January 22, 2022

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

Pfizer Inc. (PFE) Management Presents at 40th Annual J.P. Morgan Healthcare Conference (Transcript)

Pfizer Inc. (NYSE:PFE) 40th Annual J.P. Morgan Healthcare Conference Transcript January 10, 2022 3:00 PM ET

Executives

Albert Bourla – Chairman and CEO

Chris Stevo – Senior Vice President and Chief Investor Relations Officer

Analysts

Chris Schott – JPMorgan

Chris Schott

Good afternoon, everybody. I’m Chris Schott at JPMorgan. And it’s my pleasure to be hosting a fireside chat today with Albert Bourla, Chairman and CEO of Pfizer. Albert, first of all, Happy New Year. Great speaking with you today.

I thought you’d have a tough act to follow this year after your 2021 presentation with, at that point, all the progress you’ve made on the vaccine, but you’ve managed to top that this year, both with the vaccine fronts and now with the antiviral. So, obviously, congrats on the tremendous success you’ve had here.

Before kicking off with the conversation, I know, Chris, you want to run through a quick disclosure and then we’ll jump right into it from there. So, over to you, Chris.

Chris Stevo

Great. Thank you, Chris. So Albert is going to be making forward-looking statements in the course of this presentation. These statements are current as — only as of today and we undertake no obligation to update those statements in the future. Any forward-looking statements are subject to risks and uncertainties. If you have questions about that or want more information, please see our SEC filings under Form 10-Q and Form 10-K and under those respective parts of the filings. Thank you.

Question-and-Answer Session

Q – Chris Schott

Great. Thanks, Chris. And maybe, Albert, just to kick off the conversation, let me start on the COVID front given that’s top of mind for all of us and I was hoping this would be an in person discussion. But, unfortunately, Omicron got after early here. But maybe just based on your perspective, just reflecting on where we stand today in terms of the tools we have to manage through COVID versus maybe we were a year ago. And just to relearn to kind of like live with this virus, just would be love to hear your perspective on where we stand?

Albert Bourla

I think we are in a way better place right now than what — where we were a year ago. First of all, we have vaccines that they work and we have manufacturing capacity right now has reached a peak.

I would say our ability basically to give vaccines to everyone in the world. It is now wherever they don’t have enough vaccinations, there’s more of a problem of constancy or infrastructure. We have treatments which we’d never had before. We had processes in place that we can adopt the vaccine a great new versions in less than three months, which is what we are doing with Omicron. Now, we have also a virus that is tougher than what anyone would ever think…

Chris Schott

Yeah.

Albert Bourla

… in terms of being able to sense very rapidly, that’s one. The variant — let’s say the variants that creates, it is spread all over the world. So it’s not very, very difficult to eradicate. And the third is that both vaccines and the natural infection, both, even the natural infection actually even less, they can create durable protection for the population. So you have the situation that people can get infected and then after some time can be infected.

So, that needs it to make us all that, so that we would be always ahead of the virus. And but, clearly, the situation is way, way better than what we had when we started, when we didn’t even have treatments.

Chris Schott

Yeah. Absolutely. And I know what the vaccine front did, we’re dealing with a pretty steep spike in infections right now, just your latest thoughts in terms of vaccine effectiveness against Omicron and the severity of this variant maybe versus the prior ones that we’ve been experiencing, just latest on that front?

Albert Bourla

Yeah. Omicron is very way more challenging targets. So the two doses are not enough on Omicron.

Chris Schott

Yeah.

Albert Bourla

The third dose of the current vaccine is providing right good protection against that. And this protection gets hospitalization. So, most of the people that they are ending up in hospital aren’t vaccinated with Omicron. They are not people that they had the vaccine.

I think the question mark it is how long that protection last with the third dose. We have seen with a second dose very clearly that the first thing that we lost was the protection against infections with anyways that is not as good as robust against infection with the three dose for Omicron.

But then two months later, what used to be very strong in crystallization also went down. I think this is what everybody’s worried about and we’re looking this is why a lot of authorities here in the U.S. we recommend for those for all the — who are immunocompromised. In Israel they recommend for those who everyone above 60 years.

Also they are all looking to see what more needs to be done to protect those that are more vulnerable and clear everybody now is time to secure quantities of a treatment that doesn’t seem to lose any of its efficacy against that.

