One on One with Pfizer Chairman and CEO Hank McKinnell
Friday, February 10, 2006
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SUSIE GHARIB: A short while ago, I talked with Pfizer Chairman and CEO Hank McKinnell. I began by asking him what`s his strategy to get the drug company really growing again?
McKINNELL: Well, I suppose there are some Wall Street traders that are interested in small changes in earnings guidance. We are more or less comparable with where we were last year, so to me, that`s about the same. The real value of a company like Pfizer is the new medicines we introduce for people whose conditions aren`t well treated or people with conditions without cures. And on that front, the news has been exceptional. Six new products this year, five new medicines filed for approval in `06 and `07. That will be the products that will return us to growth in `07 and `08.
GHARIB: Mr. McKinnell, you said today that Pfizer is in a particularly difficult period. What assurance can you give investors that ounce you get through this transition, that things will be better next year and in 2008?
McKINNELL: Well, the difficulty here is that the products that are losing exclusivity are well known and the sales revenue of those products is, for sure. The new products are in the future. We think they certainly have very high potential. And they`re for conditions like diabetes, where Exubera has already been approved, cancer where Sutent has already been approved. Smoking cessation where Champix is undergoing regulatory review and has been designated high priority by the FDA. The future is look pretty good.
GHARIB: As you mention those drugs, can we expect them to be big blockbuster drugs like Lipitor and some of the other top sellers?
McKINNELL: They`re all addressing major unmet medical need and a new medicine for resisting cancer certainly has enormous potential. Diabetes is an epidemic in this country and around the world. And a new medicine which offers a treatment option for people who are failing on oral therapy and are unwilling to go to injectable insulin, all of these products have enormous both medical and commercial potential.
GHARIB: You told analysts today that Pfizer is open to acquisitions, but not massive ones. Can you be a little bit more specific about your acquisition strategy?
McKINNELL: Well, our acquisition strategy is focused on the licensing or partnering or acquisition of products and technology. We don`t particularly need infrastructure. We have the sales forces and the manufacturing capability all around the world. So we`re really looking for specific product opportunities that complement what we develop internally and which meet unmet medical need and that probably means acquisitions in the one, two, maybe up to $5 billion level, so small acquisitions.
GHARIB: You said today and also earlier this week that you`re going to be either selling or spinning off your consumer products division. It`s valued at something like
$10 billion or maybe more. Combine that with the money you already have on the books. What are you going to do with all that money?
McKINNELL: Well, Pfizer is an enormously strong company financially, one of only six industrial triple A rated companies in the world. Cash flow this year of $16 billion or so, an additional $10 billion possibly if we divest the consumer business. It would be additional value to shareholders if we spin it off, not necessarily cash to us. Our priorities are adding to our product offerings, acquisition or licensing of medicines and then improving return to shareholders, either through dividends, which will be increasing 26 percent this year, the 39th year we`ve increased our dividends and repurchasing our own stock.
GHARIB: So real quickly to wrap it up, what is Pfizer going to look like five to 10 years from now? It`s going to be a smaller company with targeted areas of medicine?
McKINNELL: We`ll be both. We`ll have some major products, hopefully one in the $10 to $20 billion level if our new medicine for reducing cardiovascular risk does what we hope it does. But also we are addressing unmet medical need, those conditions without cures in 11 therapeutic areas and hopefully some big products, but also a number of smaller ones for smaller needs.
GHARIB: Mr. McKinnell, thank you very much. We appreciate you talking to us.
McKINNELL: Thank you, Susie.
