Pfizer

Pfizer’s CEO attacked planned drug pricing reform for singling out their industry

Pfizer’s CEO attacked the proposed Inflation Reduction Act for implementing “price setting” and “forcing their will” on his industry.“Albert Bourla — Chairman and Chief Executive Officer: Thank you. I’m disappointed with what I’m reading in the newspapers. Of course, we can’t know exactly what will happen because we have seen that this situation is very volatile. But everything that they are reporting, they are going to implement a price setting. In reality, it’s not a price negotiation because they are forcing their will by implementing a 95% tax according to previous guidance. That will cause the industry significant. We estimate $270 billion over 10 years. There is a positive provision there that they are reducing the out-of-pocket cost for the patient. That’s a significant one, but it’s too little and too late. They could do way more because that will cost 10% of the $270 billion that they’re going to collect. They are basically not doing that to alleviate patients’ cost because they could give all the money and then make significant, significant difference to the patient. They’re just giving a part of that. And they want even to start it, if I understood well, from year 2025. So although the out-of-pocket is a very positive provision, but the (rest one) is a provision that I think will force the industry to reduce R&D if it goes the way that they are they are suggesting. So other than that, I don’t have anything to add. We will wait to see how the — what exactly in reality that means and we’ll go from there.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO said the legislation was “choosing to single out this industry. I think it’s wrong.”“Albert Bourla — Chairman and Chief Executive Officer: And also I want to say it is very disappointing that they are choosing to single out one industry. Everything in this bill, from what I understand, (indiscernible )that is affecting everyone. But then there are specific measures to affect only the pharma industry, particularly when we are out of a pandemic, where this industry has proven the value that brings to public health and to the global economy. We would be in a very different point in this global economy if we didn’t have the investments in the thriving life sciences sector. And they are choosing to single out this industry. I think it’s wrong. And I hope that reason will prevail when these discussions goes to Congress. Let’s move to the next question, please.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO complained about the focus on pricing but admitted the company would raise prices more if the government didn’t organize large purchases

Pfizer’s CEO complained “very time I speak about pricing, it’s becoming big news.”Albert Bourla — Chairman and Chief Executive Officer: Thank you very much. Chris, we do not provide, let’s say, forward-looking projections on pricing. And particularly, every time I speak about pricing, it’s becoming big news. So I want to make sure that we respect that.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO implied that while the company provided “special pricing” on large government orders, that prices would increase in a “normal market.” “Albert Bourla — Chairman and Chief Executive Officer: I know what you are asking. And I can give a very high-level answer. Clearly, we are providing special pricing when we are contracting very, very big quantities with governments. That’s also the incentive for the government to buy big quantities because the price is really, really very attractive. But if we move to a normal market, the prices would reflect both in vaccines and in antivirals, the prices of similar value, similar technology products that they are out there. And clearly, also when you move to private commercial markets, the complexities are getting way, way higher. We will need to go to single doses in the vaccines. So manufacturing complexities are very higher.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CEO said the company would see “significant opportunities” in an “open market” because “that creates a very big complexity but also could be taken into consideration as we price our products at that time. “ “Albert Bourla — Chairman and Chief Executive Officer: We need to have distribution to small distribution centers, including physician offices. So all of that creates a very big complexity but also could be taken into consideration as we price our products at that time. And I want to emphasize that also those present significant opportunities for us. Because the open market, it is way more complex, way more diverse to have millions of customers rather than one or two. And this plays to our strengths in terms of having global presence or within the U.S., dramatic presence in every single territory of the country with thousands of people that they are calling physicians, hospitals, accounts, in payers’ accounts, etc., etc. So it’s something that if we see a turn into this market, also we will see us being able to compete more of a position of strength than now. “ (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CFO crowed about the company’s “cash generation capabilities,” noting $25 billion has been funneled to their investors