Chris Schott

Yeah. Absolutely. So when we think about an Omicron updated vaccine, is that the most likely outcome of where we land as we go through 2022. So maybe just talk a little bit about where you are in the development of that and when we can think about clinical data on that front?

Albert Bourla

I think it is the most likely scenario. It’s not a slam dunk, because we need to make sure that we have not a vaccine that works against Omicron. I think…

Chris Schott

Yeah.

Albert Bourla

… the best is a vaccine that covers the other side works against Omicron and this is what we want to, because that will be a very easy decision to switch to that one. And we are working on a vaccine like that. So we have a sequencing that will help us do more of a big part of what I just described.

And we are working on hybrid. So, one vaccine that will have both, the wild type and the Omicron, to compare results, we’re working on higher doses. We’re working different schedules. So, we’re doing a lot of things right now, as we speak. We will have not only data, but I think we will be ready almost to go file and launch if it’s successful and if we needed in that.

In fact, I want to tell you that, we started already producing at risk all the preparation. So a part of our manufacturing capacity currently is moving to make at risk more Omicron, the newest version of the vaccine, so that we will be able to have a quantities to launch if is needed now in massive.

Chris Schott

Excellent. That’s great to hear. And I think about you mentioned those different iterations those ideally we’d get a vaccine that covers both the new variants and silicosis [ph] coverage against some of the prior ones. If we’re in other scenarios, we’re looking at hybrid approach where you have things combined vaccines, et cetera. Is that something you will also have clarity on and capacity for in March or is the March timeframe more about if we’re just going to swap out kind of the current version for this new updated version?

Albert Bourla

I think in March also we are trying to find out if a hybrid does the job better than if it is a bivalent than monovalent and developed to be a solution. And in terms of manufacturing, we have so big capacity build right now, but it wouldn’t be an issue to switch immediately.

Chris Schott

Okay. Excellent. Well, great to hear on that front.

Albert Bourla

I know. That’s why I told you that we are well prepared right now. We’re not even near where we used to be a year ago.

Chris Schott

Yeah. Yeah. Yeah. Absolutely. And then just pivoting over to Pasvenar [ph], just latest on 2022 capacity. I know you recently updated some of the targets there and just maybe as importantly, how do we deal with the ramp of capacity as the year progresses?

Albert Bourla

Yes. We are very transparent so that people know. We have confidence that we can make 120 million treatments this year. 120 million treatments just to make the mark is 3.6 billion tablets. So it’s a very big capacity. But it is doable, because we are making currently way more billions of tablets. We are making, let’s say, it’s not a problem.

The ramp up has to do not with like COVID vaccine was a very different situation, it was highly specialized manufacturing, highly specialized raw materials, very few places in the world could make it. Here it is very different…

Chris Schott

Okay.

Albert Bourla

… the situation. Any decent manufacturer of medicines can make it, but the chemistry it is complicated and it takes time synthesize the active substance, the API. For this reason, the first quarter expect to have 6 million to 7 million. The second quarter all the way to June, we’re going to have 30 altogether, $30 million and then the remaining 90 million, like 120 million will be spread equally more or less between third quarter and fourth quarter. So, this is how that will go.

We are — so that means that in the beginning we will have in the first quarter more constraints in terms of availability, second quarter a little bit better and then we should be okay. We are working on scenarios to make more.

Why we are working on scenarios to make more, because there are several governments that have expressed interest for stockpile and this is an ideal product to stockpile, because it is — the shelf life should be permitted to do something like about the product you can put in shelf two years, three years, so you can buy in advance so that you can be independent which is what they want to do and for health safety issues. So if those discussions progress, whichever of them we are — we will need to do more than 120 million and this is what we are aiming now.

Chris Schott

Interesting. So on that front, I mean, do we think about this is a similar situation, so maybe when the vaccine rolled out where you’d expect you’re going to be able to basically sell the vast majority of what you’re producing this year? Is — I mean, it sounds like anything there might be need for more than 120 million courses of capacity this year. Is that kind of like a foremost to think about or isn’t you always….

Albert Bourla

There is uncertainty. Certainly, when we made the decision to build 3 billion doses for 2021 and 4 billion for 2022, it was not certain, but we will need it all, right?

Chris Schott

Yeah.

Albert Bourla

Because there were other vaccine players around, but eventually didn’t take the markets. But one thing at the time and we ended up being the major, let’s say, preference of vaccines. That’s why everything went.

