Pfizer's Strategic Moves and Priorities for 2024
2024-01-09
Pfizer, one of the leading pharmaceutical companies in the world, faced several challenges in 2023 that affected its performance and stock price. Led by Chairman and CEO Albert Bourla, the company missed internal projections and the expectations of the Street, particularly in the COVID sector. This decline in stock performance was a significant blow to Pfizer, as it had previously enjoyed a strong track record of beating Bloomberg estimates in EPS and revenues.
Despite these challenges, Pfizer remained the number one pharmaceutical company in terms of revenues in the pharma business. The company estimated that it had affected the lives of 600 million people worldwide in 2023. Additionally, Pfizer received nine approvals for new molecular entities from the FDA, three times the number of the second-ranked company. The successful closure of the Seagen acquisition also demonstrated Pfizer's ability to navigate a complex legal and political system effectively.
To address the challenges faced in 2023, Pfizer took several measures. The company negotiated and resolved issues with government contracts related to COVID, ensuring a clean slate and a predictable supply in multiple countries. Pfizer also carefully navigated pricing differences and access discussions to avoid negative public perception. Additionally, the company adjusted its own stock levels to align with demand and wrote off excess stocks. Pfizer announced a cost adjustment plan, aiming for a reduction of $4 billion in costs, and started implementing the plan in the following year.
Pfizer also made strategic moves to enhance its commercial structure. The acquisition of Seagen provided an opportunity to create a new business model, and the company split its business to improve the performance of its commercial operations, particularly outside the U.S.
Looking ahead, Pfizer had several priorities and opportunities to focus on. The company recently completed a major acquisition of Seagen, which doubled its resources and research in oncology. Pfizer's focus for 2024 was execution and delivering on their promises. The company planned to maximize the performance of the new products they had launched and adjust their cost base to expand margins. Growing the dividend was Pfizer's number one priority for capital allocation.
In terms of research and development, Pfizer allocated a significant portion of its revenue, approximately 70%, to R&D. The company prioritized its R&D portfolio by removing the least productive parts and focusing on areas with potential opportunities, such as obesity and oncology. Pfizer saw the obesity category as a great opportunity, with the science having matured enough and GLP-1s unlocking a significant market. However, the discontinuation of lotiglipron, Pfizer's leading asset in the obesity category, due to elevated liver enzymes posed a challenge. The company was also exploring other promising opportunities in oncology, including CDK4 molecules and a new generation vaccine for COVID and flu.
Pfizer's focus on oncology extended to bispecifics, which Chairman and CEO Albert Bourla believed would gain significant market share due to their convenience and scalability. The acquisition of Seagen further strengthened Pfizer's position in oncology, as the technology (ADC) had been recognized as transformational. The integration of Seagen into Pfizer was being carefully managed to maintain the talent and culture of the company.
Pfizer's commercial strategy also played a crucial role in its success. The company aimed to bring early and late together in the organization, particularly in therapeutic areas like oncology and vaccines. Commercial in oncology required technical knowledge and the ability to explain data, while commercial in vaccines relied on consumer conviction. Pfizer planned to increase its market share in the RSV (respiratory syncytial virus) market and saw significant potential in the maternal market for RSV.
As Pfizer moved forward, it continued to address challenges, maximize opportunities, and execute its plans. The company remained focused on consolidating its acquisitions, executing its strategies, and delivering on its promises. With a strong portfolio of products and a commitment to research and development, Pfizer was well-positioned to navigate the ever-changing landscape of the pharmaceutical industry.