Pfizer’s CFO: “Over the past few years, Pfizer’s cash generation capabilities have expanded significantly.”“Dave Denton — Chief Financial Officer: Over the past few years, Pfizer’s cash generation capabilities have expanded significantly. And the efficient deployment of this capital is more critical than ever. It is clear to me the company is uniquely positioned for both growth and, at the same time, enhancing financial returns. And as we look to the future of the company, we are focused on three primary areas to drive significant shareholder value. First and foremost is our continued emphasis and investment in science and innovation. We are investing internally and externally to create breakthrough medicines, deploying more than $50 billion in this area in the past three years alone.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer said it had paid out more than $25 billion to shareholders recently, including over $6 six billion in 2022 alone.“Dave Denton — Chief Financial Officer: Our second priority is maintaining and growing Pfizer’s dividend, paying out more than $25 billion to shareholders over this period. We recognize that our dividend represents an important component of returns for our investors. And finally, from time to time, we will return capital to shareholders through value-enhancing share repurchases. Over the past three years, the company has allocated nearly $9 billion in this area. Clearly, maximizing shareholder value will be a major focus. And I believe that all three areas will contribute to our success. More recently and year to date, we deployed more than $12 billion into innovation, paid dividends of $4.5 billion, and repurchased $2 billion worth of our shares. This demonstrates an ongoing commitment to our robust capital deployment framework.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer’s CFO said their performance was strong enough that it was increasing revenue expectations by $2 billion, a “65% operational growth at the midpoint compared to 2021.” “Dave Denton — Chief Financial Officer: Given our strong second quarter performance and our improving outlook for the year, we are increasing our operational expectations for both revenues and adjusted earnings per share. For the full year, we are increasing our operational revenue expectations by $2 billion, and operational adjusted diluted earnings per share expectations by $0.24. Unfortunately, given additional U.S. dollar strengthening since we last updated guidance in early May, foreign exchange negatively impacts revenues by approximately $2 billion, leaving our reported revenue guidance range unchanged at $98 million to $102 billion. This represents an operational growth rate of 29% at the midpoint compared to 2021, a 200-basis-point improvement over prior expectations. The improvement in our operational adjusted diluted earnings per share outlook of $0.24 is also negatively impacted by foreign exchange movements, compressing EPS by $0.19. The net impact of these cross-currents allows the company to raise the low end of its adjusted earnings per share outlook by $0.05 to $6.30 to $6.45 a share. This represents 65% operational growth at the midpoint compared to 2021.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Despite complaints about government price setting, Pfizer reported record profits thanks to federally funded covid drugs

Pfizer predicted over $50 billion in revenue and sales between the covid vaccine and paxlovid. “Dave Denton — Chief Financial Officer: Regarding our COVID-19-related revenues. We continue to expect the vaccine revenue for the year to be approximately $32 billion, unchanged compared to the prior guidance provided on May 3, despite the impact of approximately $1 billion of incremental negative foreign exchange. For Paxlovid, we expect sales of approximately $22 billion, keeping the guidance unchanged, again despite an incremental $300 million headwind due to FX. Our non-COVID-related revenues are absorbing approximately $700 million of impact from negative foreign exchange.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer reported that the company was seeing an all time high in paxlovid usage, thanks to the Federal Government’s “Test to Treat program.” “Angela Hwang — President, Pfizer Biopharmaceuticals: So I think that gives you a sense of how much demand is coming in from all of the states. And then every single week, our utilization of Paxlovid has also increased. In fact, most recently, we hit an all-time high of 389,000 doses of Paxlovid that were used just in one week. So that gives you a sense of sort of the increase and the momentum. What’s really driving this is obviously the education and the familiarity and the experience now of physicians, as well as patients, but also the excellent work that is being done at the federal, as well as the state level — at the state level, in terms of education and utilization. And I want to call out, in particular, the Test to Treat program that I think has been particularly effective and very positive. To date, more than 41,000 pharmacies are now Test to Treat centers. And that means that that just gives access to a tremendous amount of the population to be able to access Paxlovid.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

A Pfizer executive said that currently it pushing paxlovid in a “unbranded” fashion but “ in a commercial setting, you could support through branded education and talk a lot more about the product.” “Angela Hwang — President, Pfizer Biopharmaceuticals: And then I think, finally, even if you think about consumer education, today, we’ve really limited ourselves to unbranded in sort of disease awareness education. But again, in a commercial setting, you could support through branded education and talk a lot more about the product. And so all of these are things that actually Pfizer does and the commercial organization of Pfizer does really well. This is our sweet spot.” (Pfizer Q2 2022 Earnings Call, 7/28/2022)

Pfizer predicted record high revenue in 2022 projecting over $50 billion in sales between the covid vaccine and paxlovid. “Pfizer projects it will generate record-high revenue in 2022, saying Tuesday it expects to sell $32 billion of its Covid-19 shots and $22 billion of its antiviral coronavirus treatment pill Paxlovid this year. However, the company posted mixed fourth-quarter results, beating on earnings but missing on revenue. Pfizer’s stock was down more than 5.7% in morning trading.” (CNBC, 2/8/2022) 

