involvement is solely related to its human health activities prior to Pfizer's acquisition of King/Alpharma. Zoetis paid a fine in the amount of Euro 11 million (approximately $ 14 million ) and was reimbursed by Pfizer in accordance with the Global Separation Agreement between Pfizer and Zoetis, which provides that Pfizer is obligated to indemnify Zoetis for any liabilities arising out of claims not related to its animal health assets. We filed an appeal of the decision on September 6, 2013 to the General Court of the European Union. On September 8, 2016, the General Court upheld the decision of the European Commission. We have until November 25, 2016, in which to file a further appeal to the Court of Justice of the European Union. In July 2014, we reached a commercial settlement with several large poultry customers in Mexico associated with specific lots of a Zoetis poultry vaccine. Although there have been no quality or efficacy issues with the manufacturing of this vaccine, certain shipments from several lots in Mexico may have experienced an issue in storage with a third party in Mexico that could have impacted their efficacy. We issued a recall of these lots in July 2014 and the product is currently unavailable in Mexico. We recorded a $13 million charge in Other (income)/deductions—net in the second quarter of 2014, and we do not expect any significant additional charges related to this issue. In the third quarter of 2014, we were notified of an insurance recovery of $1 million and have recorded this in Other (income)/deductions—net . On March 30, 2015, we were served with a complaint filed in the U.S. District Court for the Eastern District of Pennsylvania by two additional customers in Mexico, alleging damages suffered as a result of the use of poultry vaccines obtained from the recalled lots discussed above. We have moved to dismiss the complaint in its entirety on grounds that the complaint fails to properly state a claim on which relief can be granted. On September 16, 2015, the Court granted the motion in part and denied it in part, dismissing all claims arising out of tort or fraud. As a result, the only claims remaining in the lawsuit are based in contract, namely breach of express warranty, breach of certain implied warranties, and unjust enrichment. 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 October 2, 2016 , recorded amounts for the estimated fair value of these indemnifications were not significant.

Segment and Other Revenue Infor

Segment and Other Revenue Information	9 Months Ended
	Oct. 02, 2016
Segment Reporting [Abstract]
Segment and Other Revenue Information	Segment and Other Revenue Information A. 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 vaccines, parasiticides, anti-infectives, medicated feed additives and other pharmaceuticals, for both livestock and companion animal customers. Operating Segments Our operating segments are the United States 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 Client Supply Services (CSS) contract manufacturing results, as well as 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 , which is responsible for platform functions such as business technology, facilities, legal, finance, human resources, business development, 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 certain costs related to becoming an independent public company, 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 business technology and 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 $ 7.7 billion at October 2, 2016 , and $7.9 billion at December 31, 2015 . Selected Statement of Income Information Earnings Depreciation and Amortization (a) October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Three months ended U.S. Revenue $ 640 $ 632 Cost of Sales 137 147 Gross Profit 503 485 Gross Margin 78.6 % 76.7 % Operating Expenses 101 100 Other (income)/deductions — (1 ) U.S. Earnings 402 386 $ 7 $ 5 International Revenue (b) 585 569 Cost of Sales 201 209 Gross Profit 384 360 Gross Margin 65.6 % 63.3 % Operating Expenses 128 137 Other (income)/deductions — 4 International Earnings 256 219 11 10 Total operating segments 658 605 18 15 Other business activities (71 ) (73 ) 7 6 Reconciling Items: Corporate (159 ) (138 ) 11 9 Purchase accounting adjustments (25 ) (13 ) 21 14 Acquisition-related costs — (6 ) — — Certain significant items (c) (16 ) (46 ) 2 1 Other unallocated (54 ) (56 ) 1 1 Total Earnings (d) $ 333 $ 273 $ 60 $ 46 Earnings Depreciation and Amortization (a) October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Nine months ended U.S. Revenue $ 1,816 $ 1,692 Cost of Sales 402 399 Gross Profit 1,414 1,293 Gross Margin 77.9 % 76.4 % Operating Expenses 293 274 Other (income)/deductions — (1 ) U.S. Earnings 1,121 1,020 $ 20 $ 18 International Revenue (b) 1,754 1,762 Cost of Sales 598 638 Gross Profit 1,156 1,124 Gross Margin 65.9 % 63.8 % Operating Expenses 361 423 Other (income)/deductions 3 10 International Earnings 792 691 33 34 Total operating segments 1,913 1,711 53 52 Other business activities (219 ) (208 ) 19 19 Reconciling Items: Corporate (499 ) (392 ) 33 28 Purchase accounting adjustments (79 ) (41 ) 64 39 Acquisition-related costs (3 ) (11 ) — — Certain significant items (c) 1 (406 ) 5 3 Other unallocated (117 ) (177 ) 3 3 Total Earnings (d) $ 997 $ 476 $ 177 $ 144 (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 $157 million and $469 million for the three and nine months ended October 2, 2016 , respectively, and $139 million and $425 million for the three and nine months ended September 27, 2015 , respectively. (c) For the three months ended October 2, 2016 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $1 million ; (ii) a $3 million increase in in certain employee termination accruals, exit costs of $1 million , accelerated depreciation of $2 million , inventory write-offs of $1 million , and consulting fees of $4 million related to our operational efficiency initiative, supply network strategy, and other restructuring activities, (iii) an impairment of finite-lived trademarks of $1 million related to a canine pain management product; and (iv) charges of $3 million associated with changes to our operating model. Stand-up costs include certain nonrecurring costs related to becoming an independent public company, such as the creation of standalone systems and infrastructure, site separation, new branding (including changes to the manufacturing process for required new packaging), and certain legal registration and patent assignment costs. For the nine months ended October 2, 2016 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $18 million ; (ii) a net gain of $27 million related to divestitures as a result of our operational efficiency initiative; (iii) a $ 20 million net reduction in certain employee termination accruals, partially offset by exit costs of $3 million , accelerated depreciation of $5 million , inventory write-offs of $1 million , and consulting fees of $14 million related to our operational efficiency initiative, supply network strategy and other restructuring activities; (iv) an impairment of finite-lived trademarks of $1 million , and (v) charges of $4 million associated with changes to our operating model. For the three months ended September 27, 2015 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $22 million and (ii) charges related to our operational efficiency initiative and supply network strategy of $24 million . For the nine months ended September 27, 2015 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $84 million ; (ii) charges related to our operational efficiency initiative and supply network strategy of $317 million ; (iii) an impairment of IPR&D assets of $2 million related to the termination of a canine oncology project; and (iv) charges due to unusual investor-related activities of $3 million . (d) Defined as income before provision for taxes on income. B. Other Revenue Information Revenue by Species Species revenue are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Livestock: Cattle $ 432 $ 432 $ 1,175 $ 1,201 Swine 145 163 441 495 Poultry 111 132 351 399 Fish 25 — 64 — Other 22 23 60 60 735 750 2,091 2,155 Companion Animal: Horses 33 35 108 117 Dogs and Cats 457 416 1,371 1,182 490 451 1,479 1,299 Contract Manufacturing 16 13 41 37 Total revenue $ 1,241 $ 1,214 $ 3,611 $ 3,491 Revenue by Major Product Category Revenue by major product category are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Anti-infectives $ 350 $ 348 $ 913 $ 938 Vaccines 324 301 935 858 Parasiticides 158 158 492 504 Medicated feed additives 99 124 365 364 Other pharmaceuticals 255 226 724 650 Other non-pharmaceuticals 39 44 141 140 Contract manufacturing 16 13 41 37 Total revenue $ 1,241 $ 1,214 $ 3,611 $ 3,491