More or less is the same. Right now we are making 120, not because I have in hand orders for 120 million treatments. But looking the needs and the discussions, I see that that’s a reasonable thing that it could be. We may or its way lower than that, but better, that we can have more that — than that, in case that for any reasons order this will not come. It’s not a big financial risk for us, because we can store the API and the tablets and then use them later years.

But it could be, as I said, that’s why you are examining the scenario that we may need more if country wants to stockpile or if they said a very broad use or we have another variant that is way more lethal, all of that would play and we want to be right.

Chris Schott

Yeah. That makes sense. One of the questions I get on this is just how difficult is it going to be? I know you talked a little bit about this in your presentation last month, to get this medication to people within a few days of their symptoms developing. I know, New York is an example right now, it’s pretty hard to get tests back quickly with the spike we’re seeing. So just look a little bit about the efforts Pfizer’s making to make sure we kind of, I guess, tie someone getting diagnosed with actually getting access to the product?

Albert Bourla

Yes. That’s something that we need to make sure that works well. Right now, I don’t have data from the United States and it is different state by state. But we should be knowing how things are moving in United States next week, when we have with a couple of weeks of real world.

In that Israel is moving very, very well, because they do have a very heavy electronic system that immediately identifies high risk people immediately. They send them to the treatment. Here in the U.S., I think, within a couple of weeks, we will have it everywhere. So at least once you have a positive test and a script from your doctor, you can get it in any state. But things will become better and better as the quantities are becoming bigger and bigger.

Chris Schott

Yeah. That makes sense. And the other question I have is just about the standard risk population and the role the antiviral plays there. I know you had this novel endpoint that didn’t hit, but there was obviously a pretty strong signal in terms of more severe outcomes. So how are you thinking about the way governments are going to handle severe versus standard risk populations as this product becomes more broadly available?

Albert Bourla

I think will depend on the — on every situation in every country. Clearly, I think from regulatory approval, we have a very good chance to demonstrate of this significance and get it in the label, because the hospitalizations effect in the low income countries was very high, just we need to have the power to demonstrate that. And right now, the approval is for vaccinated and non-vaccinated. So by the definition, vaccinated, it is part of the statins, right, because this is what we had in our styles.

Chris Schott

Sure. Yeah.

Albert Bourla

So that’s something that I think would not be barrier. Then I think it would be governors that they will assess the cost effectiveness. So if it is someone who’s young and they don’t have an issue with hospitalization may not recommend and because of the course and they recommended only in the older people or the underlying conditions or let’s say people with higher risk. However, we are running studies right now that can be used even in prevention for the household, the statins.

And also, I think, those could become a very big part of the solution. Imagine that you diagnose one case in a senior house, all these people are high risk and then typically that means people that they know, some people here will die. You can give the pills and then no one will die. So that’s hopefully. So…

Chris Schott

Yeah.

Albert Bourla

… remains to be seen how that will be used?

Chris Schott

Yeah. Absolutely. Maybe one last one in this topic almost the broader business, just — your latest thoughts as we look at the endemic phase of COVID looking at a few years. How big can this products remain as we make that transition, I guess, from a pandemic to endemic and I know its play a moving target and just know that no clear answer now, but just maybe your perspective on how meaningful these franchises will be looking out a few years for Pfizer?

Albert Bourla

It’s a — I don’t think anyone knows and no one has a crystal ball. But I’m afraid will be meaningful, I’m afraid for the world that will be meaningful. And as I said before, this is a virus that is spread all over the world, so very difficult to eradicate. This virus that mutates and finds ways to live, and unfortunately, this is a virus that the immune responses are not very durable against this virus. And I’m not speaking about only vaccines, as we knows about natural infection. So the scenario is that, we will all get it, so that’s it. I don’t think it’s meaningful. But, of course, we will all get it the next year maybe again we will all get it and some of us will die.

So given all of that, I think, I don’t want to scare people, not at all. Because as I said before, we have a lot of tools that will never even — we’re not even dreaming that we will have. But we should reach a good level that we will be always ahead of the virus with their item day on the vaccine that hopefully we could be giving it annually and maybe for some groups that they are higher risk more often. But for the general population one arm will give very good protection and then you have the treatment that will, let’s say, resolve the issues of those that are getting the disease. So I think this is how I see that going in the next decade.

