Pfizer is busy right now. In recent months, the pharmaceutical giant made a $43 billion acquisition and launched a direct-to-consumer platform, all while sizing up the massive market opportunity of weight loss drugs.
Pfizer CFO Dave Denton recently appeared on Morning Brew’s After Earnings to provide a big-picture view of what’s happening at the company and in the broader pharma space.
This interview has been edited for length and clarity.
You’re growing organically, but you’re also growing through a big M&A bet that you made at the end of last year with the $43 billion acquisition of Seagen. Talk to us about that.
Even before I get to that, specifically, over the last two and a half years we actually did business transactions to the tune of about $70 billion. So what we did is, the dividends that we earned through the Covid period, we took all of that cash and we reinvested that into our business in acquisitions, really with an eye to growing our revenue base and product base by 2030.
The biggest bet that we made was in Seagen…[a] relatively small company, about $3 billion in revenue. So [we paid] $43 billion for a $3 billion business topline, but they had a really extensive pipeline in oncology products. So with our historical base in fighting cancer with now the platform of Seagen, it’s really going to enable us to touch a lot more patients in their battle with cancer.
Pfizer is known for paying out healthy dividends consistently over the past few decades. As CFO, how do you think about putting money back into innovation versus perhaps growing that dividend?
From a capital allocation perspective, actually investing strategically in the business will allow us to grow topline and bottom line over time. And if I do that correctly, that actually accelerates my cash flow generation long term, so then I can turn around and reinvest that a bit in dividends, as an example, or share repurchases.
I’m trying to balance both strategically. I know that I need to invest to make sure that from a business perspective, I’m winning the marketplace and I touch a lot of patients. At the same time I know I have shareholders, and shareholders expect a return on the investments they make with Pfizer.
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How do you size up the opportunity for investors in the GLP-1 weight loss drug market, and how do you plan to capture market share when there are already established incumbents there?
What we’ve said is, our best estimate of the market by 2030 is roughly $90 billion. To your point, I’ve seen people estimate it at twice that level. I think the more we learn about the potential uses and effects of the GLP weight management market, the more expansive it can become.
What’s really incumbent upon us is [to] make sure we understand what is on the market today, those incumbents, what their products deliver from an outcomes perspective, and then as we design our phase three clinical trial, that we design it with the lens that we’ll have something different or unique. That market, while it’s really large, is going to have segments. And which segment, theoretically, could our product be disproportionately advantaged [toward], and let’s make sure our clinical trial supports that advantage, and therefore when we do go to market, we actually have the right to win.
Drugmakers are also looking at how they can control some of their distribution channels. Pfizer recently announced its new website, PfizerForAll. Tell us about that.
What you’re seeing across not just healthcare, but across a lot of industries, is really a direct-to-consumer application of channels. What I think we’re trying to do is, we’re not trying to disintermediate the market, per se, from a drugstore perspective or a distribution channel perspective. But we’re trying to add to the market and make sure that patients, particularly in rural areas who have a hard time getting to healthcare can actually use this tool to get connected to a physician who can help diagnose their condition and ultimately get them treatment for their chronic disease. We think that’s a real innovative way in which we can improve and touch a lot of patients and improve their healthcare.