Significant Accounting Polici25

Significant Accounting Policies (Policies)	9 Months Ended
	Oct. 02, 2016
Accounting Policies [Abstract]
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements were prepared following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (U.S. GAAP) can be condensed or omitted. Balance sheet amounts and operating results for subsidiaries operating outside the United States are as of and for the three and nine-month periods ended August 28, 2016 , and August 23, 2015 .
Fiscal Period	We follow a 13-week quarterly accounting cycle pursuant to which the first three quarters end on a Sunday and the fiscal year always ends on December 31 for our operations in the United States and on November 30 for subsidiaries operating outside the United States. As a result of this convention, the first quarter of fiscal 2016 had six additional days and the fourth quarter of fiscal 2016 will have five less days compared with the respective quarters of fiscal 2015. Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year.
New Accounting Standards	New Accounting Standards In October 2016, the Financial Accounting Standards Board (FASB) issued an accounting standards update that will require the recognition of the income tax consequences of an intra-entity asset transfer, other than inventory, when the transfer occurs as opposed to when the asset is sold to an outside third party. The provisions of the new standard are effective beginning January 1, 2018, for annual and interim reporting periods. Early adoption is permitted beginning on January 1, 2017. The new standard requires a modified retrospective adoption approach, as of the beginning of the period of adoption. We are continuing to assess the potential impact that adopting this new standard will have on our consolidated financial statements. In March 2016, the FASB issued an accounting standards update which simplifies the accounting for employee share-based payments. The new standard requires the immediate recognition of all excess tax benefits and deficiencies in the income statement, and requires classification of excess tax benefits as an operating activity as opposed to a financing activity in the statements of cash flows. The standard also clarifies that all cash payments made to taxing authorities on the employees' behalf for shares withheld should be presented as financing activities on the statements of cash flows and provides for a policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The provisions of the new standard are effective beginning January 1, 2017, and early adoption is permitted if all amendments are adopted in the same period. We elected to early adopt the new standard effective January 1, 2016. Excess tax benefits of $7 million generated during the first nine months of 2016 are reflected as a component of Provision for taxes on income as presented in the condensed consolidated statements of income. We have elected to apply the change in cash flow classification for excess tax benefits on a prospective basis. Cash payments made to taxing authorities on the behalf of company employees are reflected as a financing outflow in the condensed consolidated statements of cash flows, consistent with prior years. We continue to include the impact of estimated forfeitures when determining share-based compensation expense. In February 2016, the FASB issued an accounting standards update which requires lessees to recognize most leases on the balance sheet with a corresponding right of use asset. Leases will be classified as financing or operating which will drive the expense recognition pattern. For lessees, the income statement presentation and expense recognition pattern for financing and operating leases is similar to the current model for capital and operating leases, respectively. Accounting for lessors remains largely unchanged. Companies may elect to exclude short-term leases. The update also requires additional disclosures that will better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The provisions of the new standard are effective beginning January 1, 2019, for annual and interim reporting periods. Early adoption is permitted beginning on January 1, 2017. The new standard requires a modified retrospective adoption approach, at the beginning of the earliest comparative period presented in the financial statements. We continue to assess the potential impact that adopting this new guidance will have on our consolidated financial statements. In July 2015, the FASB issued an accounting standards update to simplify the measurement of inventory by requiring that inventory be measured at the lower of cost or net realizable value, rather than at the lower of cost or market, with market being defined as either replacement cost, net realizable value or net realizable value less a normal profit margin. The provisions of the new standard are effective beginning January 1, 2017, for annual and interim reporting periods. The guidance will be adopted prospectively and early adoption is permitted. We plan to adopt this guidance as of January 1, 2017, the required effective date, and do not expect this guidance to have a significant impact on our consolidated financial statements. In February 2015, the FASB issued an accounting standards update that provides revised guidance on whether to consolidate certain legal entities, such as limited partnerships, limited liability corporations and securitization structures. We adopted this guidance effective January 1, 2016. This guidance did not have a significant impact on our consolidated financial statements. In May 2014, the FASB issued an accounting standards update that outlines a new, single comprehensive model for companies to use in accounting for revenue arising from contracts with customers. This update supersedes most current revenue recognition guidance under U.S. GAAP. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes a five-step model for determining how, when and how much revenue should be recognized. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We plan to adopt this guidance as of January 1, 2018, the required effective date. The new standard allows for either full retrospective or modified retrospective transition upon adoption. We continue to assess the transition method we will elect for adoption as well as the potential impact that adopting this new guidance will have on our consolidated financial statements.
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 derivative financial instruments. These financial instruments serve to protect net income against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions. The company may use interest rate swap contracts on certain investing and borrowing transactions to manage its net exposure to interest rates and to reduce its overall cost of borrowing. In anticipation of issuing fixed-rate debt, we may use forward-starting interest rate swaps that are designated as cash flow hedges to hedge against changes in interest rates that could impact expected future issuances of debt. To the extent these hedges of cash flows related to anticipated debt are effective, any unrealized gains or losses on the forward-starting interest rate swaps are reported in Accumulated other comprehensive loss and are recognized in income over the life of the future fixed-rate notes. When the company discontinues hedge accounting because it is no longer probable that an anticipated transaction will occur within the originally expected period of execution, or within an additional two-month period thereafter, changes to fair value accumulated in other comprehensive income are recognized immediately in earnings. All derivative contracts used to manage foreign currency risk are measured at fair value and are reported as assets or liabilities on the condensed consolidated balance sheet. The company has not designated the foreign currency forward-exchange contracts as hedging instruments. We recognize the gains and losses on forward-exchange contracts 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.
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 vaccines, parasiticides, anti-infectives, medicated feed additives and other pharmaceuticals, for both livestock and companion animal customers. Operating Segments Our operating segments are the United States 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 Client Supply Services (CSS) contract manufacturing results, as well as 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 , which is responsible for platform functions such as business technology, facilities, legal, finance, human resources, business development, 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 certain costs related to becoming an independent public company, 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 business technology and 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.

Acquisitions and Divestitures (

Acquisitions and Divestitures (Tables)	9 Months Ended
	Oct. 02, 2016
Business Combinations [Abstract]
Schedule of Business Acquisitions, by Acquisition	The transaction was accounted for as a business combination, with the assets acquired and liabilities assumed measured at their respective acquisition date fair values as summarized below: (MILLIONS OF DOLLARS) Cash and cash equivalents $ 16 Accounts receivable (a) 21 Inventories (b) 42 Other current assets 2 Property, plant and equipment 11 Intangible assets (c) 550 Accounts payable (4 ) Accrued expenses (d) (38 ) Accrued compensation and related items (4 ) Long-term debt (d) (89 ) Noncurrent deferred tax liabilities (e) (139 ) Other non-current liabilities (2 ) Total net assets acquired 366 Goodwill (f) 302 Total consideration $ 668 (a) Accounts receivable were measured at fair value as of the acquisition date and are substantially comprised of gross trade receivables of $21 million , $1 million of which is expected to be uncollectible. (b) Inventories recorded as of the acquisition date reflect fair value adjustments of $17 million which relates primarily to finished goods. The fair value was calculated based on estimated selling profit margin. (c) The acquisition date fair value of intangible assets acquired was determined using the income approach and consists of the following: $160 million related to currently marketed vaccine products, $30 million related to currently marketed therapeutics, $80 million related to customer relationships and $280 million related to in-process research and development (IPR&D). The most significant IPR&D project acquired, with an acquisition date fair value of $150 million , relates to the salmon rickettsial syndrome (SRS) vaccine. The vaccine was commercially launched, subsequent to the acquisition, during November 2015. Other significant acquired IPR&D projects relate to a vaccine for pancreatic disease, “PD” and Alphaflux, a therapeutic drug for the treatment of sea lice and vaccine technology for new species including Tilapia and Pangasius, were assigned acquisition date fair values of $50 million , $40 million , and $40 million , respectively. Vaccine developed technology and customer relationships will be amortized over a 15 year useful life while therapeutic developed technology will be amortized over 10 years. (d) Pharmaq callable bonds and derivative contracts were recorded at acquisition date fair value and settled immediately following the closing. (e) The Pharmaq acquisition was structured as a stock purchase therefore we assumed the historical tax bases of its assets and liabilities. We also established net deferred tax assets and liabilities associated with the fair value adjustments recorded as part of the opening balance sheet. The components of the Pharmaq net deferred tax liability are included within amounts reported in Note 7. Income Taxes . (f) Goodwill of $302 million is the excess of consideration transferred over the value of net assets acquired and was allocated to our existing reportable segments and is primarily attributable to corporate synergies related to platform functions. The primary strategic purpose of the acquisition was to enhance the company’s existing product portfolio by enabling Zoetis to further expand into aquaculture. The goodwill recorded is not deductible for tax purposes.

Restructuring Charges and Oth27

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables)	9 Months Ended
	Oct. 02, 2016
Restructuring and Related Activities [Abstract]
Schedule of Restructuring and Related Costs	Restructuring charges/(benefits) related to these initiatives are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Operational efficiency initiative: Employee termination costs (a) $ 3 $ — $ (26 ) $ 228 Asset impairment — 8 — 33 Exit costs 1 — 4 — 4 8 (22 ) 261 Supply network strategy: Employee termination costs — — 6 9 Asset impairment charges — — — 1 — — 6 10 Total restructuring charges/(benefits) related to the operational efficiency initiative and supply network strategy 4 8 (16 ) 271 Other operational efficiency initiative charges Cost of sales: Inventory write-offs 1 5 1 5 Selling, general and administrative expenses: Accelerated depreciation — — 1 — Consulting fees 4 8 11 28 Other (income)/deductions: Net gain on sale of assets (b) — — (27 ) — Total other operational efficiency initiative charges 5 13 (14 ) 33 Other supply network strategy charges Cost of sales: Accelerated depreciation 2 — 4 — Consulting fees — 3 3 13 Total other supply network strategy charges 2 3 7 13 Total costs associated with the operational efficiency initiative and supply network strategy $ 11 $ 24 $ (23 ) $ 317 (a) For the nine months ended October 2, 2016 , includes a reduction in employee termination accruals primarily as a result of higher than expected voluntary attrition rates experienced in the first half of 2016. (b) For the nine months ended October 2, 2016 , represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of our Taiwan joint venture, as part of our operational efficiency initiative. The components of, and changes in, our restructuring accruals are as follows: Employee Termination Exit (MILLIONS OF DOLLARS) Costs Costs Accrual Balance, December 31, 2015 (a) $ 221 $ 1 $ 222 Provision (20 ) 3 (17 ) Utilization and other (b) (99 ) (2 ) (101 ) Balance, October 2, 2016 (a) $ 102 $ 2 $ 104 (a) At October 2, 2016 , and December 31, 2015 , included in Accrued expenses ( $70 million and $ 162 million , respectively) and Other noncurrent liabilities ( $34 million and $ 60 million , respectively). (b) Includes adjustments for foreign currency translation. The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Restructuring charges/(benefits) and certain acquisition-related costs: Integration costs (a) $ — $ 5 $ 2 $ 9 Restructuring charges/(benefits) (b) : Employee termination costs 3 — (20 ) 237 Asset impairment charges — 8 — 34 Exit costs 1 — 3 — Total Restructuring charges/(benefits) and certain acquisition-related costs $ 4 $ 13 $ (15 ) $ 280 (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) The restructuring charges/(benefits) for the three and nine months ended October 2, 2016 , and September 27, 2015 , primarily relate to our operational efficiency initiative and supply network strategy. The restructuring charges/(benefits) for the three and nine months ended October 2, 2016 , are associated with the following: U.S. ( $0 million and $2 million benefit, respectively), International ( $1 million benefit and $16 million benefit, respectively) and Manufacturing/research/corporate ( $5 million and $1 million , respectively). The restructuring charges for the three and nine months ended September 27, 2015 , are associated with the following: U.S. ( $3 million benefit and $27 million , respectively), International ( $2 million and $117 million , respectively) and Manufacturing/research/corporate ( $9 million and $127 million , respectively).

