Pfizer’s CEO pushed employees to do what they thought impossible in fast-tracking a COVID vaccine
On this week’s episode of Fortune‘s Leadership Next podcast, co-hosts Alan Murray and Ellen McGirt talk with Pfizer CEO Albert Bourla, who has led the company through the COVID era. They discuss the development of Pfizer’s COVID vaccine, how the pandemic may have changed the public’s opinion about Big Pharma, Bourla’s commitment to business collaborations, and much more. Listen to the episode or read the full transcript below.
Alan Murray (01:22): Leadership Next is powered by the folks at Deloitte, who, like me, are super focused on how CEOs can lead in the context of disruption and evolving societal expectations. Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Alan Murray, and you were just listening to my fabulous co-host, Ellen McGirt.
Ellen McGirt (00:26): I am well. Thanks to many, many things, including our guest, who we’re going to talk about in just a second. And hello, everyone, thanks for tuning in. I know that we’d like to chat for a few minutes before we introduce our guest, but I’m excited enough about the CEO we’re going to hear from today that I’m just going to go ahead and say, our guest is Albert Bourla, the CEO of Pfizer, and it was about a year ago that many of us were receiving our first or second dose of the COVID vaccine, hence my health, and it’s no accident that Pfizer was in a position to make all of that happen.
Murray (00:55): It’s really an amazing story, Ellen. Vaccines normally take a decade to develop, and they did this in a year. I think it’s a testament to some important changes that Albert made before the pandemic hit that ultimately gave the company the flexibility and focus it needed to pull off this amazing feat and get a manufactured vaccine out in record time. We’re gonna get him to talk about that. But I’m also really interested in hearing about how this purpose of the past two years has changed the fundamental Pfizer business itself, and changed the perception consumers have of Pfizer.
McGirt (01:34): That’s a great point, Alan. I would say that pre-pandemic, many people didn’t hold pharmaceutical companies in high regard, and Pfizer had some particular issues in the past, and now they’re practically heroes. That’s a precarious standing, because some of the issues are still there, including drug prices, which are still pretty high.
Murray (01:50): Yeah, drug pricing is a really complicated issue, because these companies invest so much up front to get the intellectual property for the drug. But then the actual manufacturer of the drug is not that expensive, and so they have to recoup their R&D costs, but there’s enormous pressure on them to bring the price down closer to the price of manufacturing, and it’s been a tough thing. And we’ve had a lot of pricing scandals, which is why pharmaceutical companies have been held in such low regard. But Pfizer has really changed that over the course of the last two years.
McGirt (02:24): It’s really true. And I think if anyone can tackle this challenge going forward, it’s Albert Bourla. And he’s impressed us time and time again, over the past few years for all of the things that you mentioned, including a new and fascinating commitment to collaboration that includes with governments, which is always very challenging, and a full commitment to distributing a vaccine that hadn’t even been created yet, and all of the decisions he had to made to invest in that vision.
Murray (02:50): Very focused on science, very focused on health. It’s a great thing.
McGirt (02:54): It is, and just a quick bit of background for anyone who’s not up on their CEO bios, Albert had been at Pfizer for over 25 years, but he became CEO in 2019. That magical year in the before-times, and he’s actually a Doctor of Veterinary Medicine, something you don’t see a lot, and he grew up in Greece.
Murray (03:09): So let’s get him in here. Albert Bourla, welcome to Leadership Next.
Albert Bourla (03:13): Thank you very much, Alan. Thank you very much, Ellen.
Murray (03:17): So I think, at this point, everyone knows the basic story of the vaccine. But I want to get you to talk about the business story, because Pfizer was a different company before this happened, and frankly, in the public imagination, it was not a very popular company. People tended to think of it as focusing too much on protecting intellectual property and jacking up prices. And what happened over the course of the last two years not only saved millions of lives, but changed your company, and I’d like to get you to talk about that.
Bourla (03:50): Yes, I agree. And I agree with everything that you said, I agree on that Pfizer’s reputation was not at the top of the list. That was not specific to Pfizer, it was part of the entire pharmaceutical industry, but unfortunately it was not enjoying very high reputation. I think what happened during the pandemic is that the industry as a whole, and Pfizer particularly, has demonstrated the value that it can bring to society. And we did that in a very dramatic way, and that helped a lot of people to change their opinion and started not only liking us, actually loving us. I’m very cognizant, it’s so easy to lose this position, as difficult as it was to go there. Reputation comes into drops, but you can lose it in buckets. Yeah, and I don’t take that for granted, but our reputation is very high. I think that we should continue earning the trust and the recognition that we do good to humanity every day.
Murray (04:56): Yeah. It’s worth noting, Ellen, that Pfizer made it this year on to Fortune‘s World’s Most Admired list of companies, top 50, which is not a place that had been, very high on the list, not a place that had been before.
