CFO David Denton Outlines Pfizer’s Capital Allocation Strategy
November 8, 2024As Pfizer celebrates its 175th anniversary, the company continues to make steady progress toward long-term sustainable growth potential. David Denton, Pfizer’s Chief Financial Officer, continues to prioritize investments that seek to generate innovations that improve patient outcomes and enhance shareholder value. In a recent appearance on Morning Brew’s After Earnings podcast, he shared insights into Pfizer’s capital allocation strategy:
Strategic investments
Pfizer has reinvested approximately $11 billion annually in the last several years in its internal research projects, targeting key therapeutic areas like oncology and vaccines.
When evaluating new markets, David emphasized that total addressable market (TAM) analysis plays a crucial role in resource allocation in Pfizer’s decisions, as the company focuses on and invests in addressing significant unmet patient needs.
- Identifying Market Potential: One example – the obesity market, which could reach over $90 billion by 2030, presents a significant potential growth opportunity. Pfizer has several possible candidates that, if successful, may help address the burden of type 2 diabetes and obesity.
Complementary Acquisitions: Over the last two and a half years, Pfizer invested over $70 billion into strategic business acquisitions.
- Pfizer’s $43 billion acquisition of Seagen Inc. – a pioneer in Antibody-Drug Conjugate technology – has strengthened its oncology portfolio – combining Pfizer’s legacy of fighting cancer with Seagen’s innovative and extensive oncology pipeline.
Shareholder returns
David underscored Pfizer’s balanced approach to capital allocation, balancing reinvestment in innovation with delivering shareholder returns, noting the company’s use of various tools designed to enhance value for shareholders.
- Pfizer has increased its dividend each year since 2010. The company’s consistent dividend payouts remain a priority, providing strong yields for investors. Pfizer’s strategic investments are designed to drive long-term growth potential and create opportunities for future dividend increases.
- Share Repurchases: While Pfizer has paused share buybacks to help de-lever its balance sheet, David highlighted that share repurchases serve as a flexible means of delivering returns to shareholders. The company remains focused on returning to a more balanced capital allocation strategy over time.
David calls 2024 Pfizer’s “year of execution,” as the company continues to deploy capital to fuel future growth. Prioritizing capital is a key element to enable Pfizer to deliver breakthroughs that change patient’s lives while helping to drive top-line performance and enhance shareholder value.
Forward-looking statements included herein are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. We encourage you to read our reports filed with the U.S. Securities and Exchange Commission (SEC), including the sections captioned “Risk Factors” and “Forward Looking Information and Factors that May Affect Future Results,” for a description of such substantial risks and uncertainties. These reports are available at pfizer.com and the SEC’s website.