Other (Income)_Deductions - N28

Other (Income)/Deductions - Net (Tables)	9 Months Ended
	Oct. 02, 2016
Other Income and Expenses [Abstract]
Components of Other (Income)/Deductions—Net	The components of Other (income)/deductions—net are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Royalty-related income $ (8 ) $ (5 ) $ (20 ) $ (19 ) Identifiable intangible asset impairment charges (a) 1 — 1 2 Net gain on sale of assets (b) — — (27 ) — Foreign currency loss (c) 5 6 22 18 Other, net (d) (1 ) (3 ) (5 ) (1 ) Other (income)/deductions—net $ (3 ) $ (2 ) $ (29 ) $ — (a) For the three and nine months ended October 2, 2016 , represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015 , represents an impairment of IPR&D assets related to the termination of a canine oncology project. (b) For the nine months ended October 2, 2016 , represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative. (c) Primarily driven by costs related to hedging and exposures to certain emerging market currencies. (d) For the nine months ended October 2, 2016 , primarily represents income associated with certain state business employment tax incentive credits. For the nine months ended September 27, 2015 , primarily represents inventory losses of $3 million sustained as a result of weather damage at storage facilities in Brazil and Australia, partially offset by interest income and other miscellaneous income.

Financial Instruments (Tables)

Financial Instruments (Tables)	9 Months Ended
	Oct. 02, 2016
Financial Instruments [Abstract]
Schedule of Long-term Debt Instruments	The components of our long-term debt are as follows: October 2, December 31, (MILLIONS OF DOLLARS) 2016 2015 1.150% 2013 senior notes due 2016 $ — $ 400 1.875% 2013 senior notes due 2018 750 750 3.450% 2015 senior notes due 2020 500 500 5.100% bank loan due 2021 1 — 3.250% 2013 senior notes due 2023 1,350 1,350 4.500% 2015 senior notes due 2025 750 750 4.700% 2013 senior notes due 2043 1,150 1,150 4,501 4,900 Unamortized debt discount / debt issuance costs (34 ) (37 ) Less current portion of long-term debt — (400 ) Long-term debt $ 4,467 $ 4,463
Schedule of Maturities of Long-term Debt	The principal amount of long-term debt outstanding, as of October 2, 2016 , matures in the following years: After (MILLIONS OF DOLLARS) 2017 2018 2019 2020 2020 Total Maturities $ — $ 750 $ — $ 500 $ 3,251 $ 4,501
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 October 2, December 31, (MILLIONS OF DOLLARS) Balance Sheet Location 2016 2015 Derivatives Not Designated as Hedging Instruments Foreign currency forward-exchange contracts Other current assets $ 4 $ 8 Foreign currency forward-exchange contracts Other current liabilities (18 ) (10 ) Total derivatives not designated as hedging instruments (14 ) (2 ) Derivatives Designated as Hedging Instruments: Interest rate swap contracts Other current liabilities (4 ) — Total derivatives designated as hedging instruments (4 ) — Total derivatives $ (18 ) $ (2 )
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location	The amounts of net gains/(losses) on derivative instruments not designated as hedging instruments, recorded in Other (income)/deductions , are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Foreign currency forward-exchange contracts $ (25 ) $ 18 $ (29 ) $ 24
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)	The amounts of net gains/(losses) on derivative instruments designated as cash flow hedges, recorded, net of tax, in Accumulated other comprehensive loss , are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Interest rate swap contracts $ 1 $ (3 ) $ (2 ) $ (3 )

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Oct. 02, 2016
Inventory Disclosure [Abstract]
Components of Inventory	The components of inventory are as follows: October 2, December 31, (MILLIONS OF DOLLARS) 2016 2015 Finished goods $ 774 $ 758 Work-in-process 562 384 Raw materials and supplies 227 325 Inventories $ 1,563 $ 1,467

Goodwill and Other Intangible31

Goodwill and Other Intangible Assets (Tables)	9 Months Ended
	Oct. 02, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Changes in the Carrying Amount of Goodwill	The components of, and changes in, the carrying amount of goodwill are as follows: (MILLIONS OF DOLLARS) U.S. International Total Balance, December 31, 2015 $ 665 $ 790 $ 1,455 Additions / Adjustments (a) (4 ) 20 16 Other (b) — 26 26 Balance, October 2, 2016 $ 661 $ 836 $ 1,497 (a) Primarily includes a $16 million purchase price allocation associated with the acquisition of a veterinary diagnostics business in Denmark and a $12 million purchase price allocation associated with the acquisition of a livestock business in South America, offset by a $13 million reduction in the acquisition date fair value of goodwill associated with the acquisition of certain assets of Abbott Animal Health. See Note 4A. Acquisitions and Divestitures: Acquisitions. (b) Includes adjustments for foreign currency translation.
Components of Identifiable Intangible Assets	The components of identifiable intangible assets are as follows: As of October 2, 2016 As of December 31, 2015 Identifiable Identifiable Gross Intangible Assets Gross Intangible Assets Carrying Accumulated Less Accumulated Carrying Accumulated Less Accumulated (MILLIONS OF DOLLARS) Amount Amortization Amortization Amount Amortization Amortization Finite-lived intangible assets: Developed technology rights (a) $ 1,083 $ (330 ) $ 753 $ 1,010 $ (274 ) $ 736 Brands 213 (130 ) 83 212 (121 ) 91 Trademarks and trade names 63 (45 ) 18 63 (44 ) 19 Other (a) 231 (127 ) 104 214 (118 ) 96 Total finite-lived intangible assets 1,590 (632 ) 958 1,499 (557 ) 942 Indefinite-lived intangible assets: Brands 36 — 36 36 — 36 Trademarks and trade names 67 — 67 66 — 66 In-process research and development (b) 214 — 214 138 — 138 Product rights 7 — 7 8 — 8 Total indefinite-lived intangible assets 324 — 324 248 — 248 Identifiable intangible assets $ 1,914 $ (632 ) $ 1,282 $ 1,747 $ (557 ) $ 1,190 (a) Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016, the acquisition of intangible assets associated with the purchase of a livestock business in South America in the first quarter of 2016 and an increase in the acquisition date fair value of intangible assets associated with the acquisition of certain assets of Abbott Animal Health, as well as the impact of foreign exchange. See Note 4A. Acquisitions and Divestitures: Acquisitions. (b) Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016.

Benefit Plans (Tables)

Benefit Plans (Tables)	9 Months Ended
	Oct. 02, 2016
Compensation and Retirement Disclosure [Abstract]
Schedule of Net Benefit Costs	The following table provides the net periodic benefit cost associated with our international defined benefit pension plans: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Service cost $ 3 $ 2 $ 7 $ 6 Interest cost — 1 2 3 Expected return on plan assets (1 ) (1 ) (2 ) (2 ) Amortization of net actuarial loss 1 — 1 1 Curtailment gain — 1 (1 ) 1 Net periodic benefit cost $ 3 $ 3 $ 7 $ 9

Share-Based Payments (Tables)

Share-Based Payments (Tables)	9 Months Ended
	Oct. 02, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Components of Share-based Compensation Expense	The components of share-based compensation expense are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Stock options / stock appreciation rights $ 3 $ 3 $ 8 $ 14 RSUs / DSUs 5 6 17 15 PSUs 1 1 3 2 Share-based compensation expense—total (a)(b) $ 9 $ 10 $ 28 $ 31 (a) For the nine months ended October 2, 2016 , we capitalized $1 million of share-based compensation expense to inventory; for the three months ended October 2, 2016 , amounts capitalized to inventory were insignificant. For the three and nine months ended September 27, 2015 , we capitalized $1 million of share-based compensation expense to inventory. (b) Includes additional share-based compensation expense as a result of accelerated vesting of the outstanding stock options and the settlement, on a pro-rata basis, of other equity awards of terminated employees in connection with our operational efficiency initiative and supply network strategy for the nine months ended October 2, 2016 , of approximately $1 million , which is included in Restructuring charges/(benefits) and certain acquisition-related costs . For the three months ended October 2, 2016 , and the three and nine months ended September 27, 2015 , the amounts were insignificant.

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Oct. 02, 2016
Equity [Abstract]
Changes in Common Shares and Treasury Stock	Changes in common shares and treasury stock were as follows: (MILLIONS) Common Shares Issued (a) Treasury Stock (a) Balance, December 31, 2014 501.34 0.02 Share-based compensation (b) 0.23 0.04 Share repurchase program — 3.19 Balance, September 27, 2015 501.57 3.24 Balance, December 31, 2015 501.81 4.41 Share-based compensation (b) 0.08 (1.62 ) Share repurchase program — 4.86 Balance, October 2, 2016 501.89 7.65 (a) Shares may not add due to rounding. (b) Includes the issuance of shares of common stock and, beginning in the first quarter of 2016, the reissuance of shares from treasury stock in connection with the vesting of employee share-based awards. Treasury stock also includes the reacquisition of shares associated with the vesting of employee share-based awards to satisfy tax withholding requirements. For additional information regarding share-based compensation, see Note 12. Share-Based Payments .
Changes, Net of Tax, in Accumulated Other Comprehensive Loss	Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, are as follows: Currency Translation Derivatives Adjustment Benefit Plans Accumulated Other Net Unrealized Net Unrealized Actuarial Comprehensive (MILLIONS OF DOLLARS) Gains/(Losses) Gains/(Losses) Gains/(Losses) Loss Balance, December 31, 2015 $ (2 ) $ (604 ) $ (16 ) $ (622 ) Other comprehensive income (loss), net of tax (2 ) 114 2 114 Divestiture of noncontrolling interest (a) — 2 — 2 Balance, October 2, 2016 $ (4 ) $ (488 ) $ (14 ) $ (506 ) (a) Reflects the divestiture of our share of our Taiwan joint venture. See Note 4B. Acquisitions and Divestitures: Divestitures.

