Asked on a second quarter earnings call if Pfizer could direct more money to M&A amid a feeding frenzy across the pharma industry, CEO Albert Bourla defended his strategy.
Pfizer only has about $7 billion to spend on M&A right now. As its peers snap up promising biotechs left and right, analysts wondered if now is the time to cut the dividend paid to shareholders to take advantage of the moment.
But CEO Albert Bourla put the kibosh on the idea during a second quarter earnings call Tuesday. He defended the company’s M&A record and promised a bolt-on deal would be possible with the cash on hand. The company will thus maintain its long-term dividend, with plans to raise it after the company emerges from a key loss of exclusivity period.
“Look, guys, Pfizer has placed the business development bets already. And we are executing on that,” Bourla said, noting that Pfizer has spend $80 billion on transactions since 2022. In that timeframe, Pfizer has picked up Seagen for about $44.56 billion, Biohaven’s migraine portfolio for $12.56 billion and Metsera for $10 billion.
“In Metsera, we are moving at the speed of light,” Bourla said.
He promised that the $7 billion the company has in cash right now would go far, with opportunities possible in oncology, immuno-inflammation or primary care, such as obesity. Vaccine deals are also possible, Bourla said, though less likely as there is little in the marketplace available for vaccine innovation.
“I think that we have invested a lot, and we will continue doing small pieces,” the CEO said.
Pfizer returned $4.9 billion in cash dividends to shareholders in the first half of the year, representing 86 cents per share of common stock owned. Elsewhere, $5.3 billion in capital was directed toward internal R&D projects and $170 went to business development transactions.
“We feel extremely confident that even in the most stretched scenarios that we are running, we will be able to maintain our dividend,” Bourla said. “I want, once and for all, to make that clear to all that the dividend will be maintained.”
Pfizer has also been executing a rigorous cost-cutting program, and announced additional reductions on Tuesday. The company now expects to reap $2.5 billion more in savings, with cuts coming in the form of “technology and simplification efforts” across the New York pharma’s commercial, R&D and manufacturing functions, according to the second quarter earnings release.
