Post by icemandios on Jan 9, 2024 15:35:33 GMT
Pfizer CEO says it's back to basics after painful 2023 for investors: #JPM24
Drew Armstrong
Executive Editor
SAN FRANCISCO — Pfizer CEO Albert Bourla said the company has made the major cost-cutting moves required to reset its business, and will focus on executing on operations and growing margins in 2024.
In a wide-ranging lunch with reporters ahead of the company’s presentation at the JP Morgan Healthcare Conference on Monday, Bourla talked about Pfizer’s challenging past year and the changes it’s made. That has included broad cuts meant to strip excess costs from its Covid period, executive changes, and focusing on deleveraging and returning capital.
“I recognize that the last year was a very bad year for investors,” Bourla said of 2023, in which the drugmaker’s stock $PFE dropped 44%. “I think it will be a very good year in 2024.”
There are no new cost cuts planned, he said, emphasizing that Pfizer had made last year’s staff reductions as quickly as possible to turn the focus to the new year. By the end of 2023, everyone in the US business “knew if they were in or out,” he said.
And Bourla said that despite questions from some investors, there were no plans to cut the company’s dividend and will instead focus on growing it. That matches with what he called a priority to give back capital to investors after years of spending on M&A to reload the pipeline.
Issues with execution and forecasting
But Bourla said that part of the challenge in 2023 had been how the company had managed the commercial side of its business.
“We were not very happy with the performance of some” product launches, Bourla said. That side of the business “used to be a well-oiled machine,” Bourla said, and “we took some measures to correct that.” He cited the example of the company’s RSV vaccine, a space where GSK and its competing vaccine have dominated, winning more than 70% of the market, according to the UK company.
“That to me was very unacceptable. GSK was able to do better contracting and better execution,” Bourla said.
The company has made a set of changes at the top, and last month announced that chief commercial officer and global biopharma president Angela Hwang was departing. Bourla said Hwang collaborated on the changes, including splitting the US and international operations, and creating a distinct oncology division to help oversee the company’s bigger goals.
The New York-based company last year also took down a huge portion of its 2023 sales forecast after demand for its Covid products had waned, and the US returned doses of Paxlovid that had been cleared for use under an FDA emergency authorization. The company also overestimated how many people in the US would get its vaccines, originally projecting that 24% of the US population would get Covid shots this year. The actual number has turned out to be 17%, Bourla said.
“It is multi-factorial why investors’ confidence in Pfizer was hurt and the stock went down. Covid was only one element,” Bourla said. But the issue overshadowed what Bourla said was good news, particularly the completion of its $43 billion purchase of Seagen and its ADC assets, and tilted other things — like Pfizer’s decision to place an immunology asset with Roivant that was later sold in a blockbuster deal — into a bad light.
Obesity, cancer and what’s next
“I don’t expect we will go and buy a Phase III asset for multibillion dollars, but in terms of licensing assets that are cheaper and earlier, we are scanning the environment,” Bourla said. Pfizer also has another GLP-1 molecule in early-stage testing, as well as another drug that uses a mechanism that the CEO declined to disclose.
And despite the setback with danuglipron, Bourla said he believes there is still substantial room for other players.
“The market is currently a duopoly, but there will be fierce competition,” he said. “We believe we have the ability to play and win.”
Having closed the deal with Seagen, Bourla said Pfizer’s goal was to be a world leader in oncology, and to do everything they could to hang onto key staff who came over in the deal. He used one of his favorite metaphors for the deal, calling Seagen “the goose that laid the golden eggs.”
And he said he had no regrets about the deal to move an immunology asset targeting TL1A to Roivant, which flipped the program to Roche in short order for $7.1 billion.
The company still owns significant overseas rights on the drug, and will get royalties in the US if it’s approved here. Bourla said he estimated that Pfizer owned about half the value of the drug.
And while past practice might have been to kill a program that the company wouldn’t pursue, he was happy he had found a home for it.
“Everything we decided to stop, we have tried to find a home for,” he said. Killing it off, he said, would have been “stupid.”
“For a Phase I asset, when I look over all the benchmarks, it was quite a good deal,” he said. But, he acknowledged, “looking back, it created a lot of discussions that were exacerbated, because when you’re not doing well, everyone asks a lot of questions.”
Editor’s note: This story has been updated to add a comment from Bourla on the company’s organizational changes.