Earnings per Share (Tables)

Earnings per Share (Tables)	9 Months Ended
	Oct. 02, 2016
Earnings Per Share [Abstract]
Basic and Diluted Earnings Per Share	The following table presents the calculation of basic and diluted earnings per share: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA) 2016 2015 2016 2015 Numerator Net income before allocation to noncontrolling interests $ 237 $ 190 $ 665 $ 319 Less: net income (loss) attributable to noncontrolling interests (2 ) 1 (2 ) 2 Net income attributable to Zoetis Inc. $ 239 $ 189 $ 667 $ 317 Denominator Weighted-average common shares outstanding 495.2 499.2 496.3 500.2 Common stock equivalents: stock options, RSUs, PSUs and DSUs 2.7 2.5 2.5 2.3 Weighted-average common and potential dilutive shares outstanding 497.9 501.7 498.8 502.5 Earnings per share attributable to Zoetis Inc. stockholders—basic $ 0.48 $ 0.38 $ 1.34 $ 0.63 Earnings per share attributable to Zoetis Inc. stockholders—diluted $ 0.48 $ 0.38 $ 1.34 $ 0.63

Segment and Other Revenue Inf36

Segment and Other Revenue Information (Tables)	9 Months Ended
	Oct. 02, 2016
Segment Reporting [Abstract]
Schedule of Selected Income Statement Information by Segment	Selected Statement of Income Information Earnings Depreciation and Amortization (a) October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Three months ended U.S. Revenue $ 640 $ 632 Cost of Sales 137 147 Gross Profit 503 485 Gross Margin 78.6 % 76.7 % Operating Expenses 101 100 Other (income)/deductions — (1 ) U.S. Earnings 402 386 $ 7 $ 5 International Revenue (b) 585 569 Cost of Sales 201 209 Gross Profit 384 360 Gross Margin 65.6 % 63.3 % Operating Expenses 128 137 Other (income)/deductions — 4 International Earnings 256 219 11 10 Total operating segments 658 605 18 15 Other business activities (71 ) (73 ) 7 6 Reconciling Items: Corporate (159 ) (138 ) 11 9 Purchase accounting adjustments (25 ) (13 ) 21 14 Acquisition-related costs — (6 ) — — Certain significant items (c) (16 ) (46 ) 2 1 Other unallocated (54 ) (56 ) 1 1 Total Earnings (d) $ 333 $ 273 $ 60 $ 46 Earnings Depreciation and Amortization (a) October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Nine months ended U.S. Revenue $ 1,816 $ 1,692 Cost of Sales 402 399 Gross Profit 1,414 1,293 Gross Margin 77.9 % 76.4 % Operating Expenses 293 274 Other (income)/deductions — (1 ) U.S. Earnings 1,121 1,020 $ 20 $ 18 International Revenue (b) 1,754 1,762 Cost of Sales 598 638 Gross Profit 1,156 1,124 Gross Margin 65.9 % 63.8 % Operating Expenses 361 423 Other (income)/deductions 3 10 International Earnings 792 691 33 34 Total operating segments 1,913 1,711 53 52 Other business activities (219 ) (208 ) 19 19 Reconciling Items: Corporate (499 ) (392 ) 33 28 Purchase accounting adjustments (79 ) (41 ) 64 39 Acquisition-related costs (3 ) (11 ) — — Certain significant items (c) 1 (406 ) 5 3 Other unallocated (117 ) (177 ) 3 3 Total Earnings (d) $ 997 $ 476 $ 177 $ 144 (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 $157 million and $469 million for the three and nine months ended October 2, 2016 , respectively, and $139 million and $425 million for the three and nine months ended September 27, 2015 , respectively. (c) For the three months ended October 2, 2016 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $1 million ; (ii) a $3 million increase in in certain employee termination accruals, exit costs of $1 million , accelerated depreciation of $2 million , inventory write-offs of $1 million , and consulting fees of $4 million related to our operational efficiency initiative, supply network strategy, and other restructuring activities, (iii) an impairment of finite-lived trademarks of $1 million related to a canine pain management product; and (iv) charges of $3 million associated with changes to our operating model. Stand-up costs include certain nonrecurring costs related to becoming an independent public company, such as the creation of standalone systems and infrastructure, site separation, new branding (including changes to the manufacturing process for required new packaging), and certain legal registration and patent assignment costs. For the nine months ended October 2, 2016 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $18 million ; (ii) a net gain of $27 million related to divestitures as a result of our operational efficiency initiative; (iii) a $ 20 million net reduction in certain employee termination accruals, partially offset by exit costs of $3 million , accelerated depreciation of $5 million , inventory write-offs of $1 million , and consulting fees of $14 million related to our operational efficiency initiative, supply network strategy and other restructuring activities; (iv) an impairment of finite-lived trademarks of $1 million , and (v) charges of $4 million associated with changes to our operating model. For the three months ended September 27, 2015 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $22 million and (ii) charges related to our operational efficiency initiative and supply network strategy of $24 million . For the nine months ended September 27, 2015 , Certain significant items primarily includes: (i) Zoetis stand-up costs of $84 million ; (ii) charges related to our operational efficiency initiative and supply network strategy of $317 million ; (iii) an impairment of IPR&D assets of $2 million related to the termination of a canine oncology project; and (iv) charges due to unusual investor-related activities of $3 million . (d) Defined as income before provision for taxes on income.
Schedule of Significant Product Revenues	Revenue by Species Species revenue are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Livestock: Cattle $ 432 $ 432 $ 1,175 $ 1,201 Swine 145 163 441 495 Poultry 111 132 351 399 Fish 25 — 64 — Other 22 23 60 60 735 750 2,091 2,155 Companion Animal: Horses 33 35 108 117 Dogs and Cats 457 416 1,371 1,182 490 451 1,479 1,299 Contract Manufacturing 16 13 41 37 Total revenue $ 1,241 $ 1,214 $ 3,611 $ 3,491 Revenue by Major Product Category Revenue by major product category are as follows: Three Months Ended Nine Months Ended October 2, September 27, October 2, September 27, (MILLIONS OF DOLLARS) 2016 2015 2016 2015 Anti-infectives $ 350 $ 348 $ 913 $ 938 Vaccines 324 301 935 858 Parasiticides 158 158 492 504 Medicated feed additives 99 124 365 364 Other pharmaceuticals 255 226 724 650 Other non-pharmaceuticals 39 44 141 140 Contract manufacturing 16 13 41 37 Total revenue $ 1,241 $ 1,214 $ 3,611 $ 3,491

Organization (Details)

Organization (Details) product in Thousands	Oct. 02, 2016speciescountryregioncategory	May 05, 2015product
Product Information [Line Items]
Number of regional segments | region	2
Number of countries in which entity markets products	45
Number of core animal species | species	8
Number of major product categories	5	5
Product
Product Information [Line Items]
Number of countries in which entity markets products	100

Significant Accounting Polici38

Significant Accounting Policies Significant Accounting Policies (Details) $ in Millions	9 Months Ended
	Oct. 02, 2016USD ($)
Accounting Policies [Abstract]
Deferred tax benefit	$ 7

Acquisitions and Divestitures39

Acquisitions and Divestitures (Details) $ in Millions

Nov. 09, 2015USD ($)

Feb. 10, 2015USD ($)

Oct. 02, 2016USD ($)

Apr. 03, 2016USD ($)

Sep. 27, 2015USD ($)

Oct. 02, 2016USD ($)

Sep. 27, 2015USD ($)

Apr. 28, 2016USD ($)

Feb. 12, 2016site

Dec. 31, 2015USD ($)

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Goodwill

$ 1,497

$ 1,497

$ 1,455

Amount expected to be uncollectible

$ 1

Number of manufacturing sites sold | site

2

Gain (loss) recognized related to divestitures

[1]

0

$ 0

27

[2]

$ 0

Taiwan Joint Venture

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Ownership percentage

55.00%

Proceeds from divestiture

$ 13

India and US Manufacturing Sites

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Total cash proceeds

$ 88

Gain (loss) recognized related to divestitures

6

$ 33

PHARMAQ

Business Acquisition [Line Items]

Percentage acquired

100.00%

Purchase price

$ 765

Payments to acquire business

668

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Cash and cash equivalents

16

Accounts receivable

[3]

21

Inventories

[4]

42

Other current assets

2

Property, plant and equipment

11

Intangible assets

[5]

550

Accounts payable

(4)

Accrued expenses

[6]

(38)

Accrued compensation and related items

(4)

Long-term debt

[6]

(89)

Noncurrent deferred tax liabilities

[7]

(139)

Other non-current liabilities

(2)

Total net assets acquired

366

Goodwill

[8]

302

Total consideration

668

Gross trade receivables

21

Finished goods

17

PHARMAQ | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Intangible assets

280

PHARMAQ | Customer Relationships

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Intangible assets

$ 80

Weighted average useful life

15 years

PHARMAQ | Developed Technology Rights

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Weighted average useful life

10 years

PHARMAQ | Vaccine pancreatic disease | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Acquisition date fair value

$ 50

PHARMAQ | Alphaflux | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Acquisition date fair value

40

PHARMAQ | New species | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Acquisition date fair value

40

PHARMAQ | Vaccines

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Intangible assets

160

PHARMAQ | Vaccines | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Intangible assets

150

PHARMAQ | Therapeutics

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Intangible assets

$ 30

Abbott Animal Health

Business Acquisition [Line Items]

Purchase price

$ 254

Payments to acquire business

229

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Inventories

12

Property, plant and equipment

1

Goodwill

187

Weighted average useful life

15 years

Contingent consideration payment, high

25

Contingent consideration fair value liability

22

Final valuation adjustments

$ 14

Abbott Animal Health | In Process Research and Development

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Assets acquired, indefinite-lived intangible assets

8

Abbott Animal Health | Trade Names

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Assets acquired, finite-lived intangibles

5

Abbott Animal Health | Developed Technology Rights

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Assets acquired, finite-lived intangibles

16

Abbott Animal Health | Other Intangible Assets

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest [Abstract]

Weighted average useful life

5 years

Assets acquired, finite-lived intangibles

$ 23

[1]

For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative.

[2]

For the three and nine months ended October 2, 2016, represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015, represents an impairment of IPR&D assets related to the termination of a canine oncology project.

[3]

Accounts receivable were measured at fair value as of the acquisition date and are substantially comprised of gross trade receivables of $21 million, $1 million of which is expected to be uncollectible.