Chris Schott

Yeah. Absolutely. Maybe as we kind of transition to the rest of the business, just on a broader organizational level, I mean developing these COVID therapies obviously — in such a short time is obviously required significant resources and focus within Pfizer. I guess what have you been doing to ensure that the other strategic priorities of the company continue to move forward and get the kind of the attention and resources they need? Say, I guess, challenge becomes as we kind of move past this as the rest of the company is getting starved for resource to getting attention they need, like, how do you think about that for the broader Pfizer picture?

Albert Bourla

Yeah. The company is organized its six business units. This is how we have organized the early reserves, there are six groups. And then this is how we have organized the development, clinical development, like the same identical groups and this is how we have organized the commercial, the same identical groups, one of them is vaccines.

So although tremendous amount of resources went into developing the vaccine, these were resources that were given to this one business unit, because the others were not affected at all. Oncology had nothing to do with what is happening. And we didn’t take resources out of oncology to give it the vaccines. We took the risk and we added the resources to the vaccines, when we decided to go all in, in this vaccine and let’s say develop.

The same we did with a second business unit do not had the treatment, which is the hospital business unit, a very different business unit that we gave them on top of the resources. So it is more of an issue within the vaccines how to manage that much opportunity, because they have in addition to the COVID vaccine, the same people they are working on RSV, on Pendavelen [ph], on sick death, on — you name on flu, now on syndromes, they are learning on buying disease. So it’s very, very rich. Over there, we are trying to deal with the situation by increasing dramatically the resources in the vaccines group.

On the other units, I would say, it’s — imagine if you are a Pfizer and your oncology, of course you want to become also to have your moment of fame by bringing the cancer cure now the vaccine arrays that tie the level and bring a vaccine like that or the hospital unit raise the bar that high. So there is a very good competition I think right now and the resources are among all.

Chris Schott

Yeah. Make sense. When I think about the Lightspeed kind of approach you took to drug development that worked so well on the COVID side of the business, where else are you applying that within the organization? And I guess what type of diseases or products do you think will be most appropriate for that type of approach?

Albert Bourla

I don’t think that our technical or other type of or this type of considerations is more mentality that it is different when it comes to the Lightspeed. It was the fact that the focus was relentless, the resources were without the limitations and all that and the bureaucracy was cut off completely. Means having meetings of four or five layers of management all together rather than one layer getting approval from the second, get from the third, from the fourth and then comes to me.

All of that, you can’t do it for everything. But you can do it for things that they have the ability to have a great impact on public health, and as a result, they have great impact on public health will have on the finances of the company. And we could make a difference by putting resources into it.

We have done twice of that. We call those Project Lightspeed and those are projects that every week with a group of 30 people I review and myself. So we did that with a treatment. We are doing that with flu and RSV. We are doing that with an oncology treatment for the pharma and we are — yes and we — yes, those are the projects that we have right now. And there are other projects that are coming as a result of the business units asking we want also to be part of that. We want the resources, this is our proposal.

Chris Schott

Okay. So this is more about unmet need and just kind of identifying your highest most interesting pipeline assets more than this works specifically well for vaccines, doesn’t work as well and maybe some other, call it, oncology or something. So it’s more about…

Albert Bourla

Yeah.

Chris Schott

Okay. That’s very helpful. And the other question is, the company’s been pretty active on the BD front recently. So maybe the first question is, looking at the Arena deal that you announced last month. I guess what brought you to that deal and can you tell us are you comfortable making of that and acquiring an asset so close to Phase 3 data. So you think about kind of the risk you’re taking on there? How did you get comfortable taking that risk?

Albert Bourla

Look it is — the comfort comes from the scientific expertise that you have in each therapeutic area. This is an area that our people examine and these are people that they have run multiple studies from UC from ulcerative colitis, for example, or for atopic dermatitis and they reviewed those data. They didn’t review final data, because they were not in existence, but they review blinded data. And they without having the higher level of certainty, they could, let’s say, recommend that we think that is going to be successful.

Now, there is risk in that one, but also there is benefit, the benefit is that we got it without having to go into an auction after the data were released. We paid like if, I think, it was successful, although it might not be. But if we were waiting to buy it after it was successful, clear we pay more.

