Wetteny Joseph
Executive Vice President and Chief Financial Officer at Zoetis
Thank you, Kristin, and good morning, everyone. To reiterate, innovation and execution underpinned an excellent third quarter, driven by the strength of our diverse and differentiated portfolio. Another quarter of double-digit operational growth across species and geographies. The remarkable performance of our companion animal portfolio highlights the willingness of pet owners to spend on the health and well-being of their pets and the value of our products to pet owners and veterinary practices.
Our livestock growth underscores the essential and growing need for animal protein around the world, and the important role our products play in helping producers keep their herds healthy. Put simply, we provide critical solutions central to animal health. Our success is directly tied to our customers, and our first-to-market innovations continue to fuel the growth and success of their practices.
In the third quarter, we posted $2.4 billion in revenue, growing 11% on a reported basis and 14% operationally, with 8% driven by volume and 6% from price. Adjusted net income of $716 million grew 14% on a reported basis and 15% operationally. Revenue growth in the quarter was driven by our innovative companion animal portfolio. Globally, OP pain mAbs contributed $151 million. Our Simparica franchise posted $333 million, and our key dermatology franchise contributed revenue of $449 million. Our lifestyle portfolio also contributed strong growth with $758 million in revenue.
Regarding our OP pain mAbs, Librela and Solensia, in Europe, after just 3.5 years on the market, Librela and Solensia are the leading treatments for OA pain and are driving market expansion by broadening treatment options across cases. As Kristin mentioned, many of these patients were previously untreated because they could not tolerate NSAIDs. In Europe and the US, Librela expansion into this patient group represents a significant market growth opportunity.
In the US, the growing importance of mAbs cannot be understated. While overall US clinic visits are down, particularly for prescription-only visits that are moving to alternative channels, therapeutic visits such as those for OA are on the rise. In the US, Librela has brought almost 0.5 million new patients to the OA pain category since launch by expanding the market with a new standard-of-care.
Our performance within the Simparica franchise highlights our ability to meet the evolving needs of pet owners by delivering safe, effective products to convenient channels such as retail, where Trio is the top-selling pharmaceutical. Parasiticides is the largest, most competitive therapeutic category in animal health, and we have substantially increased our market share by being the first-to-market in the US with a trusted differentiated product.
Since the launch of Trio, we have gone from number five in this category to number two with clear triple combination market leadership. And in the first year of competition in US triple combinations, we grew revenue by more than 25% and increased our market share. In the US, we estimate almost 60% of medicalized dogs are not on triple combination products. The increased share of voice from new entrants should accelerate the shift to triple combinations, where we have a first-to-market advantage.
We continue to win with puppies, where Trio is the preferred choice for these new patients, signaling strong growth potential. Earlier, Kristin highlighted the deliberate balance between safety and efficacy with our key dermatology products. Apoquel delivered on that and quickly became one of the most important products in clinics. We understood our customers wanted more convenient options for derm treatment, and we delivered.
We have multiple derm products with unique value propositions for both the vet and the pet owner. All of our products can be used on acute, seasonal and chronic cases and have years of real-world vet and pet owner satisfaction. As we face new competition, we remain confident in our growth trajectory. We have proven experience defending established brands and we are confident that our portfolio of first-line treatments will remain among the most important products in vet clinics.
Now let's move to segment results. US revenue grew 15% in the quarter with companion animal growing 18% and livestock growing 5%. US companion animal performance was driven by our OA pain mAbs, including the launch of Librela, as well as continued adoption and compliance of Simparica Trio and our key dermatology franchise.
We continue to grow above-market, driven by increased therapeutic treatment for OA and dermatology, veterinarian's preference for injectables and evolving pet owner preference for retail convenience and home delivery, which also boosts compliance with oral medications. Our OA pain mAbs, Librela and Solensia, posted a combined $73 million in US sales in Q3. Librela generated $55 million, primarily on increased clinic utilization. Penetration has reached 85%, faster than any product in our history.
A crucial first step-in our successful launch was ensuring clinic availability. And again, we are just scratching the surface with OA. Just as we've seen with our key dermatology franchise, addressing unmet needs with revolutionary treatment can deliver long-term growth, and we believe Librela will be a growth tailwind for years ahead.
Solensia posted $18 million in revenue, or 50% growth. While the incidence rate for OA in cats is similar to dogs at around 40%, there were very few treatment options for cats prior to Solensia. Since Solensia's launch in the US two years ago, we have seen feline OA patients increase over 70%. With current feline medicalization rates significantly lower than dogs, boosting feline treatment presents a significant untapped opportunity.
Simparica Trio posted US growth of 29%, with $237 million in revenue. We previously highlighted Trio's momentum through the first year with competition, and our expectations remain high. As we have seen with previous generations of parasiticides, secondary entrants serve to accelerate conversion from older therapies. But in the absence of meaningful differentiation, they do not erode market share. In addition to robust volume growth for Trio, we continue to see the benefit of price driven by our lower promotional environment, and more thoughtful discounting across our customer base.
