Jefferies Global Healthcare Conference

Okay, everybody. It is my treat. I'm Rich Handler as CEO of Jeffries. I get the pleasure of interviewing my good friend, Albert Berlis, CEO of Pfizer. Before we get going, the last time I interviewed Albert, and I was telling him this backstage, it was right in the heat of COVID when no one knew what was going to happen. And I had, at the time, I think we had about 5,000 Jeffries employees on the Zoom. And quite honestly, I can't convey to you enough the calming, the sense of hope, the sense of purpose, and the sense of strategy that you gave our firm at that point in time. So before we start, I want to give Albert and his entire company a big round of applause. Give us just a little bit of you growing up A little bit about your background So people know who you are And it's a pretty interesting background

I'm Greek I used to say I'm Greek by birth American by choice I studied in Greece I studied veterinary science I did a PhD All I wanted was to stay in academia To become a professor Pfizer in Greece had an animal health group at the time now it's Zoetis that they were keen to hire me they put an offer I couldn't resist I said that I would go sabbatical a year or two and then I would go back to academia but then once I joined Pfizer I liked so much the energy of the private sector and entrepreneurship that was matching my personality, but I never looked back. So that happened 33 years ago. I moved with my family in five different countries, in ten different cities, and I worked with all the countries of the world.

So if you were to describe to the layman today, what is Pfizer in your mind? How do you see the company?

It's an iconic pharmaceutical company with a tradition that very few have. This year is celebrating 177 years of existence. New York company that comes with the competitiveness and drive that New York companies have. have. A company that has developed iconic medicines that changed the paradigm when it comes to treatments from the cardiovascular to from the Lipitor's to the Viagra's to I can go on and on and a company that it is right now very much purpose driven all we care is to develop breakthroughs that change patients' lives and everything else will fall into place, including the stock price

If you're talking about the competitive moats and the competitive advantages that you have right now on a global basis what are they?

Pfizer has capabilities that basically none of the others have to that degree We have probably the largest manufacturing network in the world and the capabilities of its network were able to be demonstrated in COVID. I remind people that during COVID, people were impressed that within eight, nine months, we were able to develop a medicine. The biggest, the most impressive accomplishment, which I know how challenging it was, was to make in the first year, three billion doses of a product that we had never manufactured before. The run rate of Pfizer was 200 million doses a year of all the vaccines that we were making. Our manufacturing capabilities are enormous. We are a powerhouse in commercial, and this is not only in the U.S., where we constantly are ranked as the number one primary care force in the industry, constantly, every year after year, by physicians. But we have a global presence that no one else has. We have subsidiaries basically everywhere in the world with our own field forces and our own research teams in the world. And we have unparalleled R&D also capabilities.

So you focused the entire energy and passion of Pfizer during COVID successfully, but now your mission on the cancer side, you're taking all of the passion and energy to cancer. What does that mean? How does it look and the breadth of it, the geographics of it, the technology of it, how does that look?

you are right to use the word passion it is really my passion in life to be able to advance significantly i don't want to say empty words and say i want to find the cure before i go but i want to advance significantly the fight against cancer and i want to convert most of the cancers into chronic disease so that you can live with your cancer for years rather than receiving a death sentence why cancer one it is a significant need for humanity people cancer mobilize people like nothing else secondly science when it comes to finding solutions for cancer it is very mature we know way more about cancer than for example we know about alzheimer's or we know about parkinson's it's well well established third pfizer had tremendous already capabilities in cancer probably our most successful division with small molecules which was our expertise eyebrows and alki inhibitors i can go on and on and we invested pretty much everything that we made from covet to buy a citizen which has had and has the largest adc platform which is a very big large molecules platform against cancer so when i put together the the need the fact that the science is really breaking now and the fact that we are good at doing that that was the obvious choice for us that this is where we go um any surprises on that acquisition

or positive or negative?