Bourla (05:10): It was No. 4, and it was a very, very—we’re very, very proud to be able to do that. And we hope that we will stay there, if not improve our position for the years to come.
McGirt (05:24): So, it seemed also that there was some wonderful synchronicity that led up to a terrible moment, and a real opportunity for the company. You’ve been working at Pfizer for a long time before you became CEO. And you were part of making some important decisions, divesting yourself of businesses that were not devoted to research and development, for example, focusing on digital transformation, all of which were ingredients that put you in an interesting place when the pandemic hit. Could you talk to us about how you were able to leverage those decisions so quickly?
Bourla (05:55): Yes, the two businesses that we moved out of Pfizer, in both cases actually did it by trying to create higher value. I don’t believe in financial engineering at all. So both of these cases, we exited these businesses or let’s say we created new businesses by joint venture ours with someone else that the complementarity of the two will do great value, but that also created a way more singular-focus company within Pfizer by doing that, a singular focus on science. And that created a very different mindset, the mindset of innovation, and mindset of scientific innovation that we had to make sure that we develop so that we can be successful when we are betting the whole company on the science. That came not only with a sense of portfolio, but also with dramatic changes in the capital [inaudible]. The company was investing something like $7 billion dollars in R&D, $6 [billion] to $7 [billion] in the year 2018. For example, when I took over in my team, January, now we spend $11 [billion].
So, we dramatically increased the amount of research budgets. And we did that in a very, very well-orchestrated way. It was not just money that was going to in general, to reserves, it was money to build infrastructure, but will accelerate the speed. It was money that went to digital digitization of our entire research process and the projects. So when the pandemic came, for example, it found our development machine, our clinical development machine, in not only in the best shape it was ever, but a step up from what we used to b,e because we wouldn’t be able to complete the studies of the COVID vaccine, for example, and later for the COVID pills, without the digitization that we have achieved—wouldn’t be able to even come close to the speed that we were able to do.
Murray (07:58): We talk on this podcast a lot about the power of purpose in helping drive business results. I don’t know of a better example than what happened at Pfizer over the course of the last couple of years. Of course you had a purpose imposed upon you. You had to get the vaccine done, save lives, but can you talk about how that drove the business to have better results?
Bourla (08:23): I think it was the most important factor. It was not a singular focus on science. It was not the infrastructure we were able to develop. It was the culture and the mindset. And the culture was a culture, what we called ourselves in ’99, purpose-driven culture. And we articulated our purpose in a way that everybody can remember it. But also being able to focus on that, we said, breakthroughs that change patients’ lives. What’s the reason of our existence? This is why we have formed this corporation. Without that, there’s no reason for us to be part of the corporate America, unless we will be able to bring breakthroughs that change patients’ lives. Companies that they are staying true to their purpose always perform better than companies that don’t. And I think this is because, when you are having a strong focus on your purpose, you coordinate all the resources of the company towards one common goal. So that gives a really good compass for everyone to do the right thing. Now, in cases like ours, when the purpose is so noble, when the purpose, it’s saving lives of other people, that creates an additional boost to the end of, preserving culture can bring the results of a company, because people are goimg the extra mile, they are involved in themselves. This is what happened with COVID.
Murray (09:47): I want to follow up on that just quickly, because in your book, Moonshot, which is a great book by the way, I recommend it to our listeners, you use the phrase, the common phrase is, “time is money.” You turn that phrase into “time is lives.” Every extra week it takes you to develop this vaccine, more people die. That had to be a pretty powerful motivator.
Bourla (10:07): Absolutely. In multiple cases when we were faced with obstacles, or we were faced with the challenges, and people felt that it is impossible, I was telling him, okay, so go ahead and calculate how many people will die if we don’t do it. And when you know the answer, now, I know that was a little bit of psychological blackmail when I was doing that to people. But I did that for a variety of reasons, because I knew that this is true. And that helped a lot. People went back and brought solutions to things that they didn’t think they could do, just because they realize that failure is not an option because people will die. We’re entering misery that we never imagined that would be a misery of this century.
McGirt (10:53): The other thing that happened very early in the pandemic was a global conversation about health equity and outcomes and vaccine equity and I know you weighed in very early. You’re also, along with other vaccine makers, are facing some shareholder pressure organizations like Oxfam, or through proxy ballots are pressuring vaccine makers to do more, including share access and technology with poor countries. How do you respond to that? How do you think about all of that?
Bourla (11:21): In order to be able to provide vaccines to all and have equity, you need two conditions. The first is to price it in a way that everybody can afford it. The second is to manufacture it in volumes that everybody can have it. The first one we resolved it back in June. We priced the vaccine in a price that is known the cost of takeaway meal for the high-income countries. But we gave it half that cost in the middle-income countries. We gave it at-cost in the low income countries. And pretty soon, we made a deal with the U.S. government, and they bought from us 1 billion doses, so it didn’t make money but it didn’t lose money. And the U.S. government was giving it for free to 92 poorest countries in the world. So that resolved early enough.