Pfizer reported fourth quarter revenue doubling to $23 billion thanks to $12.5 billion in covid vaccine sales. “However, Pfizer’s fourth-quarter revenue more than doubled overall to $23.84 billion year-over-year, driven by $12.5 billion in sales of its Covid vaccine. The company’s antiviral pill that fights Covid, Paxlovid, contributed $76 million in U.S. sales during the fourth quarter. The Food and Drug Administration gave the pill emergency approval in December.” (CNBC, 2/8/2022) 

Pfizer still disappointed analysts because of sales declines in “internal medicine” and flat “hospital sales.” “Pfizer’s miss on revenue was driven by lackluster sales in its internal medicine and hospital segments. Fourth-quarter internal medicine sales fell 3% year-over-year to $2.24 billion, while hospital sales were largely flat at $1.88 billion. Pfizer’s oncology sales expanded 7% to $3.24 billion compared with the year-earlier period.” (CNBC, 2/8/2022) 

Pfizer has raised prices on at least 100 drugs in 2022 so far, with an average price hike of 4%. (GoodRx, accessed 2/11/2022)

Pfizer executives crowed to Wall Street analysts that their covid treatments would be a long term multi-billion franchise

Pfizer’s CEO: “we believe our COVID-19 franchises will remain multibillion-dollar revenue generators for the foreseeable future which should serve as a buffer for any unforeseen challenges” “Albert Bourla — Chairman and Chief Executive Officer: And of course, we have many more potential vaccines and medicines in our pipeline with numerous launches expected in the ’24 to ’30 time line. These include gene therapy candidates for hemophilia A, B, and Duchenne muscular dystrophy; our oral GLP-1 for diabetes and obesity; a potential combo vaccine that would cover flu and COVID-19 in one shot and many, many more. With regard to our COVID-19 products, while their sales may fall from our expected 2022 levels of approximately combined $55 billion, we believe our COVID-19 franchises will remain multibillion-dollar revenue generators for the foreseeable future which should serve as a buffer for any unforeseen challenges with other products in our portfolio. Our confidence to execute this plan stems from the depth of our financial resources and the firepower it gives us to pursue business development opportunities, the power brand equity we have built up over the past 170 years and further enhanced in the past two years” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer’s CFO told analysts it expected annual covid vaccine revenue to reach $34 billion, and Paxlovid sales to reach $22 billion. “Dave Denton — Chief Financial Officer: The net impact of these cross-currents result in increases to the midpoint of our revenue and adjusted diluted earnings per share guidance ranges. These revised ranges reflect operational growth rates of 31% for revenues and 70% for adjusted diluted earnings per share at the midpoint compared to 2021. And this was up from our previous operational growth expectations for revenues and adjusted diluted earnings per share of 29% and 65%, respectively. Regarding our COVID-19-related revenues, we now expect the vaccine revenue for the year to be approximately $34 billion, up by $2 billion compared to our prior guidance. For Paxlovid, we expect sales of approximately $22 billion, keeping the guidance range unchanged despite the negative incremental impact of changes in FX. “ (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer’s CFO on covid: “the franchise is going to be a multibillion-dollar franchise in the respect that this is going to be somewhat like a flu, sustained flu, but actually more deadly than the flu.” “Dave Denton — Chief Financial Officer: Yes. Thank you, Albert. Maybe let me discuss the stage as it relates to COVID and the COVID franchise. I think if you look out longer term, the franchise is going to be a multibillion-dollar franchise in the respect that this is going to be somewhat like a flu, sustained flu, but actually more deadly than the flu. So, therefore, I think the products, both from a vaccine and the therapy perspective that Pfizer has developed, they’re going to be quite relevant for many years to come. Having said that, when we provide guidance for 2023, when it’s appropriate to do so, we will give investors a perspective on what our expectations are for the year. We will break out that guidance specifically so you can hold us accountable for delivering on those revenue promises when the time comes. (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer CEO: “ is it unthinkable — is it unreasonable to think that we could have a $15 billion franchise?” “Albert Bourla — Chairman and Chief Executive Officer: Thank you, Mikael. Before I turn to Dave to answer the question about the sales of Nurtec in the third quarter, let me make a comment on Comirnaty and Paxlovid and the franchise. Clearly, we said they will provide us a good picture of what we expect to be the sales for next year. Now you’re asking about year 2030, which is even more challenging. But also, the way you are asking the question, is it unthinkable — is it unreasonable to think that we could have a $15 billion franchise? Well, taken that it is 55 right now, it’s not unreasonable to think that in year 2030 could be that. But it’s not clear that it will be done. So that will depend on the virus and how it saves. Will depend on if it will become a standard practice to vaccinate together with flu. If we will have a combination product, clearly, that will enhance this direction. So I think it’s a little bit too early, but no, it’s not unreasonable to think given where we are right now. “ (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer emphasized that it would benefit as covid treatments moved to commercial payment models