Yes. So far, it's very positive. The acquisition had four products that were already in the market, but early introductions of them, and had a significant pipeline, 13 different products. And right now, we only have the results of the foreign market products that are doing extremely well. The Patshev, which is the crown jewel of the four, and brings the vast majority of the sales, has released data that are transformational. It's changing the lives of cancer, bladder cancer patients. When I say change the life, more than double survival. Not 10%, not 20%, more than double survival. Now we are studying, we are initiating a new study that will be bladder sparing because usually when you have this type of cancer they remove your bladder and you have a terrible quality of life because of that and of course you will have metastasis that we need to treat with Patsev so now we try to see if we can demonstrate that you don't need to remove your bladder we will treat it while it is there so the inline products are doing very well then there is the pipeline that is coming significant amount of value about it And the first of them, it is a very significant molecule. It's called SV. It is for lung cancer. It has two studies that are ongoing right now. Lung cancer is the biggest killer in terms of cancer deaths. There is nothing else that kills more people like that. In the U.S., 250,000, 260,000 new cases every year diagnosed with lung cancer. It's a very big problem. And as a result, it's the biggest market in oncology. The SV, which is a very targeted technology, we are expecting this year results from a second-line lung cancer treatment as monotherapy. So alone, SV, against the current standard of care, no one was ever being able to beat the current standard of care in a monotherapy setting. we hope we will is riskier than the second one which is combination therapy and it is bigger market so the second one is first line not second line first line is much bigger than numbers and we studied in combination with immunomodulator so we will see how that goes but if this is successful probably that will become the biggest season product and probably the biggest Pfizer product.

There's a lot going on in the biopharma world today. Patent, Cliffs, AI, regulatory change. How do you view the climate right now for potential new acquisitions? If you were looking at the world right now, where would you hope to focus your attention and where do you hope to see the biotech sector emerge?

There are several, let's say, things that are shaping right now the industry. I've never seen a moment in that industry that so rapid change is imminent. The three things, one I think is behind us for the moment, but comes back and forth, is the pricing, MFN, geopolitical tensions that was an existential threat for us. in 2025 and i spent most of my time working this out you kind of embraced it right i mean you went right at it we drove the industry some liked it some didn't like it they all did the same we are 17 companies that they did 17 identical deals with the deal that we opened and we negotiated basically on behalf of everyone and i truly believe it was a very good deal for the industry and by the way the investors believe the same because the first two days after the announcement of the Pfizer deal the pharma went up 15 percent seven and eight or seven and a half and seven and a half so it was a very good thing but right now I think things are calm there because of that there are two things that are shaping the future the first is AI it's changing everything dramatically. It's going to change not only the things that people think, the drug discovery and how we are

going to discover new medicines or develop them,

that very much so, but it's changing our manufacturing, it's changing our commercial model, the role of a rep, the role of a marketer, the role of a medical liaison, the physicians already receiving most of their information through LLMs rather than through magazines and promotions from the rep. So the whole marketing process will change in addition to the whole manufacturing process, to the whole research process. And of course, there will be significant productivity gains because those three things that I said primarily will drive sales, primarily will drive new products, primarily will drive less batches failed, but also cost will come in the form that you will have a much more efficient finance department legal department, HR department all the enabling functions so that's one, AI

while we're on that so how is Pfizer directly being affected by all this what are you doing internally in that regard

yes we are all in if you see the spectrum of the pharma CEOs in terms of how strong believers they are in AI there are those that they believe that we'll have some incremental changes, those that they believe that is changing everything, and everybody is somewhere in between. I'm much more closer to I think everything will change. Our basic belief in strategy is that right now, AI cannot do everything, but right now, today, Tuesday, or Wednesday, Wednesday.

I think it's Wednesday. Check AI, Cloud.

wednesday ai can do much more than enterprises are using it for so what is the bottleneck why they don't it's not technological limitations and it is not to make the right choice if it is gemini or claude if you are going to build your own data center or if you are going to lease gpus in google or amazon the key the secret it is organizational ability to transform itself into an ai native organization now that this unique powerful tool is available and that varies from company to company some companies will find it easy air nobody will find it easy but some will find it easier to transform themselves than others the reasons why you could that could inhibit something like that it is inertia it is fear of employees about their job it is the unknown because it's a foreign language too many it is the fact that so many people are proud for the way that they are doing things because they're extremely good and what they do and they do it the last 20 years and they are the number one and now you tell them you need to change completely how the finance department is structured and how the legal department is structured and how we look pattern or litigations but it's happening so our whole effort it is on that second one i don't worry that much if it is claude or gemini i'm having the right people making sure that you have the right computational power the right infrastructure that you are cleaning all our data in the way that to make them ai ready but for me it is more how the organization will endorse the idea that i'm changing and not i'm changing by year 2030 i'm changing by year 27 because the speed with which things are moving is tremendous so that's for me the fundamental of the technology now i will take a caveat there are some things that ai cannot do yet things that predominantly are in the research field we have significant advancements but we don't have it yet we can predict the right targets with high accuracy biological targets we cannot have the right molecules design the way that we want we still don't have toxicology in silico that it is well established and i can go on and on and on things that could once we do could save a tremendous amount of time of out of the drug development and discovery for that our strategy is to work with big players and these companies to develop the tools so we partner with them i don't think any tech company alone will be able to develop a good AI model that predicts new compounds, and I don't think any pharma company alone by hiring engineers will be able to do it. We need the expertise of the two, and that's our strategy on that second domain. So the first one, more or less generic from my perspective, infrastructure, data, and then training of the people, changing the organizational structure. The second one is still to come. Okay, so