[4]

Inventories recorded as of the acquisition date reflect fair value adjustments of $17 million which relates primarily to finished goods. The fair value was calculated based on estimated selling profit margin.

[5]

The acquisition date fair value of intangible assets acquired was determined using the income approach and consists of the following: $160 million related to currently marketed vaccine products, $30 million related to currently marketed therapeutics, $80 million related to customer relationships and $280 million related to in-process research and development (IPR&D). The most significant IPR&D project acquired, with an acquisition date fair value of $150 million, relates to the salmon rickettsial syndrome (SRS) vaccine. The vaccine was commercially launched, subsequent to the acquisition, during November 2015. Other significant acquired IPR&D projects relate to a vaccine for pancreatic disease, “PD” and Alphaflux, a therapeutic drug for the treatment of sea lice and vaccine technology for new species including Tilapia and Pangasius, were assigned acquisition date fair values of $50 million, $40 million, and $40 million, respectively. Vaccine developed technology and customer relationships will be amortized over a 15 year useful life while therapeutic developed technology will be amortized over 10 years.

[6]

Pharmaq callable bonds and derivative contracts were recorded at acquisition date fair value and settled immediately following the closing.

[7]

The Pharmaq acquisition was structured as a stock purchase therefore we assumed the historical tax bases of its assets and liabilities. We also established net deferred tax assets and liabilities associated with the fair value adjustments recorded as part of the opening balance sheet. The components of the Pharmaq net deferred tax liability are included within amounts reported in Note 7. Income Taxes.

[8]

Goodwill of $302 million is the excess of consideration transferred over the value of net assets acquired and was allocated to our existing reportable segments and is primarily attributable to corporate synergies related to platform functions. The primary strategic purpose of the acquisition was to enhance the company’s existing product portfolio by enabling Zoetis to further expand into aquaculture. The goodwill recorded is not deductible for tax purposes.

Restructuring Charges and Oth40

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Components of Costs Incurred (Details) product in Thousands, $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016USD ($)category	Sep. 27, 2015USD ($)	Oct. 02, 2016USD ($)employeessitecategory	Sep. 27, 2015USD ($)	Apr. 28, 2016	May 05, 2015productemployees
Restructuring Cost and Reserve [Line Items]
Employee termination costs				$ (17)
Exit costs	[1]			3
Total Restructuring charges and certain acquisition-related costs		$ 4	$ 13	$ (15)	$ 280
Number of major product categories		5		5			5
Number of manufacturing sites to be exited | site				10
Number of US manufacturing sites divested | site				3
Number of international sites divested | site				1
Number of positions eliminated | employees				1,800
Taiwan Joint Venture
Restructuring Cost and Reserve [Line Items]
Ownership percentage						55.00%
Minimum
Restructuring Cost and Reserve [Line Items]
Number of terminated positions expected | employees							2,000
Maximum
Restructuring Cost and Reserve [Line Items]
Number of terminated positions expected | employees							2,500
United States (U.S.)
Restructuring Cost and Reserve [Line Items]
Employee termination costs		$ 0	(3)	$ (2)	27
International
Restructuring Cost and Reserve [Line Items]
Employee termination costs		(1)	2	(16)	117
Manufacturing, Research, Corporate
Restructuring Cost and Reserve [Line Items]
Employee termination costs		5	9	1	127
Employee Termination Costs
Restructuring Cost and Reserve [Line Items]
Employee termination costs				(20)
Direct Cost
Restructuring Cost and Reserve [Line Items]
Integration costs	[2]	0	5	2	9
Asset impairment charges	[3]	0	8	0	34
Exit costs	[3]	1	0	3	0
Direct Cost | Employee Termination Costs
Restructuring Cost and Reserve [Line Items]
Employee termination costs	[3]	$ 3	$ 0	$ (20)	$ 237
[1]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of our Taiwan joint venture, as part of our operational efficiency initiative.
[2]	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.
[3]	The restructuring charges/(benefits) for the three and nine months ended October 2, 2016, and September 27, 2015, primarily relate to our operational efficiency initiative and supply network strategy. The restructuring charges/(benefits) for the three and nine months ended October 2, 2016, are associated with the following: U.S. ($0 million and $2 million benefit, respectively), International ($1 million benefit and $16 million benefit, respectively) and Manufacturing/research/corporate ($5 million and $1 million, respectively). The restructuring charges for the three and nine months ended September 27, 2015, are associated with the following: U.S. ($3 million benefit and $27 million, respectively), International ($2 million and $117 million, respectively) and Manufacturing/research/corporate ($9 million and $127 million, respectively).

Restructuring Charges and Oth41

Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Restructuring Benefits and Charges (Details) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016USD ($)	Sep. 27, 2015USD ($)	Oct. 02, 2016USD ($)site		Sep. 27, 2015USD ($)	Dec. 31, 2015USD ($)
Restructuring Cost and Reserve [Line Items]
Number of International Sites Exited | site				1
Provision				$ (17)
Exit costs	[1]			3
Provision for losses on inventory				65		$ 59
Accelerated depreciation				5
Consulting fees		$ 4	$ 8	11		28
Gain (loss) recognized related to divestitures	[2]	0	0	27	[3]	0
Consulting fees				14
Total costs associated with the operational efficiency initiative and supply network strategy		11	24	(23)		317
Restructuring Reserve [Roll Forward]
Beginning balance	[4]			222
Provision				(17)
Utilization and other	[5]			(101)
Ending balance	[4]	104		104
Other current liabilities
Restructuring Reserve [Roll Forward]
Accrued expenses		70		70			$ 162
Other Noncurrent Liabilities
Restructuring Reserve [Roll Forward]
Other noncurrent liabilities		34		34			$ 60
Employee Termination Costs
Restructuring Cost and Reserve [Line Items]
Provision				(20)
Restructuring Reserve [Roll Forward]
Beginning balance	[4]			221
Provision				(20)
Utilization and other	[5]			(99)
Ending balance	[4]	102		102
Exit Costs
Restructuring Cost and Reserve [Line Items]
Provision				3
Restructuring Reserve [Roll Forward]
Beginning balance	[4]			1
Provision				3
Utilization and other	[5]			(2)
Ending balance	[4]	2		2
Operational Efficiency
Restructuring Cost and Reserve [Line Items]
Provision		4	8	(22)		261
Asset impairment charges		0	8	0		33
Exit costs		1	0	4		0
Provision for losses on inventory		1	5	1		5
Accelerated depreciation		0	0	1		0
Gain (loss) recognized related to divestitures	[1]	0	0	(27)		0
Other cost reduction and cost productivity charges		5	13	(14)		33
Restructuring Reserve [Roll Forward]
Provision		4	8	(22)		261
Operational Efficiency | Employee Termination Costs
Restructuring Cost and Reserve [Line Items]
Provision	[6]	3	0	(26)		228
Restructuring Reserve [Roll Forward]
Provision	[6]	3	0	(26)		228
Supply Network Strategy
Restructuring Cost and Reserve [Line Items]
Provision		0	0	6		10
Asset impairment charges		0	0	0		1
Employee termination costs		0	0	6		9
Accelerated depreciation		2	0	4		0
Other cost reduction and cost productivity charges		2	3	7		13
Consulting fees		0	3	3		13
Restructuring Reserve [Roll Forward]
Provision		0	0	6		10
Zoetis Initiatives
Restructuring Cost and Reserve [Line Items]
Provision		4	8	(16)		271
Exit costs		1
Accelerated depreciation		2
Consulting fees		4
Restructuring Reserve [Roll Forward]
Provision		4	8	(16)		271
Zoetis Initiatives | Employee Termination Costs
Restructuring Cost and Reserve [Line Items]
Provision		3		(20)
Restructuring Reserve [Roll Forward]
Provision		3		(20)
International [Member]
Restructuring Cost and Reserve [Line Items]
Provision		(1)	2	(16)		117
Restructuring Reserve [Roll Forward]
Provision		$ (1)	$ 2	$ (16)		$ 117
[1]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of our Taiwan joint venture, as part of our operational efficiency initiative.
[2]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative.
[3]	For the three and nine months ended October 2, 2016, represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015, represents an impairment of IPR&D assets related to the termination of a canine oncology project.
[4]	At October 2, 2016, and December 31, 2015, included in Accrued expenses ($70 million and $162 million, respectively) and Other noncurrent liabilities ($34 million and $60 million, respectively).
[5]	Includes adjustments for foreign currency translation.
[6]	For the nine months ended October 2, 2016, includes a reduction in employee termination accruals primarily as a result of higher than expected voluntary attrition rates experienced in the first half of 2016.

Other (Income)_Deductions - N42

Other (Income)/Deductions - Net (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016		Sep. 27, 2015
Other Income and Expenses [Abstract]
Royalty-related income		$ (8)	$ (5)	$ (20)		$ (19)
Identifiable intangible asset impairment charges	[1]	1	0	1		2
Net gain on sale of assets	[2]	0	0	(27)	[1]	0
Foreign currency loss	[3]	5	6	22		18
Other, net	[4]	(1)	(3)	(5)		(1)
Other (income)/deductions—net		$ (3)	$ (2)	$ (29)		0
Inventory losses						$ 3
[1]	For the three and nine months ended October 2, 2016, represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015, represents an impairment of IPR&D assets related to the termination of a canine oncology project.
[2]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative.
[3]	Primarily driven by costs related to hedging and exposures to certain emerging market currencies.
[4]	For the nine months ended October 2, 2016, primarily represents income associated with certain state business employment tax incentive credits. For the nine months ended September 27, 2015, primarily represents inventory losses of $3 million sustained as a result of weather damage at storage facilities in Brazil and Australia, partially offset by interest income and other miscellaneous income.