The second one of course was how to provide doses for all and we ramped up manufacturing capacity in the way that no one has done ever. I will give you a number to understand that before the pandemic Pfizer was manufacturing 200 million doses annually of all the vaccines across all manufacturing sites in the world. In the first year of the pandemic, we manufactured 3 billion doses of a vaccine that was never produced before. And only machine like us could do that and there would be no way that anyone else that never manufactured anything like that would do it.
Unfortunately, we faced a situation that also I have very early predicted, that availability and access to the vaccines, maybe will not be enough if we don’t work on the infrastructure of this country on the ground. Right now, the U.S. government has a lot of this 1 billion doses that they’re giving for free at their disposal that they cannot use. They are asking us to store for them those vaccines, because the countries that are receiving them, they cannot absorb them. They cannot absorb them for multiple reasons.
One very important is vaccine hesitancy that people in these countries. They are not coming to get vaccinated to greater and greater proportion then this phenomenon occurs in high- or middle-income countries or in this country, for example. Also, they have infrastructure issues. Sometimes they don’t have vaccination centers, sometimes they are lacking freezers. So, if in the first half of this year instead of focusing on maybe we should take the patents from those companies, we were focusing maybe we should put boots on the ground and prepare these countries to receive vaccines. When I was telling all over the world the vaccines will be available. We will have a very different healthcare outcome right now. Unfortunately, we didn’t but never is too late. I think we should work and to help also ourselves although it is not our core mission. Our core missions is to provide the vaccine. It is WHO, it is other organizations that can go and help those countries build the necessary systems and infrastructures to absorb vaccines that are available free to them.
Murray (14:29): That’s interesting. So, you think the patent argument now is pointless. We have the vaccines we need at a price people can afford. The problem is one of actually getting the vaccines to people and administering.
Bourla (14:41): The only thing I would correct according to your statement is not at prices that they can afford—free. Hundreds of millions of doses available for them to reach them completely free and they cannot absorb them.
Murray (14:51): But you know, Albert, this of course, is why the pharmaceutical industry got itself into a mess prior to your time to begin with. When I went to school to study economics, which I grant was a long time ago, we were taught that competition would drive prices down to the marginal cost, which is basically the cost of manufacturing. That doesn’t work for high-development cost products, like pharmaceuticals, where the cost of manufacturing is very low, but the cost of developing is very high. We’ve never really solved that problem people in the U.S. Many people in the U.S. resent the fact that they have to pay such a high cost for pharmaceuticals when many people in other parts of the world get it at a much lower cost. It’s like our economic system doesn’t work that well for high intellectual property development cost products like pharmaceuticals, and the debate you’ve been through over the last year suggests we haven’t really solved that yet.
Bourla (15:48): Yes, we haven’t. And in the U.S. we have a real real issue. But I will argue that the cause is slightly different than what people might think. Let me be explicit when speaking about drug pricing. We’re speaking about two different and distinct issues. The first is what is the cost of medicines to the healthcare system? How much Medicare would pay? How much Coca-Cola as a major employer will have to pay? Flat costs, it is 12% of the total healthcare costs that Coca-Cola or Medicare will have to pay. So, medicines are present only 12% and by definition cannot be the biggest when it is only 12%. And by the way it’s going down. So, in the last day here Pfizer report in the U.S. net pricing reduction of minus 5% and minus 5%.
However, this is not the experience that the people that are using our medicines are having. I know that when they go to the pharmacy, they will not feel minus 5% this year, they will feel a very different reality. And I’m coming to the second issue of drug price is not how it is the cost of medicines to the system. It is what is the cost of medicines to the individual who goes to collect their medicines. There is disproportional contribution out of pocket for medicines than for anything else in our current insurance system. And this is why something that represents 12% of the total gross occupies 90% of the newspaper headlines, because that’s really because when Americans are going to take their medicines in the pharmacy counter, they pay for them like if they don’t have insurance, although they have and they have a very expensive one.
Bourla (15:48): It’s an issue you’re going to have to solve if you want to keep that number four spot on world’s most admired companies.
Bourla (17:37): I fully agree. It is an issue we have to resolve even without that because it creates significant issues to the healthcare system. And to resolve that, I realized I don’t want to wash my hands, I realized that to resolve that that will create additional costs. Because if the patient suddenly don’t pay out of the pocket, someone else needs to pay, like the insurance companies. I’m more than willing and I offer multiple times to all administrations, the previous one and the current one that we are willing and a lot of my peers to take very big part of the cost burden to do that. But let’s do it right now. All the discussions about drug pricing are discussions of how we can be taxed for the first part, which means maybe the employers or Medicare will not pay that much but no change in the way that Americans are paid for their medicines. I’m perfectly fine to use all this costs that they want the industry to assume as long as every cent goes to relieve the out-of-pocket of the American patients.
