I think as you look ahead, right, from a tech perspective, what keeps us all awake, right, it's about this whole thing that's coming with AI, right?

AI, I think, is beginning to reshape the entire continuum of care in animal health. I worry about, as a leader, how do I inspire the right kind of confidence in the future? How do we build a team and teams around us that are excited about the prospect of change?

Okay, five years from now, if your business were to look like this, you would have said, wow, we accomplished so much. What would that look like?

This was sort of accidental, I guess. There's almost a second mover advantage that we can gain there.

Let the others do it, and you always want to be a fast, fast second, fast follower.

There's a lot of growth potential and a lot of reason to be excited when you think about an innovation-based strategy in so many areas of unmet need.

I'm Subhro Malik, and this is a series about big ideas, bold conversations, and the breakthroughs shaping the future of business, and indeed, life and beyond. Today, I'm pleased to chat with Keith Sarbaugh, EVP and CDTO at Zoetis, and talk about all the breakthroughs that he sees that's spanning across, especially in the life sciences space, and peek into the future from his lens.

Keith, welcome to the show.

Thank you, Subhro. Thanks for having me.

Keith, if you look at the industry more broadly, the animal health or the broad life sciences industry, we are in unprecedented circumstances, both in terms of what's going on from a tech perspective, geopolitical perspective, or any other lens you want to apply. And within that, there are both opportunities and challenges.

So, if you look at the animal health business that you are an integral part of from a leadership perspective, in your opinion, what are the challenges in front of the industry, and then, what are the opportunities in front of the industry and then, how are you doing it at Zoetis?

Thank you, Subhro. That's a great question. I think animal health is an incredibly resilient industry, and it's powered really by two engines of growth. I think, first and foremost, it's the role that animals play in food production around the world. Then, second, it's the deepening of the human-animal bond. I think those two reasons provide a lot of promise for the future and a lot of optimism for where we're headed as an industry.

We believe animal health will be about a billion industry by 2035. That's significant growth over where we are today. That really comes to life for the two reasons I just mentioned. For sure, we have challenges, and they're challenges that you would hear from other clients as well. We've got macroeconomic challenges, we've got geopolitical uncertainty, persistent workforce challenges, we've got market volatility, those types of things, I think any business, any global business is facing today are no different for animal health.

What I'm excited about is the innovation pipeline we have at Zoetis. Innovation has been core to who Zoetis is since day one. It's no doubt when you look into the future. We're excited about opportunities in new markets such as oncology, kidney disease, even obesity in companion animals. These are all really new and untapped markets for us.Just to give an idea of what I think is possible, when you look at a therapeutic area like dermatology, dermatology was a million market in 2012. Right now, it's about a .9 billion market. I think for reasons like that, animal health is incredibly promising.There's a lot of growth potential and a lot of reason to be excited when you think about an innovation-based strategy in so many areas of unmet need.

That's a fantastic point, Keith, and a great way to start our conversation because what you said, the growth to billion, the kind of change you saw from the .1 billion, it can only be accelerated and achieved by innovation. I think that innovation today, without tech, that innovation is not possible, as the enabler behind it.

That brings us to our next topic, which I think everybody wants to talk about, is AI. We cannot get into a conversation and not talk about AI and how it's disrupting our world. I strongly believe, and I hope that everyone will agree, that it is a challenge, but it is an opportunity.

That billion could become billion, who knows, because of the kind of opportunity, the potential we see based on everything we see in the industry from a tech perspective. If you think of AI and from an animal health and a Zoetis perspective, in your opinion, what are the opportunities that you're seeing and then what is it that you think is really holding us back from an adoption perspective?

That's a great question, Subhro.

I would say it's across the value chain from early on drug discovery all the way through commercialization. It shows up in the products we have on the market. It's an exciting time. For sure, we have the same challenges that any other industry has around adoption and making sure we have good value metrics and we understand the business case for what we're doing, but I'm incredibly excited about what I've already seen in the areas I've mentioned.

That's fantastic to hear, Keith, because I think across the industry, whether we look at pharma or animal health, AI is potentially addressing the entire value chain from R&D to commercial. Like you rightly said, the adoption challenges are more about can you really get the value from the investments that you might want to make.

It's a pretty incredible time if you think about it. There are so many possibilities. Our strategy at Zoetis on AI has not been let's pursue 200 or 300 things and see what grows. Instead, we took a very business value-based approach where we said what are the top challenges, what are the top opportunities for our industry, and let's make a handful of big bets in those areas.