Income Taxes - Taxes on Income

Income Taxes - Taxes on Income (Details) - USD ($) $ in Millions	3 Months Ended					9 Months Ended
	Oct. 02, 2016	Apr. 03, 2016	Sep. 27, 2015	Jun. 28, 2015	Mar. 29, 2015	Oct. 02, 2016	Sep. 27, 2015
Income Tax Contingency [Line Items]
Effective tax rate for income from continuing operations	28.80%		30.40%			33.30%	33.00%
Valuation allowance				$ 3
Discrete tax benefit related to change in statutory tax rates		$ 10			$ 9
Deferred tax benefit						$ 7
Discrete tax benefit related to prior tax adjustments				$ 6
Belgium
Income Tax Contingency [Line Items]
Discrete tax benefit			$ 7				$ 38

Income Taxes - Deferred Taxes (

Income Taxes - Deferred Taxes (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Net deferred income tax liability	$ 147	$ 182
Noncurrent deferred tax assets	119	82
Noncurrent deferred tax liabilities	$ 266	$ 264

Income Taxes - Tax Contingencie

Income Taxes - Tax Contingencies (Details) - USD ($) $ in Millions	9 Months Ended
	Oct. 02, 2016	Dec. 31, 2015
Income Tax Contingency [Line Items]
Liabilities associated with uncertain tax positions	$ 87	$ 61
Unrecognized tax benefits, income tax penalties and interest accrued	10	7
Noncurrent Deferred Tax Assets
Income Tax Contingency [Line Items]
Liabilities associated with uncertain tax positions	5	6
Other Taxes Payable
Income Tax Contingency [Line Items]
Liabilities associated with uncertain tax positions	82	$ 55
Belgium
Income Tax Contingency [Line Items]
Net tax charge	22
Tax liability	50
Cash settlement	28
Decrease in uncertain tax positions within the next twelve months	$ 22

Financial Instruments - Credit

Financial Instruments - Credit Facilities (Details)		3 Months Ended				9 Months Ended		12 Months Ended
		Oct. 02, 2016USD ($)	Dec. 31, 2015USD ($)	Sep. 27, 2015USD ($)	Jun. 28, 2015USD ($)	Oct. 02, 2016USD ($)	Sep. 27, 2015USD ($)	Dec. 31, 2012USD ($)
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity		$ 81,000,000				$ 81,000,000
Foreign currency loss	[1]	$ 5,000,000		$ 6,000,000		$ 22,000,000	$ 18,000,000
Revolving credit facility, minimum interest coverage ratio		3.50				3.50
Line of credit facility		$ 0	$ 0			$ 0
Short term borrowings			4,000,000
Short-term bank loans and notes payable			5,000,000
Venezuela
Line of Credit Facility [Line Items]
Foreign currency loss			$ (95,000,000)
Operational Efficiency
Line of Credit Facility [Line Items]
Aggregate amount of all charges					$ 237,000,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Revolving credit facility, term								5 years
Revolving credit facility, current borrowing capacity								$ 1,000,000,000
Line of credit facility, maximum borrowing capacity								$ 1,500,000,000
Revolving credit facility, covenant compliance ratio, 2015		3.50				3.50
Maximum total leverage ratio		4.25				4.25
[1]	Primarily driven by costs related to hedging and exposures to certain emerging market currencies.

Financial Instruments - Commerc

Financial Instruments - Commercial Paper Program (Details) - USD ($)	Oct. 02, 2016	Dec. 31, 2015	Feb. 28, 2013
Short-term Debt [Line Items]
Commercial paper	$ 0	$ 0
Commercial Paper
Short-term Debt [Line Items]
Capacity of commercial paper program			$ 1,000,000,000

Financial Instruments - Short-T

Financial Instruments - Short-Term Borrowings (Details) $ in Millions	Dec. 31, 2015USD ($)
Financial Instruments [Abstract]
Short-term bank loans and notes payable	$ 5
Short-term debt, weighted-average effective interest rate	5.20%

Financial Instruments - Senior

Financial Instruments - Senior Notes Offering and Other Long-Term Debt (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015	Nov. 13, 2015	Jan. 28, 2013
Debt Instrument [Line Items]
Debt, principal amount	$ 4,501	$ 4,900
Long-term debt current portion	0	400
Senior Notes
Debt Instrument [Line Items]
Debt, principal amount			$ 1,250	$ 3,650
Debt, unamortized discount			$ 2	$ 10
Debt, purchase price percent due to downgrade of investment grade				101.00%
Senior Notes | 1.150% 2013 senior notes due 2016
Debt Instrument [Line Items]
Debt, principal amount	$ 0	$ 400
Interest rate percentage				1.15%

Financial Instruments - Schedul

Financial Instruments - Schedule of Long-term Debt (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015	Nov. 13, 2015	Jan. 28, 2013
Debt Instrument [Line Items]
Total long-term debt	$ 4,501	$ 4,900
Bank loan	1
Unamortized debt discount / debt issuance costs	(34)	(37)
Less current portion of long-term debt	0	(400)
Long-term debt, net of discount and issuance costs	4,467	4,463
Senior Notes
Debt Instrument [Line Items]
Total long-term debt			$ 1,250	$ 3,650
Senior Notes | 1.150% 2013 senior notes due 2016
Debt Instrument [Line Items]
Interest rate percentage				1.15%
Total long-term debt	0	400
Senior Notes | 1.875% 2013 senior notes due 2018
Debt Instrument [Line Items]
Interest rate percentage				1.875%
Total long-term debt	750	750
Senior Notes | 3.450% 2015 senior notes due 2020
Debt Instrument [Line Items]
Interest rate percentage				3.45%
Total long-term debt	500	500
Senior Notes | 3.250% 2013 senior notes due 2023
Debt Instrument [Line Items]
Interest rate percentage				3.25%
Total long-term debt	1,350	1,350
Senior Notes | 4.500% 2015 senior notes due 2025
Debt Instrument [Line Items]
Interest rate percentage				4.50%
Total long-term debt	750	750
Senior Notes | 4.700% 2013 senior notes due 2043
Debt Instrument [Line Items]
Interest rate percentage				4.70%
Total long-term debt	$ 1,150	$ 1,150
Bank Loan Obligations
Debt Instrument [Line Items]
Interest rate percentage				5.10%

Financial Instruments - Fair Va

Financial Instruments - Fair Value of Debt (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Senior Notes | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Fair value, debt instrument	$ 4,760	$ 4,759

Financial Instruments - Long-te

Financial Instruments - Long-term Debt Maturity (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015	Dec. 31, 2015
Financial Instruments [Abstract]
2,017	$ 0		$ 0
2,018	750		750
2,019	0		0
2,020	500		500
After 2,020	3,251		3,251
Total long-term debt	4,501		4,501		$ 4,900
Interest expense, net of capitalized interest	41	$ 29	125	$ 86
Capitalized interest	$ 1	$ 1	$ 2	$ 3

Financial Instruments - Foreign

Financial Instruments - Foreign Exchange Risk (Details) - USD ($) $ in Millions	9 Months Ended
	Oct. 02, 2016	Dec. 31, 2015	Jan. 28, 2013
Senior Notes | 1.875% 2013 senior notes due 2018
Derivative [Line Items]
Interest rate percentage			1.875%
Foreign Exchange Contract
Derivative [Line Items]
Derivative notional amount	$ 1,200	$ 1,400
Foreign Exchange Contract
Derivative [Line Items]
Maturity period	60 days
Interest Rate Swap
Derivative [Line Items]
Derivative notional amount		$ 250
Interest Rate Contract
Derivative [Line Items]
Maturity period	10 years
Maximum | Foreign Exchange Contract
Derivative [Line Items]
Maturity period	180 days

Financial Instruments - Fair 54

Financial Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Total derivatives	$ (18)	$ (2)
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Total derivatives	(14)	(2)
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Other current assets
Derivatives, Fair Value [Line Items]
Derivative assets	4	8
Foreign Exchange Forward | Derivatives Not Designated as Hedging Instruments | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	(18)	(10)
Interest Rate Swap | Derivatives Designated as Hedging Instruments:
Derivatives, Fair Value [Line Items]
Total derivatives	(4)	0
Interest Rate Swap | Derivatives Designated as Hedging Instruments: | Other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ (4)	$ 0

Financial Instruments - Interes

Financial Instruments - Interest Rate Risk (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Foreign Exchange Forward
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Foreign currency forward-exchange contracts	$ (25)	$ 18	$ (29)	$ 24

Financial Instruments - Amounts

Financial Instruments - Amounts of net losses on derivative instruments designated as cash flow hedges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Cash Flow Hedging
Derivative [Line Items]
Interest rate swap contracts	$ 1	$ (3)	$ (2)	$ (3)

Inventories (Details)

Inventories (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Finished goods	$ 774	$ 758
Work-in-process	562	384
Raw materials and supplies	227	325
Inventories	$ 1,563	$ 1,467

Goodwill and Other Intangible58

Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Gross goodwill	$ 2,033		$ 2,033		$ 1,991
Accumulated goodwill impairment losses	536		536
Amortization of intangible assets	$ 24	$ 16	$ 72	$ 47

Goodwill and Other Intangible59

Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Millions		9 Months Ended
		Oct. 02, 2016	Dec. 31, 2015
Goodwill [Roll Forward]
Beginning Balance		$ 1,455
Additions / Adjustments	[1]	16
Other	[2]	26
Ending Balance		1,497
Reduction in acquisition date fair value		13
Gross goodwill		2,033	$ 1,991
United States (U.S.)
Goodwill [Roll Forward]
Beginning Balance		665
Additions / Adjustments	[1]	(4)
Other	[2]	0
Ending Balance		661
International
Goodwill [Roll Forward]
Beginning Balance		790
Additions / Adjustments	[1]	20
Other	[2]	26
Ending Balance		836
Denmark
Goodwill [Roll Forward]
Amount of purchase price allocation		16
South America
Goodwill [Roll Forward]
Amount of purchase price allocation		$ 12
[1]	Primarily includes a $16 million purchase price allocation associated with the acquisition of a veterinary diagnostics business in Denmark and a $12 million purchase price allocation associated with the acquisition of a livestock business in South America, offset by a $13 million reduction in the acquisition date fair value of goodwill associated with the acquisition of certain assets of Abbott Animal Health. See Note 4A. Acquisitions and Divestitures: Acquisitions.
[2]	Includes adjustments for foreign currency translation.