Drew Armstrong
Executive Editor
SAN FRANCISCO — Pfizer CEO Albert Bourla said the company has made the major cost-cutting moves required to reset its business, and will focus on executing on operations and growing margins in 2024.
In a wide-ranging lunch with reporters ahead of the company’s presentation at the JP Morgan Healthcare Conference on Monday, Bourla talked about Pfizer’s challenging past year and the changes it’s made. That has included broad cuts meant to strip excess costs from its Covid period, executive changes, and focusing on deleveraging and returning capital.
“I recognize that the last year was a very bad year for investors,” Bourla said of 2023, in which the drugmaker’s stock $PFE dropped 44%. “I think it will be a very good year in 2024.”
There are no new cost cuts planned, he said, emphasizing that Pfizer had made last year’s staff reductions as quickly as possible to turn the focus to the new year. By the end of 2023, everyone in the US business “knew if they were in or out,” he said.
And Bourla said that despite questions from some investors, there were no plans to cut the company’s dividend and will instead focus on growing it. That matches with what he called a priority to give back capital to investors after years of spending on M&A to reload the pipeline.
“I’m talking to a lot of investors and they are all over the place. It depends on what is their investment style,” he said.
But Bourla said that part of the challenge in 2023 had been how the company had managed the commercial side of its business.
“We were not very happy with the performance of some” product launches, Bourla said. That side of the business “used to be a well-oiled machine,” Bourla said, and “we took some measures to correct that.” He cited the example of the company’s RSV vaccine, a space where GSK and its competing vaccine have dominated, winning more than 70% of the market, according to the UK company.
“That to me was very unacceptable. GSK was able to do better contracting and better execution,” Bourla said.
The company has made a set of changes at the top, and last month announced that chief commercial officer and global biopharma president Angela Hwang was departing. Bourla said Hwang collaborated on the changes, including splitting the US and international operations, and creating a distinct oncology division to help oversee the company’s bigger goals.
The New York-based company last year also took down a huge portion of its 2023 sales forecast after demand for its Covid products had waned, and the US returned doses of Paxlovid that had been cleared for use under an FDA emergency authorization. The company also overestimated how many people in the US would get its vaccines, originally projecting that 24% of the US population would get Covid shots this year. The actual number has turned out to be 17%, Bourla said.
“It is multi-factorial why investors’ confidence in Pfizer was hurt and the stock went down. Covid was only one element,” Bourla said. But the issue overshadowed what Bourla said was good news, particularly the completion of its $43 billion purchase of Seagen and its ADC assets, and tilted other things — like Pfizer’s decision to place an immunology asset with Roivant that was later sold in a blockbuster deal — into a bad light.
“I was impressed how much bad news can shift the attention from significant other things,” Bourla said.
Bourla said the company’s run of significant acquisitions was on pause, and it would focus primarily on licensing deals that will give it access to earlier-stage, lower-cost assets. That could include earlier-stage assets for the treatment of obesity, after the drugmaker reported disappointing data last month from it’s oral GLP-1, danuglipron.
And despite the setback with danuglipron, Bourla said he believes there is still substantial room for other players.
“The market is currently a duopoly, but there will be fierce competition,” he said. “We believe we have the ability to play and win.”
Having closed the deal with Seagen, Bourla said Pfizer’s goal was to be a world leader in oncology, and to do everything they could to hang onto key staff who came over in the deal. He used one of his favorite metaphors for the deal, calling Seagen “the goose that laid the golden eggs.”
And he said he had no regrets about the deal to move an immunology asset targeting TL1A to Roivant, which flipped the program to Roche in short order for $7.1 billion.
The company still owns significant overseas rights on the drug, and will get royalties in the US if it’s approved here. Bourla said he estimated that Pfizer owned about half the value of the drug.
And while past practice might have been to kill a program that the company wouldn’t pursue, he was happy he had found a home for it.
“Everything we decided to stop, we have tried to find a home for,” he said. Killing it off, he said, would have been “stupid.”
“For a Phase I asset, when I look over all the benchmarks, it was quite a good deal,” he said. But, he acknowledged, “looking back, it created a lot of discussions that were exacerbated, because when you’re not doing well, everyone asks a lot of questions.”
Editor’s note: This story has been updated to add a comment from Bourla on the company’s organizational changes.