Working with the board, with the executive team, in our first go-round a couple of years back, we prioritized seven big bets, both across our commercial business and across our R&D business. I think we took a more focused and intentional approach. Yes, they were more complex problems to solve, but they were also opportunities where if we did crack it, it was going to lead to a much more impactful outcome versus making Subhro or Keith 5% more productive in their day-to-day.

So we took a big bet sort of approach on those seven. We ran POCs. I think six of the seven hit well and are now in various stages of scale. That's going to continue to be our approach is really focused on the transformative, game-changing things we can do with AI.

Of course, we need to do the productivity, and the efficiency stuff. I mean, that's just responsible use of resources. We're going to do that, but we're going to stay heavily focused in these early days while there's still low-hanging fruit or big opportunities on the big bets, transformative things. That's where we're going to put our energy.

That's a tremendous point, Keith. I think it's good to hear that you're doing it very, very thoughtfully. We see that as a trend across all of our life sciences given the impact that we have on human and animal life. Most of our clients are looking for these complex problems that is worth solving instead of talking about the low-end productivity stuff, which possibly the ROI for it is there, but it's not really what you want.

Going back to your original point about how you can leverage it from a broader industry perspective and get to that 90 billion number and be a bigger part, I think that tech will play a huge role in that.

Yeah. I think as an innovation-based business, that's just where it makes sense for us to focus. The other advantage I see, and this was sort of accidental, I guess, by not putting so much focus on the more commoditized efficiency plays, there's almost a second-mover advantage that we can gain there. When others have paved that path, those are not things that are differentiated to Zoetis. Let's adopt and learn from what others have done and quickly harvest value where we can.

That's, again, a tremendous point. Yeah, let the others do it, and you always want to be a fast second, fast follower, and that works tremendously in our business. Yeah, good to hear that. Then what's your view on the partnerships? What are you expecting from your tech partners, broadly speaking?

It's interesting. We definitely have an approach where we want to pool in partnerships. We don't feel like we have to do all of this ourselves. Of course, we want the IP and the understanding of the business and the opportunities that exist in the animal health market. I want that knowledge in-house with Zoetis colleagues, but when it comes to delivery at scale, execution, delivery of new capability, we certainly look both within the company and outside the company.

We look for partners that can help us find that scale, help us with a better speed to value, and sort of a more enduring solution. We've partnered with software companies that we already have existing relationships with, professional services firms such as Infosys and others, really to help us generate scale and speed.

That's great to hear, Keith. I think if you look at the AI narrative today in the market, it has gone to the point where people just believe that you'll drop an AI technology in the mix and that's it. Everything will be solved, but we believe, like you have, that it has to be done much more thoughtfully from an enterprise perspective where the value for what you are doing is clearly articulated and it's not like you're investing because, as you rightly said, it's a shiny toy.

I think it's great to hear you talk about it. Quite honestly, the entire life sciences as an industry is very thoughtful in how it adopts technologies and what it means given the impact it has on humans and animals like we talked about. It's great to hear that. But now let's switch gears a little bit.

We look at AI and both you and me have young kids going into college. As you think about the future and you think about what we need to be doing, both professionally and personally, what is it that keeps you awake to say that, hey, as we look at the future, what keeps you awake and what gives you hope, if I may say?

Yeah, that's a broad question. I'll start with the AI angle there. I think there's obviously a lot of debate in the press right now about what is the impact of AI on up-and-coming recent college graduates, early career professionals, all the way through mid and late career as well. And when I look at the dynamics they're facing in education today, it's much different than you and I did. And I think we're still in this time of we know AI is disruptive.

We don't know exactly how it's disruptive and what it's going to mean to future roles. But when I talk to my kids or other young adults, I try to have the perspective of what can they do to sort of work alongside AI and not think so much about how do I avoid AI or how do I keep AI out of the space I want to work. I think the real possibility and the real unlock comes when you have a smart person who's motivated about and cares about the job they're going to do and knows how to do it with AI.

And I think that's generally kind of the best place you can go. And I think, yes, it's disruptive, and we see it today impacting new job offers. We recently are recruiting college interns or even early career professionals, and the pipeline has never been as full as it is right now.

So as a business, that's a wonderful opportunity to have to be able to hire the best of the best. But as a human in this broader society, it's a little concerning to think about. I almost wish we could fast forward through this trough of uncertainty that we're in now and really get young people confident again in their prospects because some of the young people I talk to really lack that confidence right now.