Goodwill and Other Intangible60

Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015	Dec. 31, 2015
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount		$ 1,590		$ 1,590		$ 1,499
Finite-lived intangible assets, accumulated amortization		(632)		(632)		(557)
Finite-lived intangible assets, identifiable intangible assets, less accumulated amortization		958		958		942
Total indefinite-lived intangible assets		324		324		248
Intangible Assets, gross carrying amount		1,914		1,914		1,747
Identifiable intangible assets, less accumulated amortization		1,282		1,282		1,190
Amortization of intangible assets		24	$ 16	72	$ 47
Brands
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets		36		36		36
Trademarks and Trade Names
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets		67		67		66
In Process Research and Development
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets	[1]	214		214		138
Product Rights
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Total indefinite-lived intangible assets		7		7		8
Developed Technology Rights
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	[2]	1,083		1,083		1,010
Finite-lived intangible assets, accumulated amortization	[2]	(330)		(330)		(274)
Finite-lived intangible assets, identifiable intangible assets, less accumulated amortization	[2]	753		753		736
Brands
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount		213		213		212
Finite-lived intangible assets, accumulated amortization		(130)		(130)		(121)
Finite-lived intangible assets, identifiable intangible assets, less accumulated amortization		83		83		91
Trademarks and Trade Names
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount		63		63		63
Finite-lived intangible assets, accumulated amortization		(45)		(45)		(44)
Finite-lived intangible assets, identifiable intangible assets, less accumulated amortization		18		18		19
Other Intangible Assets
Finite Lived and Indefinite Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross carrying amount	[2]	231		231		214
Finite-lived intangible assets, accumulated amortization	[2]	(127)		(127)		(118)
Finite-lived intangible assets, identifiable intangible assets, less accumulated amortization	[2]	$ 104		$ 104		$ 96
[1]	Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016.
[2]	Includes the acquisition of intangible assets associated with the purchase of a veterinary diagnostics business in Denmark in the third quarter of 2016, the acquisition of intangible assets associated with the purchase of a livestock business in South America in the first quarter of 2016 and an increase in the acquisition date fair value of intangible assets associated with the acquisition of certain assets of Abbott Animal Health, as well as the impact of foreign exchange. See Note 4A. Acquisitions and Divestitures: Acquisitions.

Benefit Plans (Details)

Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost	$ 3	$ 2	$ 7	$ 6
Interest cost	0	1	2	3
Expected return on plan assets	(1)	(1)	(2)	(2)
Amortization of net actuarial loss	1	0	1	1
Curtailment gain	0	1	(1)	1
Net periodic benefit cost	3	3	7	9
U.S. Plan
Defined Benefit Plan Disclosure [Line Items]
Pension and postretirement benefit expense	2	2	5	5
International
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Contributions to benefit plans	$ 1	$ 3	7	$ 6
Expected future contributions to benefit plans			$ 9

Share-Based Payments - Componen

Share-Based Payments - Components of Share-Based Compensation Expense (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense—direct	[1],[2]	$ 9	$ 10	$ 28	$ 31
Capitalized share-based compensation expense to inventory			1	1	1
Amount of accelerated vesting				1
Stock options / stock appreciation rights
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense—direct		3	3	8	14
RSUs / DSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense—direct		5	6	17	15
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense—direct		$ 1	$ 1	$ 3	$ 2
[1]	For the nine months ended October 2, 2016, we capitalized $1 million of share-based compensation expense to inventory; for the three months ended October 2, 2016, amounts capitalized to inventory were insignificant. For the three and nine months ended September 27, 2015, we capitalized $1 million of share-based compensation expense to inventory.
[2]	Includes additional share-based compensation expense as a result of accelerated vesting of the outstanding stock options and the settlement, on a pro-rata basis, of other equity awards of terminated employees in connection with our operational efficiency initiative and supply network strategy for the nine months ended October 2, 2016, of approximately $1 million, which is included in Restructuring charges/(benefits) and certain acquisition-related costs. For the three months ended October 2, 2016, and the three and nine months ended September 27, 2015, the amounts were insignificant.

Share-Based Payments - Narrativ

Share-Based Payments - Narrative (Details)	9 Months Ended
	Oct. 02, 2016$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, options granted, shares | shares	930,441
Share-based compensation, weighted average exercise price (in dollars per share)	$ 42.32
Share-based compensation, Options, weighted average grant date fair value (in dollars per share)	$ 11.29
Share-based compensation, risk free interest rate	1.55%
Share-based compensation, expected dividend rate	0.89%
Share-based compensation, expected volatility rate	26.75%
Share-based compensation, expected term	6 years 6 months
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period	3 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, granted, shares | shares	732,671
Share-based compensation, weighted average grant date fair value (in dollars per share)	$ 42.10
Share-based compensation, award vesting period	3 years
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, expected volatility rate	23.80%
Share-based compensation, granted, shares | shares	198,445
Share-based compensation, weighted average grant date fair value (in dollars per share)	$ 50.20
Share-based compensation, award vesting period	3 years
Performance Shares | PeerCompanies
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, expected volatility rate	25.20%
Performance Shares | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, target number of units percentage	0.00%
Performance Shares | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, target number of units percentage	200.00%

Stockholders' Equity - Changes

Stockholders' Equity - Changes in Common Shares and Treasury Stock (Details) - USD ($)		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015		Dec. 31, 2015	Nov. 30, 2014
Class of Stock [Line Items]
Common stock, shares authorized		6,000,000,000			6,000,000,000
Preferred stock, shares authorized		1,000,000,000			1,000,000,000
Stock repurchase program, authorized amount						$ 500,000,000
Stock repurchase program, remaining authorized repurchase amount		$ 75,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued, shares		501,808,229	501,340,000	[1]
Treasury stock, shares		4,408,116	20,000	[1]
Stock issued, employee stock purchase plans, shares	[1],[2]	80,000	230,000
Stock issued, employee benefit plan, shares	[1]	0	0
Common stock issued, shares		501,891,243	501,570,000	[1]
Treasury stock, shares		7,650,463	3,240,447
Stock Compensation Plan
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock acquired, shares	[1],[2]	(1,620,000)	(40,000)
Share Repurchase Program
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock acquired, shares	[1]	(4,860,000)	(3,190,000)
[1]	Shares may not add due to rounding.
[2]	Includes the issuance of shares of common stock and, beginning in the first quarter of 2016, the reissuance of shares from treasury stock in connection with the vesting of employee share-based awards. Treasury stock also includes the reacquisition of shares associated with the vesting of employee share-based awards to satisfy tax withholding requirements. For additional information regarding share-based compensation, see Note 12. Share-Based Payments.

Stockholders' Equity - Change65

Stockholders' Equity - Changes in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, December 31, 2015				$ (622)
Other comprehensive income (loss), net of tax		$ 49	$ (60)	114	$ (202)
Divestiture of noncontrolling interest		286	$ 130	779	117
Balance, October 2, 2016		(506)		(506)
Accumulated Other Comp. Income/(Loss)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, December 31, 2015				(622)
Other comprehensive income (loss), net of tax				114	$ (201)
Divestiture of noncontrolling interest	[1]			2
Balance, October 2, 2016		(506)		(506)
Derivatives Net Unrealized Gains/ (Losses)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, December 31, 2015				(2)
Other comprehensive income (loss), net of tax				(2)
Balance, October 2, 2016		(4)		(4)
Currency Translation Adjustment Net Unrealized Gain/(Losses)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, December 31, 2015				(604)
Other comprehensive income (loss), net of tax				114
Divestiture of noncontrolling interest	[1]			2
Balance, October 2, 2016		(488)		(488)
Benefit Plans Actuarial Gains/(Losses)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance, December 31, 2015				(16)
Other comprehensive income (loss), net of tax				2
Balance, October 2, 2016		$ (14)		$ (14)
[1]	Reflects the divestiture of our share of our Taiwan joint venture. See Note 4B. Acquisitions and Divestitures: Divestitures.

Earnings per Share (Details)

Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Numerator
Net income before allocation to noncontrolling interests	$ 237	$ 190	$ 665	$ 319
Less: net income (loss) attributable to noncontrolling interests	(2)	1	(2)	2
Net income attributable to Zoetis Inc.	$ 239	$ 189	$ 667	$ 317
Denominator
Weighted-average common shares outstanding	495.2	499.2	496.3	500.2
Common stock equivalents: stock options, RSUs, PSUs and DSUs	2.7	2.5	2.5	2.3
Weighted-average common and potential dilutive shares outstanding	497.9	501.7	498.8	502.5
Earnings per share attributable to Zoetis stockholders—basic (in dollars per share)	$ 0.48	$ 0.38	$ 1.34	$ 0.63
Earnings per share attributable to Zoetis stockholders—diluted (in dollars per share)	$ 0.48	$ 0.38	$ 1.34	$ 0.63
Employee Stock Option [Member]
Denominator
Antidilutive securities excluded from computation of earnings per share, amount	1	1	1	1

Commitments and Contingencies (

Commitments and Contingencies (Details) € in Millions, $ in Millions	May 16, 2016producer	Jun. 03, 2015count	Mar. 30, 2015customer	Aug. 31, 2014animal	Apr. 30, 2012	Sep. 28, 2014USD ($)	Jun. 29, 2014USD ($)	Oct. 02, 2016customerclaims	Jun. 19, 2013USD ($)	Jun. 19, 2013EUR (€)	Feb. 29, 2012defendant
Mexico
Loss Contingencies [Line Items]
Number of counts of negligence | customer			2
Litigation settlement expense | $							$ 13
Insurance recoveries | $						$ 1
PregSure
Loss Contingencies [Line Items]
Number of claims seeking damages | claims								255
Number of claims settled | claims								168
Ulianopolis, Brazil
Loss Contingencies [Line Items]
Number of claims seeking damages | defendant											6
Number of additional defendants | defendant											5
Duration of suspension of lawsuit					1 year
Lasadoil
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 counts of negligence	2	1						3
European Commission
Loss Contingencies [Line Items]
Loss contingency accrual									$ 14	€ 11