And it is $5 billion, let’s say, this is the market with, let’s say, more or less that we are putting at risk or this is more or less, maybe I wouldn’t do it if we had to place a $50 billion back into something that didn’t read out before, because that looks more like a chasm even if you have a very high comfort level.

But if you do 10 of that and you spread $50 billions of capital into 10 deals that your experts, they are feeling very good about it, then statistics will work. And then you will have acquired success realizes at least at the success rates of the industry in better price and this is what probably you do.

Chris Schott

Yeah. That makes a lot of sense. I think that’s — we have to solve for some of the evaluation challenge because I think we’ve been seeing across the industry in terms of target valuations.

Albert Bourla

Once it turn out, forget it, it is getting, let’s say, to numbers that are the value goes to the people that said it. And so many times people came to me and said, let’s acquire this company. What is the stock price? $30? How much was the stock price six months earlier? $12. Why you didn’t come to us six months earlier, why at that time. Well, we didn’t have the data. Well, yes, let’s do it. You see what is happening. If you wait, you will overpay.

Chris Schott

Yeah. Yeah. Yeah. And then, I guess, other one more, recently we’ve seen a number of RNA related deals, some today, some last week. Hope you just put these all together and how this fits within kind of Pfizer’s broader approach here?

Albert Bourla

Yes. Let’s start with the fundamentals. We truly believe that mRNA is a game changer technology. It’s not the Holy Grail, not everything will happen because of mRNA. But clearly it is a very powerful technology and we have seen that’s scratching the surface of it. So we decided that we are going in because we have developed also the expertise and the infrastructure that allow us to be a living play.

Now to do that, we analyze all the landscape and as to where we can go, and we did some moves, which are part of the puzzle, strategic puzzle that we have built, this is not the only one, others will come.

But how those treat, one, in the lowest hanging fruit it is the other infectious disease. And clearly our partners with biotech was a winning partnership, a fantastic partner, scientific competent, they serve the same values with that. So we had one for COVID, that keeps us very busy both of us, we have one for flu and we have now a third one that we are going to develop for Zoster. That’s one here. So they are one of our main partners over there.

We did a license from Acuitas. The LNP technology for at least 10 additional targets that will allow us to do other things if we want give us an independent, if we want to do all the things. And we are working on, of course, mRNA technologies or siRNA, which is a cell design. So that’s one.

The second is that there is a lot of work happening right now in cancer vaccines with mRNA. And we are having internal efforts to complement internal efforts that we had for AAV type of cancer vaccines. Now that we have the RNA technology.

The third area, it is an area on rare diseases or even more not rare disease, but genetically, let’s say, induce diseases, because there’s a mistake in your DNA and we analyzed a lot of the technologies that exist. We came that the most promising technology, it is the base technology and the most prominent company mastering these technologies is big. That’s why we did this deal with three targets and that builds also upon all our understanding RNA and LNP.

And the last but not least, within the deal with contracts that will allow us to, if successful, to be able to accelerate dramatically the time that needs to synthesize DNA, which is a very big part of any mRNA project. Right now, for example, to make a new vaccine, we said, we need 100 days, right, one-third of the time it is to build a DNA template, because we need to do it with biological means.

For that technology potentially could allow us to do it instead of 30 days to, so that we can shrink the time to bring a new variant of vaccine into the market in two months instead of three months or to make a flu vaccine a way more effective, because you can do way closer to the real strain to have a better match to the real strength, because you can wait to see rather than predict from nine months ago. So all of that I think are part but — and you will see other ones as well as we are building, at least let’s say, there’s supposes.

Chris Schott

Yeah. Can you talk about the shingles vaccine? I guess, maybe two questions here. First, how do we the timing here in terms of how quickly can you move this forward? And second, how do you differentiate this from shingles vaccine and what did you see with this program that excited?

Albert Bourla

Yeah. What gets me excited that is that we can move very fast. And we should be able to do it, of course, this year and we were waiting to see when. We said second quarter, second half of the year, but we will go to clinic, but clearly we’ll try to see if we can do it faster, that’s one.

Now what is the need here? I think the current Zoster vaccines they have pretty good efficacy. What they don’t have pretty good it is the tolerability profile, the reactogenicity profile is very, very hard to vaccine, very, very tough to get it. That not only creates a competitive disadvantage if you bring something better, but also blocks the market.