Pfizer’s CEO predicted that covid treatments “government model into a commercial model for vaccines and therapeutics” would “bring both therapeutics and vaccines into a multibillion-dollar franchise.” “Albert Bourla — Chairman and Chief Executive Officer: Now when we move to COVID, we expect ’23 will be a transition year with likely in the U.S. moving from government model into a commercial model for vaccines and therapeutics. The timing is not certain. So we are ready to do either side, but will be phased over the years. And it likely will not be the same for Paxlovid or Comirnaty. And clearly also, there will be some stuff that will have to be depleted in ’23. And clearly, there will be new price dynamics as we are moving to ’23. So probably will be a little bit more of a transitional year in ’23 until it will be established into more like flu volumes type of market, but of course, with different price points and different severity of the disease, that will bring both therapeutics and vaccines into a multibillion-dollar franchise, but we are not going to predict now what will be the number for the years out, but we will try to be as accurate as possible for our ’23 numbers when we will provide guidance.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer’s CEO stressed their covid vaccine was moving to more expensive variable pricing, but “people wouldn’t see the difference because there’s no copay.” “Albert Bourla — Chairman and Chief Executive Officer: Yes. I can answer both of them. Look, I think what was very bold and the right absolutely decision was to price the Paxlovid during the pandemic at a very, very, very low price. Clearly, the price that — excuse me, the vaccine at a very, very low price. That was the right thing to do, and we did it and we maintained that for the years to come. Now that we are coming to the end of this period, and as we are moving to very different products, which is very different presentations, which are — now we are moving to single instead of mass viral multi-dose vial, we are pricing the vaccine according to the cost effectiveness, and the cost effectiveness of the current vaccine. The way that CDC is pricing, it is way, way, way below than what the price that we have set [Inaudible] start. Also keep in mind that people will not see any difference and the system will get the benefit of a cost-effective product. And the people wouldn’t see the difference because there’s no copay.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer’s CEO repeatedly noted its vaccines benefitted from being zero-copay, so patients didn’t notice price hikes

Pfizer’s CEO stressed that its vaccination products would have “zero co-pay,” with only insurers bearing the cost. “Albert Bourla — Chairman and Chief Executive Officer: Drew, thank you. In the interest of time, let me give the first answer. Yes, you are right. As long as the product is recommended by CDC, and we believe with this part of efficacy will be recommended, there is zero co-pay. The relevance of the insurance, if it is commercial or if it is public, their obligation is zero co-pay from the payers, and they have to cover it.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer’s CEO contrasted vaccine with antibody treatments: “antibodies are quite expensive, and you do have co-pays.” “Albert Bourla — Chairman and Chief Executive Officer: Thank you very much. And of course, Andrew made also the point, with vaccines, we do not have co-pays. And antibodies are quite expensive, and you do have co-pays.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer singled out RSV and migraines as other multi-billion “franchises”