back to the biopharma environment AI is clearly one. Let's talk about regulatory for a second as one of the things that are changing. Actually, even recently, it's been changing quite a bit. So how do you see the changes? Is it going in the right direction? What do we have to make sure we protect? And what needs to be improved?

If we speak about the U.S. on the front of significant institutions like the CDC, the FDA, et cetera, I think 25 was not a good year. We had a setback, but I think the White House realized that. I think that they initiated corrective actions. We saw a lot of changes in CDC and in the FDA, and we continue seeing. CDC publicly said that it is a wonderful choice, the one that they did. a decent high ethical scientist that it is highly respected by the other scientists. That's what you need from a director of CDC. You don't need someone that every medical establishment is challenging it. We reach the level that CDC will make some vaccine recommendations and then the American pediatricians, the American Association of Pediatricians, for the first time ever in the history of this country, will issue their own guidelines because they say, we don't trust the CDC guidelines. Terrible. But this is, I think, very rapidly moving to the right direction.

And if you could have your choice on things that the regulatory regime would improve going forward, what would they be?

Before answering that question, because it's kind of connected, Many are asking, what about China? Because China, it is the area that it is, in addition to AI, the second driver that is shaping this industry. We have a phenomenon of a country that replicated the US success model of building an ecosystem with NIH, universities, venture capital, biotech, big pharma. And this is what the U.S. did in the last two decades and attracted the entire world research basically here. It was happening in Europe before that. And everything came here. And from Japan, most came here. And most Europeans are doing here their research now. So China is the very impressive example of a meteoric rise of a nation as a scientific superpower. They are not stealing patents, because some people still are in this narrative. Actually, they are adamant in protecting patents. Why? Because they filed way more patents than U.S. companies last year. There is a true revolution that is happening there, and it is based on two things. things. One it is they are investing in organizations that they operate with half the cost and three or four times the speed, and they are investing big amounts.

Is that because they've embraced AI faster or because they were...

No, I don't think that the big changes that we see in China is because of AI. Actually, I'm concerned when they will start doing that, how better they could potentially do it for us and go forward. There are multiple reasons, including some regulatory flexibility that they have there. But the reality is that people are hungry for success. And they are very driven. And they have set the goals. I've been to universities, and every researcher over there has in front of his computer screen the words CNS Cell, Nature, Science These are the three top magazines of the world The Cell, the Science and the Nature that they are obsessed, we published only there So we published only there, that's China They publish only on the highest quality magazines that an article to be accepted goes through the most severe scrutiny from peer groups. They dominate. 70% of the publications in some areas are coming from Chinese authors right now. So when you have this type of dynamic...

So is it a mistake for us to try to contain them versus make ourselves better?

You're right, and that's the biggest mistake that the U.S. bipartisanly is doing. They worry, rightly so. We want to maintain our superiority in the field. But the way that they are thinking about it, and they are investing 80% of their resources and brain power and time, it is how to slow down China. They should invest 80% of our resources and brain power how to become better than them. That's the only way. It's like if you are in a race and you have won in your life multiple races, so you are used to be the winner, and suddenly for the first time you feel someone approaching you from the bank. What are the two things that you can do? It is to run faster, which is the sensible thing to do, or to think that I'm going to push him to the side. This is what we try to do. Too late. They have scale, which critical mass, that we won't be able to slow them down. We should not even think about it. We should think how our biotech world will have three times the speed and half the cost to develop things.