So there are people that they don’t do it just because of that. So the — what here it is the question is can by using the mRNA technology bring the same efficacy with way more tolerable profile. And if we are able to — and we have great visibility that that will be the case, because we have seen similar information how the RNA react. So if that is proven in the clinic, then we have very competitive vaccine that genomic can grow the market but take market share from existing players.

Chris Schott

Yeah. That makes perfect. Interesting to watch that progress as well. Maybe follow-up questions like RNA in general is, it seems like the areas becoming more and more crowded very quickly. We’ve got a big obviously the small companies, lots of resources going in, what do you think allows Pfizer to kind of win here versus some of the other assets and players that are kind of putting resources into the space as well?

Albert Bourla

I think Pfizer through this pandemic experience were able to accumulate experience of a decade in one year. Very difficult for anyone to repeat that.

Chris Schott

Yeah. Absolutely.

Albert Bourla

So we are very competent in manufacturing, in formulating it, in manipulating it, you name it. And that gives us an advantage to be first and best.

Chris Schott

Yeah. That makes sense. The other one is want to ask about was RSV. That’s the other kind of sort of other big data release we should be thinking about in 2022. Just your thoughts on Pfizer’s can take here relative to competition, your confidence and just the studies you’re running. Just talk a little bit about why you’re so enthusiastic about the asset in that?

Albert Bourla

Look, there are two different, let’s say, vaccines right now that we have. One is a maternal and the other is the adult, right? On the maternal, that it is the one that hopefully if things continue to the cases accumulate, as they are right now, we may have results this work.

Chris Schott

Okay.

Albert Bourla

So if we have a result this quarter, I don’t know how competition is moving, but we may be first or may be head-to-head with the competition and I think this is what I expect. Then the question is, who is going to be better, that remains to be seen, but what I know, it is that we have done with our vaccine CHALLENGE study in the U.K., so we challenge people with RSV and had 100% efficacy.

Also, I know that we are the only ones that we have both A and B components in our vaccine, which is not the case for competition. So I have high reasons to believe that we will be first and best, and if not first, best, but we will only know when we see the results.

The material now, I don’t think anyone has presented anything so far. So, clearly, I think, we are ahead and also in the quarter and in the second quarter, we should be able to have, let’s say, this data also come out. So this is why we placed this project into a Lightspeed entirely, as explained, so that we can move it, I review the progress every week and the progress is good as things are moving.

Chris Schott

Okay. Good to hear. Maybe the last five minutes or six minutes here, well let just pivot maybe to business development for a bit. Just what are your priorities as you think about how you look at business development, think about business development, given the substantial step up in cash flow we’ve seen for the company over the last few years. How has that changed? When you think about the assets you think about Pfizer considering?

Albert Bourla

For us there is one clear goal that supersedes everything else. We need to bring medicines that saves patients lives and allow us to have — to maintain a 6% CAGR from now until 2025 to the 2026 to 2030. So that’s what we want.

Chris Schott

Yeah.

Albert Bourla

I think that something like that. I think something that will allow us to have a higher multiple, life with the highest in the industry, like right now shingles has the highest in the industry. But with a profile like the one that I described, we could have something like that and we may have a much higher EPS, which is the EPS of $0.05. So that’s clearly what we want to do.

I think we are having very good projections from our internal pipeline, way better than those three things, but clearly, we will need a lot of external support and this is where all the money goes. Right now, when we make an acquisition, we have of course a portfolio of metrics that you are looking to see if we do it or not, but always one of them it is what is the growth that adds to the 2030 CAGR, I mean, 2026 to 2030 CAGR, 1.1 points.

Of course, the valuations, the NPVs, of course, what will be the impact on P&L dilutive or not and when. But the fundamental thing that we’re looking it is, is it helping us to grow in that period of time on a risk adjusted basis. So when if we get a lot of it’s in the various goes away could be even higher. So this is what is driving it and I think we have enough a lot of opportunities out there and enough capital to execute on that that will be a very pivotal year this year.

Chris Schott

Yeah. And on the capital deployment front, I guess, I know the company has never been capital constrained necessarily for deals, but as we get maybe closer to some of those LOEs and I think as you’ve been getting more, more confidence in the scientific organization in general and the production you are having. Is there — should we think about Pfizer looking at larger transactions as part of that kind of approach to BD or are things more than you kind of right-size I think the sweet spot for you going forward?

Albert Bourla

I’m not going to stick to the size.

Chris Schott

Okay.