Pfizer predicted their maternal RSV vaccine could become a “multibillion-dollar peak revenue opportunity if approved.” “Albert Bourla — Chairman and Chief Executive Officer: We are also excited about the potential for our maternal RSV vaccine candidate. Globally, each year, RSV [Inaudible] more than 6.5 million infants under six months old and kills approximately 45,000. As announced this morning, our maternal RSV study met the success criterion for one of the two primary endpoints. Vaccine efficacy of 81.8% was observed against severe medically attended lower respiratory tract illness due to RSV in infant’s birth through the first 90 days of life. And high efficacy of 69.4% was demonstrated through the first six months of life. So there is the potential that, subject to regulatory approval, by late 2023, early 2024, we could have the only RSV maternal vaccine in the market, along with an RSV vaccine for older adults, that has high efficacy, and it is well tolerated with no safety concerns. Combined, the two indications represent a potential multibillion-dollar peak revenue opportunity if approved, especially with our high-respected primary care sales force executing these launches.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer CEO: “for RSV, I would say, clearly, we think that could become like flu. I think all respiratory diseases eventually will have coverage like we have right now in flu.” “Albert Bourla — Chairman and Chief Executive Officer: All right. And then for RSV, I would say, clearly, we think that could become like flu. I think all respiratory diseases eventually will have coverage like we have right now in flu. The question is how often that will happen. And that will depend on several factors. Education, of course, of the people and their physicians, but also the availability of combination programs and products that could significantly bring all three of them together, RSV, COVID, and flu.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer predicted their “migraine franchise” could become a $6 billion business. “Albert Bourla — Chairman and Chief Executive Officer: Lastly, let’s look at migraine. Following our acquisition of Biohaven in early October, we are now aiming to build the world’s leading global migraine franchise with the potential to impact 1 billion patients around the world. Migraine is a debilitating disease and has 11.6% prevalence worldwide. In the U.S. alone, there are 40 million patients with migraine, and one out of five women are migraine sufferers right now. The economic burden is significant at $36 billion per year. We believe our portfolio, including Nurtec ODT, Vydura, and zavegepant could meet the range of needs in the market, allowing physicians and patients to decide how to appropriately monitor migraine treatment and prevention. As a result, we see the potential to reach more than $6 billion in peak revenue altogether.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Pfizer executives explained they were using their “cash generation capabilities” to drive M&A and consolidation

Pfizer’s CFO described how the company was using its profits to consolidate the industry by spending tens of billions buying other drug makers: “As you know, Pfizer’s cash generation capabilities has expanded significantly over the past several years…” “Dave Denton — Chief Financial Officer: Thank you, Albert, and good morning. I’ll begin this morning with a few comments regarding how the company continues to deploy capital in a disciplined manner in support of long-term growth and, importantly, enhanced shareholder returns. As you know, Pfizer’s cash generation capabilities has expanded significantly over the past several years and the efficient deployment of this capital is more critical than ever. During the first nine months of 2020, the company has deployed and committed capital in three main areas: First, we’ve invested $7.8 billion in internal R&D as we continue to support our growing pipeline of innovative medicines. These investments are squarely focused on driving revenue growth through 2030. Secondly, in the first three quarters of this year, we have invested approximately $8 billion in completed business transactions. Additionally, early in the fourth quarter, the company completed investments for more than $18 billion in transactions, including both Biohaven and GBT, which brings us to approximately $26 billion in capital deployed for business development transactions thus far in 2022 alone. “ (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

A Pfizer executive stressed “cost synergy-driven deals is not where our focus is going to be. We’re going to be focused on driving growth through our (business development).” “Aamir Malik — Chief Business and Innovation Officer: Thanks for the question, Colin. The BD priorities remain consistent with what we’ve articulated before. And principally, we are most excited about scientific substrate that has the potential for patient breakthroughs. That’s going to continue to be our north star. We’re looking for deals that accelerate our top-line growth in the back half of the decade. And importantly, we’re focused on opportunities where we can add substantial value, and that can come in the form of either shaping the science or also accelerate in our commercial momentum. And if you look at the deals that we announced and closed in 2022 including Arena, Biohaven, Array, GBT, they would all be very consistent with those priorities. We’ve said that we are agnostic to size of transaction. But you’ve also heard us be very clear about the fact that cost synergy-driven deals is not where our focus is going to be. We’re going to be focused on driving growth through our BD.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)

Thanks to covid profits, Pfizer spent nearly $9 billion dividends and stock buybacks

Pfizer used its pandemic fueled profits to funnel nearly $9 billion to investors through dividends and stock buybacks. “Dave Denton — Chief Financial Officer: And finally, we have returned nearly $9 billion of capital to shareholders through a combination of both dividends and value-enhancing share repurchases. Clearly, maximizing shareholder value through prudent capital allocation will continue to be a major focus for Pfizer. So with that, let me briefly review our financial results for the quarter. I’ll limit my remarks largely to adjusted and operating growth figures.” (Pfizer Q3 2022 Earnings Call Transcript, 11/2/2022)