Segment and Other Revenue Inf68

Segment and Other Revenue Information - Segment Information (Details)	9 Months Ended
	Oct. 02, 2016segment
Segment Reporting [Abstract]
Number of operating segments	2

Segment and Other Revenue Inf69

Segment and Other Revenue Information - Segment Assets (Details) - USD ($) $ in Millions	Oct. 02, 2016	Dec. 31, 2015
Segment Reporting [Abstract]
Assets	$ 7,715	$ 7,913

Segment and Other Revenue Inf70

Segment and Other Revenue Information - Statement of Income (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Segment Reporting Information [Line Items]
Revenue		$ 1,241	$ 1,214	$ 3,611	$ 3,491
Cost of Sales	[1]	410	421	1,198	1,242
Other (income)/deductions		3	2	29	0
Earnings	[2]	333	273	997	476
Depreciation and amortization	[2],[3]	60	46	177	144
Other business activities
Segment Reporting Information [Line Items]
Earnings		(71)	(73)	(219)	(208)
Depreciation and amortization	[3]	7	6	19	19
Corporate Segment
Segment Reporting Information [Line Items]
Earnings		(159)	(138)	(499)	(392)
Depreciation and amortization	[3]	11	9	33	28
Purchase Accounting Adjustments
Segment Reporting Information [Line Items]
Earnings		(25)	(13)	(79)	(41)
Depreciation and amortization	[3]	21	14	64	39
Acquisition-related Costs
Segment Reporting Information [Line Items]
Earnings		0	(6)	(3)	(11)
Depreciation and amortization	[3]	0	0	0	0
Certain Significant Items
Segment Reporting Information [Line Items]
Earnings	[4]	(16)	(46)	1	(406)
Depreciation and amortization	[3],[4]	2	1	5	3
Other unallocated
Segment Reporting Information [Line Items]
Earnings		(54)	(56)	(117)	(177)
Depreciation and amortization	[3]	1	1	3	3
Operating Segments | Reportable Segment
Segment Reporting Information [Line Items]
Earnings		658	605	1,913	1,711
Depreciation and amortization	[3]	18	15	53	52
Operating Segments | United States (U.S.)
Segment Reporting Information [Line Items]
Revenue		640	632	1,816	1,692
Cost of Sales		137	147	402	399
Gross Profit		$ 503	$ 485	$ 1,414	$ 1,293
Gross margin (as a percent)		78.60%	76.70%	77.90%	76.40%
Operating Expenses		$ 101	$ 100	$ 293	$ 274
Other (income)/deductions		0	(1)	0	(1)
Earnings		402	386	1,121	1,020
Depreciation and amortization	[3]	7	5	20	18
Operating Segments | International
Segment Reporting Information [Line Items]
Revenue	[5]	585	569	1,754	1,762
Cost of Sales		201	209	598	638
Gross Profit		$ 384	$ 360	$ 1,156	$ 1,124
Gross margin (as a percent)		65.60%	63.30%	65.90%	63.80%
Operating Expenses		$ 128	$ 137	$ 361	$ 423
Other (income)/deductions		0	4	3	10
Earnings		256	219	792	691
Depreciation and amortization	[3]	$ 11	$ 10	$ 33	$ 34
[1]	Amortization expense related to finite-lived acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to finite-lived acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, general and administrative expenses or Research and development expenses, as appropriate, in the condensed consolidated statements of income.
[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]	For the three months ended October 2, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $1 million; (ii) a $3 million increase in in certain employee termination accruals, exit costs of $1 million, accelerated depreciation of $2 million, inventory write-offs of $1 million, and consulting fees of $4 million related to our operational efficiency initiative, supply network strategy, and other restructuring activities, (iii) an impairment of finite-lived trademarks of $1 million related to a canine pain management product; and (iv) charges of $3 million associated with changes to our operating model. Stand-up costs include certain nonrecurring costs related to becoming an independent public company, such as the creation of standalone systems and infrastructure, site separation, new branding (including changes to the manufacturing process for required new packaging), and certain legal registration and patent assignment costs. For the nine months ended October 2, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $18 million; (ii) a net gain of $27 million related to divestitures as a result of our operational efficiency initiative; (iii) a $20 million net reduction in certain employee termination accruals, partially offset by exit costs of $3 million, accelerated depreciation of $5 million, inventory write-offs of $1 million, and consulting fees of $14 million related to our operational efficiency initiative, supply network strategy and other restructuring activities; (iv) an impairment of finite-lived trademarks of $1 million, and (v) charges of $4 million associated with changes to our operating model. For the three months ended September 27, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $22 million and (ii) charges related to our operational efficiency initiative and supply network strategy of $24 million.For the nine months ended September 27, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $84 million; (ii) charges related to our operational efficiency initiative and supply network strategy of $317 million; (iii) an impairment of IPR&D assets of $2 million related to the termination of a canine oncology project; and (iv) charges due to unusual investor-related activities of $3 million.
[5]	Revenue denominated in euros was $157 million and $469 million for the three and nine months ended October 2, 2016, respectively, and $139 million and $425 million for the three and nine months ended September 27, 2015, respectively.

Segment and Other Revenue Inf71

Segment and Other Revenue Information - Statement of Income Narrative (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016		Sep. 27, 2015
Segment Reporting Information [Line Items]
Employee termination costs				$ (17)
Exit costs	[1]			3
Accelerated depreciation				5
Provision for losses on inventory				65		$ 59
Consulting fees				14
Charges with changes in operating model		$ 3		4
Gain (loss) recognized related to divestitures	[2]	0	$ 0	27	[3]	0
Identifiable intangible asset impairment charges	[3]	1	0	1		2
Investor related costs						3
In Process Research and Development
Segment Reporting Information [Line Items]
Identifiable intangible asset impairment charges						2
Certain Significant Items
Segment Reporting Information [Line Items]
Stand-up costs		1	22	18		84
Zoetis Initiatives
Segment Reporting Information [Line Items]
Employee termination costs		4	8	(16)		271
Exit costs		1
Accelerated depreciation		2
Consulting fees		4
Aggregate amount of all charges			24			317
Operational Efficiency
Segment Reporting Information [Line Items]
Employee termination costs		4	8	(22)		261
Exit costs		1	0	4		0
Accelerated depreciation		0	0	1		0
Provision for losses on inventory		1	5	1		5
Gain (loss) recognized related to divestitures	[1]	0	0	(27)		0
Employee Termination Costs
Segment Reporting Information [Line Items]
Employee termination costs				(20)
Employee Termination Costs | Zoetis Initiatives
Segment Reporting Information [Line Items]
Employee termination costs		3		(20)
Employee Termination Costs | Operational Efficiency
Segment Reporting Information [Line Items]
Employee termination costs	[4]	3	0	(26)		228
Euro Member Countries, Euro
Segment Reporting Information [Line Items]
Revenues denominated in Euros		$ 157	$ 139	$ 469		$ 425
[1]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of our Taiwan joint venture, as part of our operational efficiency initiative.
[2]	For the nine months ended October 2, 2016, represents the net gain on the sale of certain manufacturing sites and products, partially offset by the loss on the sale of our share of a Taiwan joint venture, as part of our operational efficiency initiative.
[3]	For the three and nine months ended October 2, 2016, represents an impairment of finite-lived trademarks related to a canine pain management product. For the nine months ended September 27, 2015, represents an impairment of IPR&D assets related to the termination of a canine oncology project.
[4]	For the nine months ended October 2, 2016, includes a reduction in employee termination accruals primarily as a result of higher than expected voluntary attrition rates experienced in the first half of 2016.

Segment and Other Revenue Inf72

Segment and Other Revenue Information - Revenue by Species (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Revenue from External Customer [Line Items]
Revenue	$ 1,241	$ 1,214	$ 3,611	$ 3,491
Livestock:
Revenue from External Customer [Line Items]
Revenue	735	750	2,091	2,155
Cattle
Revenue from External Customer [Line Items]
Revenue	432	432	1,175	1,201
Swine
Revenue from External Customer [Line Items]
Revenue	145	163	441	495
Poultry
Revenue from External Customer [Line Items]
Revenue	111	132	351	399
Fish
Revenue from External Customer [Line Items]
Revenue	25	0	64	0
Other
Revenue from External Customer [Line Items]
Revenue	22	23	60	60
Companion Animal:
Revenue from External Customer [Line Items]
Revenue	490	451	1,479	1,299
Horses
Revenue from External Customer [Line Items]
Revenue	33	35	108	117
Dogs and Cats
Revenue from External Customer [Line Items]
Revenue	457	416	1,371	1,182
Contract Manufacturing
Revenue from External Customer [Line Items]
Revenue	$ 16	$ 13	$ 41	$ 37

Segment and Other Revenue Inf73

Segment and Other Revenue Information - Revenue by Major Product Category (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Oct. 02, 2016	Sep. 27, 2015	Oct. 02, 2016	Sep. 27, 2015
Revenue from External Customer [Line Items]
Revenue	$ 1,241	$ 1,214	$ 3,611	$ 3,491
Anti-infectives
Revenue from External Customer [Line Items]
Revenue	350	348	913	938
Vaccines
Revenue from External Customer [Line Items]
Revenue	324	301	935	858
Parasiticides
Revenue from External Customer [Line Items]
Revenue	158	158	492	504
Medicated feed additives
Revenue from External Customer [Line Items]
Revenue	99	124	365	364
Other pharmaceuticals
Revenue from External Customer [Line Items]
Revenue	255	226	724	650
Other non-pharmaceuticals
Revenue from External Customer [Line Items]
Revenue	39	44	141	140
Contract manufacturing
Revenue from External Customer [Line Items]
Revenue	$ 16	$ 13	$ 41	$ 37