As Covid-19 isolates people from one another, a growing need for companionship and humanization of pets is accelerating the demand for holistic animal care, according to Abhay Nayak, head of global strategy, commercial development and customer experience at Zoetis Inc. (ZTS).

Speaking at The Deal Economy: Middle Market Week on Tuesday, July 28, Nayak said pet owners are thinking more about wellness, prevention and specialty care such as for dermatological and chronic pain conditions for their pets.

“We really think that the companion animal market in particular has really strong structural tailwinds behind it and that’s where we’ll see lots of growth coming from in the future,” Nayak said.

Diagnostics is also an important part of animal healthcare, Nayak said. Zoetis’ biggest acquisition to date is diagnostics company Abaxis Inc, which it bought for $2 billion in 2018.

“If you want to be a leading animal healthcare company, you need to have a strong presence in diagnostics,” Nayak said.

When it comes livestock, Zoetis is focused on increasing output to meet the demands of a growing population, through farm animal healthcare and livestock analytics. Such analytics can help producers identify things such as the onset of disease in animals.

The company acquired Performance Livestock Analytics Inc. for an undisclosed amount in April.

Despite the growing popularity of plant-based products, Zoetis remains focused on traditional animal protein. The demand for protein is only going to increase and there will be room for both animal and plant-based products, according to Nayak.

The company is trying to make sure that animal protein is viewed as healthy, safe and nutritious at the moment, he said.

Zoetis also entered the veterinary reference laboratory space with its purchase of Phoenix Central Laboratory for Veterinarians Inc. in October, ZNLabs in November and Ethos Diagnostic Science in February.

With a market cap of nearly $70 billion, Zoetis is the largest animal healthcare company in the world. Other key players in the industry include Merck Animal Health, Bayer Healthcare Animal Health, Merial, Elanco Animal Health and Novartis Animal Health.

Zoetis, which spun off from Pfizer Inc. (PFE) in 2013, is led by CEO Kristin Peck, who succeeded Juan Ramón Alaix at the helm of the company in January. It offers medicines, vaccines and diagnostic products for livestock and companion animals.

Nayak, who was previously head of corporate strategy at Parsippany, N.J.-based Zoetis, took on the new role in January. He joined the company in 2018 after working as a management consultant at McKinsey & Co. and an investment banker at Barclays plc.

Zoetis continues to be on the lookout for businesses that align with its strategy and culture for acquisitions.

“As a market leader in animal health, we’re often viewed as a potential acquirer of business for smaller companies so there are always opportunities that get presented to us,” Nayak said.

Though most of their acquisitions in the past couple of years have been tuck-ins, Nayak said he didn’t want to “preclude” other kinds of deals. “It’s really up to what we want to accomplish strategically,” he said.

Zoetis’ shares were up 10.3% year-to-date at $145.98 apiece as of Tuesday’s close.

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