So when you, and now back to the regulatory side of it, So if that's the goal, and to be the best, what help do you need from the regulators?

We need a lot of help from the regulators, and that's what I do every time I go to D.C. I speak about reforms that need to happen with Congress, with FDA, with HHS, et cetera, et cetera. But I need to say something. For us to be able to compete with Chinese companies in the next, in five years, let's say, when they will develop global players so the way i see it it is year 2030 my competition will not be merc and lily will be chinese companies and i know that they are coming with half the cost three times the speed i don't think government will solve that problem for me i don't think that we will be able to develop with the intervention or the protectionist of the government have the cost three times the speed we can develop it if we do the right ai development we can develop if we do the right transformations we can develop if we do the changes that we need to do so that we can become better that's mainly on us however the government when it keeps bringing the pricing issue of this industry is killing the industry is not helping because who is going to place his money in this industry, when there is an existential threat, maybe prices in the U.S. will be cut in half. Every time we have this debate, the funding for biotech comes to historical laws and the multiples of the pharmaceutical industry in extreme laws. That needs to stop. That's the help I want from them. The rest I'll do. I don't want their money. We have enough capital to do the things, and to have the will, and we have the expertise to transform ourselves.

Correct me if I'm wrong. I think you just did a recent deal in China with a 15-year maturity, a long-term. What drove that? Was it worrying about the U.S. regulatory change, or that you liked the product so much you wanted the duration?

You mean the innovative deal with Everton? No, what drove that? it is that right now the Chinese, because of their very high productivity, they are developing significant medical innovation, new things, new stuff. And my passion is to find the cure of cancer, but I am pretty aware it's a very difficult thing, because this fucker is very tough. You can't beat it, right? So we need to use the resources of all. And by finding a company that is very quick and good in some of the things and combine it with our capabilities that are very good in other things, we have better chances to develop the cancer medicine. So that's the deal.

Back to China for one last question. You've been there twice in the last six months, is that right? Say it again?

You've been to China twice? Yes, yes, I've been there twice.

Who do you meet with? Forget the big meetings with Pomp and Circumstance. When you're in a small meeting, are you meeting with the CEOs of the pharmaceutical companies? Who are you actually having the conversations with and what do you talk about?

Various changes. I always meet the political establishment. If I can, I will meet the presidency. It's not that easy to see him, but I have seen it several times but I will see the premier always I will see other members you should also Shanghai, Beijing are the most influential right now you see always the mayor and the party secretary so you see let's say the political world then I meet with a lot of investors there there are a lot of either Chinese or Singaporean or other type of investors that they have a very good understanding of China and I'm closely connected with them. I'm meeting CEOs of companies, particularly if we have advanced deals. For example, the Innoven deal, I went and met with the CEO before we had an agreement just not even a month ago, three weeks ago. And I think that helped because also when they look at you in the eyes they feel very different level of trust to conclude the deal. And the same is for us. I wanted to see who is the person, right, before we commit years of code developments. So pretty much you get the feeling. Whenever I can, always I visit my people. It means a lot for them to see the CEO there and to have a lot of people in China. We are very big in China in terms of infrastructure and sales. and we are in e-commerce, we are in direct sales, you name it. We are the biggest name from international companies in China.

Okay, I think we're out of time and we have a hard stop, but I want to ask you just one last question and you could answer as quickly or as long as you want. The purpose that you have in your life and the purpose for your company, how are you motivated, what is it about, and how do you feel about your job?

I feel very good about my job and I think very few people have the luxury to work in an industry that doing good means that you are making good for humanity. There is a big misconception that existed for many years and was politically driven that what is the interest of the patients and the interest of the shareholders when it comes to pharma are fundamentally at odds. One is the reverse is true. There is no way that any shareholder will make a single dollar unless if the company creates dramatically significant value for the patients. so morally i'm so pleased to know that because what i need to do to serve my fiduciary responsibilities it is to bring new medicines to patients which is what i'm very proud of doing and that's how we motivate our people very few people as i said work in an industry but they can claim that they can do so much good to humanity and every time a neighbor unfortunately tells you that he got the diagnosis of cancer this is the time that you remember why

we need the Pfizer's of the world great Albert thank you so much on behalf of everybody here we greatly appreciate you thank you very much