Albert Bourla

But what I am clearly biased it is, I don’t want to do a deal, but the only thing that will offer it is value for cost synergies. So we will put together two and then we will spend three years closing research centers and closing manufacturing sites and then…

Chris Schott

Yeah.

Albert Bourla

… making again a new field forces that resizing field forces, so to justify the premium that we paid to the shareholders of the other company, that I don’t want to do. Now…

Chris Schott

Sure.

Albert Bourla

… if it is a sizable opportunity that enhances our growth in the 2026 to 2030, of course. If it is a sizable unit that brings us new science, yes, of course, so which is not at all an issue. It is just what time is the value that you can create. I don’t want financial engineering and I don’t want cost cutting. This is not the time for…

Chris Schott

Yeah.

Albert Bourla

It’s not the — I don’t think that you can have, let’s say, synergies in general in business by putting together the two and making it more effective, that’s not the time for Pfizer. Right now manufacturing is working very well. Our research is very productive. Our commercial operations are flying. This is not the time to disrupt all of that by cutting costs.

Chris Schott

Sure. Sure. So, let’s say, you could think, listen, the company doing a larger deal as long as it’s not one of these kind of messy integrations that we might have thought about in the past. But…

Albert Bourla

Yeah.

Chris Schott

… if there was like, innovative company with multiple assets, that’s within the spectrum of things you’re looking at.

Albert Bourla

Absolutely. Absolutely. That will be within the spectrum. We don’t have any issues with that.

Chris Schott

Yeah. Excellent. And another question just about, I guess, one of the things I’m finding investors are still kind of grappling with is we’ve got, on one hand, this kind of like spike in earnings that we’ve seen 2020, 2021, 2022, this kind of uncertain outlook on the COVID piece. We all know it is going to be something sizable. It’s just defining what sizable means is challenging. And it kind of leaves the company with an earnings profile kind of peaks and then kind of rolls over. How do you think about Pfizer maybe turning some of this near-term upside in sales and earnings into longer term growth, longer term sales? I mean, I think, you are talking about BD, but can we think the other things like accelerating R&D spend or other investments that company can make in their business that you maybe wouldn’t have done in the past, but are now enabled by the cash flow you’re generating? How should we think about that?

Albert Bourla

No. Just to think about all of these options are on the table and we are very strategic about that. First of all, most of the licensing acquisition are coming with R&D expenses. So, clearly, we need to be able to create room within the R&D. And in our projections always, I have — since I took over three years ago, I refinance money for R&D, but can only be used for external opportunities, but otherwise, R&D will argue that ours is better than the outside, why don’t we put the money here. You can’t access those money unless if you go for something, which is good outside, that incentivize people to go outside and look for good size. So that’s one.

Clearly, our R&D expenses as our revenue goes up also, those will continue going up. And then, clearly, also there are things that are happening right now that could improve margins, because there are disruptions that could occur. There are things that are happening in the way that drug discovery is happening. We are moving from drug discovery to drug design through AI and how clearly, how development is happening.

We are — by the way, part of our development efforts in COVID were very successful because of the digitization that we’ve had in our operation and that also will continue play. Go-to-market approach, very different, the way that now you can, let’s say, have access and physicians can have access to information about the medicines through, the digital route rather than through field forces necessarily that we use to control all of that.

I think our opportunity that clearly we are looking and we want to be the ones. If there is a disruption in itself, we don’t want to be some of the ones that will happen to us. We want to be the ones that will do it. We are looking also for this type of opportunities and for what it is meaningful given our capabilities, but the bulk it is new novel science, but in our trend can be translated into life saving medicines very fast.

Chris Schott

Absolutely. So, well, I think, we’re just about out of time. Albert, again, congrats on all the progress and really enjoyed the conversation. Thanks for joining us today and have a great rest of the conference.

Albert Bourla

No. Thank you. Thank you. And we believe that let’s say this will be the year or two and by the way, even from financial terms, because this is an investment conference that we will end up and that whatever will be the number we will announced billions and will grow next year. That’s…

Chris Schott

Yeah.

Albert Bourla

… we are going to think about, right?

Chris Schott

Yeah. I think basically where we’ve been. But again…

Albert Bourla

Yeah.

Chris Schott

… appreciate the conversation. We’ll talk soon.

Albert Bourla

Thank you.

Chris Schott

Thank you.

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