In US key dermatology, we saw 17% growth, or $303 million, for the quarter. Apoquel was the largest driver with outsized contributions from the retail channel. Apoquel Chewable growth outpaced tablet cannibalization declines, benefiting from increased conversion and compliance. Cytopoint growth continues to be driven by preference for injectables. US livestock grew 5% in the quarter, primarily driven by volume growth in cattle, where we continue to see improved supply of Seftifer [Phonetic]. This growth was partially offset by Draxxin price declines.
Moving on to our International segment. Revenue grew 7% on a reported basis and 13% operationally in the quarter. International livestock grew 15% operationally and companion animal grew 11% operationally. International livestock grew 15% operationally in the quarter with equal contributions from volume and price. Cattle was the largest growth contributor, driven by the impact of price in high inflationary markets, as well as volume growth from higher demand and improved supply. Poultry growth was driven by price and key account penetration.
Lastly, fish saw strong volume growth in Norway, driven by high demand for our vaccines, as well as the impact of a soft comparable period last year. International companion animal growth was driven by our Simparica key dermatology and OA pain mAbs franchises. Our international Simparica franchise grew 28% operationally, with $75 million in sales. Performance was driven by Simparica Trio, growing 39% operationally to $31 million in sales, benefiting from key account growth in Europe, DTC and the positive impact of our Q1 China launch. Simparica grew 22% operationally on $44 million in sales, driven primarily by Eastern Europe and Brazil.
Our international key dermatology franchise contributed $146 million of revenue and 13% operational growth, with double-digit operational growth in Apoquel and Cytopoint. Growth was driven by Apoquel with strong DTC success, especially in European markets. Europe is also benefiting from strong adoption of Apoquel Chewable, where we now see more than half of doses dispensed coming from the chewable formulation. Our key dermatology franchise continues to expand internationally. Many countries are still in the early stages of derm market development and increases in medicalization as well as the benefits that chewable and injectables can offer, provide a significant run rate for growth.
Internationally, our OA pain mAbs grew 27% operationally, posting $78 million in combined revenue. International sales of Librela were $62 million, growing 26% operationally. The growth of Librela was driven by higher use in Europe, as well as market expansion and share gains in second-wave launch markets. We see opportunity for continued market expansion from converting existing NSAID patients and increasing months on therapy. Solensia sales were $16 million, growing 32% on an operational basis.
Now moving on to the P&L for the quarter. Adjusted gross margin of 70.7% grew 20 basis points with increases from price and mix, offset by higher manufacturing costs. Adjusted operating expenses increased 9% operationally. Growth was driven primarily by SG&A expenses of 9% operationally, largely due to higher compensation-related expenses due to company performance. R&D grew 10% operationally in the quarter on higher compensation-related expenses due to company performance and increases in project spend related to internal portfolio advancements. Adjusted net income was faster than revenue at 15% operationally. Adjusted diluted EPS grew 17% operationally for the quarter.
Now moving on to guidance for the full year 2024. Our raised revenue guidance reflects continued strong performance of our key franchises, partially offset by a reduction to sales for the divestiture of our medicated feed additive product portfolio and certain water soluble products completed October 31. As Kristin highlighted, we remain committed to livestock and see opportunities in several therapeutic areas, enhanced by our strategic partnerships and focus. Please note that guidance reflects foreign exchange rates as of mid-October.
For the year, we expect revenue between $9.2 billion and $9.3 billion, a range of 10% to 11% operational growth. This is both an increase and a narrowing of our revenue range versus our prior full year guidance. We now expect adjusted net income to be in the range of $2.67 billion to $2.695 billion, representing operational growth of 13.5% to 14.5%. Finally, we expect adjusted diluted EPS to be in the range of $5.86 to $5.92 and reported diluted EPS to be in the range of $5.33 to $5.39.
We have seen outstanding performance in 2024 thus far with broad-based growth from our key innovative products across species and geographies, and we remain very positive on the remainder of the year and beyond. Our guidance, combined with our year-to-date results, does signal some expected deceleration in our revenue growth rate for Q4 specifically.
As a reminder, revenue growth in Q4 will be impacted by the MFA divestiture, reflecting a reduction of two months of US sales and one month from our international business out of our results in Q4. Additionally, we also saw the impact of stocking from the launch of both Librela and Apoquel Chewable in Q4 of last year. Normalizing for these items, Q4 will be more in line with our historical growth rate. We remain confident in underlying demand and market dynamics as we move into the fourth quarter and then 2025. Our outlook for next year remains positive.
We continue to see favorable trends in our key franchises, including OA, dermatology and Simparica, as well as momentum from alternative channels. While we anticipate the recent tailwinds from higher inflation to normalize, our recent performance has significantly outpaced price-driven gains alone. Additionally, we expect headwinds in China to normalize in Q4 and moving into next year. We estimate these headwinds have had approximately 1 percentage unfavorable impact to our growth this year that should normalize in 2025.
We are confident in our continued ability to grow above the animal health market, driven by the strength of our portfolio, pipeline and our dedicated colleagues.
Now, I'll hand things over to the operator to open the line for your questions. Operator?