They really don't understand how they're going to fit into a broader career. They look at careers like others and adults in their life have had and it causes them concern. So I think AI is definitely in that realm of it's disruptive. We don't know exactly how, but if a person can be curious, can learn - how do I use AI to accelerate and add value in a topic I'm already passionate about, I think that's kind of the best scenario.

So that's how I think about AI in the job market. That does keep me up at night. I'd like to say there's nothing else, but of course there are. I think recently this whole evolution of nation states getting more active and engaged in cybersecurity attacks worries me deeply. What we've seen here recently in the last few weeks and few months, more sophisticated adversaries trying new tactics.

We have a large global enterprise. It's complicated. How do we protect that, still run a business in a reasonable way? That's a top issue. The geopolitical risk and uncertainty that's in the environment, regulations are evolving so quickly and they're not evolving in sync anymore. So one of the challenges that easily comes up is what may be required in one jurisdiction might be illegal in another jurisdiction.

So trying to thread the needle and find how do you maintain compliance globally, that's a more complicated proposition than I think it needs to be, but certainly than it has been in the past. That causes me some concern. And then I just think this sounds weird, but like keeping the spirit up in such a time of uncertainty, I think there's a tendency as humans we think about, well, if we can just get through this trying time, then it's going to be back to the good old days like it used to be. And I'm a believer that like that won't happen. There isn't a one or two things we pass through and we're just going to be back to life as good and it's easy and simple again.

And I worry about as a leader, how do I inspire the right kind of confidence in the future? How do we build a team and teams around us that are excited about the prospect of change and what change means and not intimidated by it? I think as humans, you know, change is a tough thing to deal with. And I think the better we can do as leaders to help the organization, just understand and expect that that's going to be the way of the future, I think the better. So really it's just three simple things. It's AI, geopolitical uncertainty, and then, you know, just keeping hope in a time that's very challenging.

Well, that's a tremendous perspective, Keith, because I think you summarized it well at the end, when looking at all the three changes that is the spirit. It's the spirit and the belief that, you know, we have actually never been in a state of steady state ever. We've always been different. We have always evolved.

And I think the younger generation, we just need to give them that spirit and the confidence that you guys will be fine. Just keep at it, learn new things, and we will come out of it strong and you will have opportunities and you don't need to do, I don't think we did or we are doing what our parents have done. So I think our kids will be perfectly fine.

And yes, the geopolitical risks and the nation states, they're completely new stuff we are dealing with from a change perspective, and I'm sure we will figure a solution out.

I think as you look ahead, right, and as you talked about AI, the geopolitical risks and all this stuff that's going to be going in front of us, if you had a crystal ball and said that, okay, five years from now, and you looked at your business today, Zoetis, in your mind that, okay, in five years from now, if your business were to look like this, you would have said, wow, we accomplished so much. So what would that look like for you?

That's an amazing question. I think as an industry, there's tremendous growth on the horizon. I think we're projected, animal health is projected to be about a billion industry by 2035. That's significant growth over where we are today. And if you think about the opportunity that tech and digital has in accelerating that, it's just awesome, right?

Like the things that are possible with machine learning, AI, data and analytics that we couldn't even, not only could we not have done, we couldn't even have imagined two or three years ago. For me to project five or ten years would be silly, but I just think it's a time of, like, I've never been as optimistic about the future as I am now.

I've never seen the opportunity for technology and digital to propel growth - at Zoetis, we don't look at tech and digital as an enabler. It is a strategic imperative. We have to win in the market with tech and digital. And when you have that sort of mindset, it opens up a whole set of new possibilities that you would otherwise miss. So I think five to ten years from now, the animal health industry will have grown significantly.

I think the premium and the value that we bring through technology is only increasing. Everything we do is based on data, whether that's AI, ML, anything. Data is the foundation, so we're making big investments to make sure we understand our business, we have data, and it's easily accessible and well-known across the organization. I think the standard of care will have advanced for animal care, animal welfare. It's just an amazingly complex but opportunistic time.

This is a fantastic answer, Keith, because the excitement of what the future can be and the possibilities are undefined and gigantic. And I think that goes back to the previous point we were discussing, that the hope that we have for the next generation is only better, that they will inherit a world which is much better.

And I think this has been a tremendous conversation, Keith. I'm sure the audience would have heard and learned a lot from you and your experiences that you have shared. So thank you for being on this show. To all the audiences out there, thank you for joining and listening in. Talk to you guys soon.