Murray (18:49): I’m here with Joe Ucuzoglu, the CEO of Deloitte US, and the sponsor of this podcast for all three of its seasons. Thank you for that, Joe.
Joe Ucuzoglu (18:57): Pleasure to be here, Alan.
Murray (18:58): We’ve had this rising talk about a notion of stakeholder capitalism that businesses have a responsibility not just to their shareholders, but to their employees, to the communities they operate in, to the natural environment. Is all of that talk real and will it last particularly when times get tough? And is it working, Joe?
Joe Ucuzoglu (19:17): I see a pretty durable shift, Alan, with a lot of momentum here. CEOs are prioritizing sustainability. They’re prioritizing purpose. They’re prioritizing trust. You certainly see some noise on one end, there’s some skepticism as to whether this is virtue signaling. On the other end, there’s some lingering debate about whether this broader focus on stakeholders detracts from shareholder returns. If you cut through all the noise, what we’re seeing is actually a huge convergence of interests. This is core to sustaining a vibrant capitalist system. If you take a long-term view, the only way that you’re going to deliver sustainable shareholder returns is to take really good care of all of those constituents that you referenced.
Joe Ucuzoglu (19:21): Well, business was at the heart of leading society through the pandemic. Business is at the heart of addressing the climate challenge. We’re seeing massive momentum with very tangible commitments and tangible actions towards decarbonizing the economy. So yes, I think the evidence is ample.
Murray (20:18): Joe, thank you.
Joe Ucuzoglu (20:20): Alan, it’s a real pleasure.
McGirt (20:26): I want to switch gears a bit. You mentioned boots on the ground earlier and I want to ask about actual boots on the ground. And of course, I’m talking about what’s happening in Ukraine. First, I just want to inquire how it’s affecting Pfizer employees, your business, but also vaccine production, the Sputnik vaccine, which I know doesn’t have WHO approval, but it’s still an option in lots and lots of countries like India. I’m curious your take on how that’s going to disrupt that supply and how that will impact the picture of COVID overall.
Bourla (20:59): First, let me say, needless to say, that what happens in Ukraine is tragedy is unacceptable. It is something that we didn’t think that we’ll have to deal with. And suddenly we are. Let me also say that in Ukraine, we have relatively small operations, so it doesn’t affect us in terms of financial but to have employees and we take care of all the employees. They all know that they have job security, a lot of them moved out of the country, and to try to move them into other countries actually very moving stories of all these Pfizer employees that they are going to the borders to collect Ukraine and Pfizer employees and bring them to their homes so that they can give them let’s say the first cultural, all of that are very moving stories.
Now in terms of vaccines, I don’t know how Sputnik could influence the availability or not of the vaccines that the Russians are producing, would affect vaccination programs in mainly developing countries. I don’t think that they’re used at all in the other countries. And as I said before, for these countries, we have billions of those available. They want free. So in reality, I don’t think that would be by any measure any issue. What happened with Sputnik. [Hard to hear] on these countries, it is how to help them get educational campaigns and vaccination centers so that they can use these vaccines.
Murray (22:21): I want to ask you a question about lessons learned from the last two years because the vaccine you developed in a year’s time would be an extraordinary accomplishment under any circumstances, particularly extraordinary for a big bureaucratic company like Pfizer to be able to move that quickly. And I wonder what you’ve learned from that incredible experience that can both be helpful to companies going forward that are trying to make rapid transitions, and also can be helpful in solving some of the big thorny problems we face whether they’re healthcare problems like heart disease or diabetes, or whether they’re bigger systemic problems like climate change. What have we learned that can make us better at this?
Bourla (23:05): I think we’ve learned a lot and we’ve used a lot of this learning. So let’s not forget that Pfizer did not only did the vaccine, but also did the pills. The oral pills, and we did it in equally impressive time. And we did by using exactly the same principles and I can go into the details for those that they want them. But I think by far the most important learning was on the cultural level, was a learning that when you set up very big, dramatic goals to your people, and you don’t budge when they tell you it’s impossible. To continue emphasizing that, find a way that’s the goal. You will be surprised how much they will do. You will be surprised how many solutions will be invented. What will be the level of delivery that you will receive? People have a tendency to severely underestimate what they can do. And when you ask them to and empower them to do things, you will be really really surprised. That was the big lesson.
McGirt (24:10): That’s a good one. Albert, we’re asking all our guests this year on Leadership Next to participate in a quick lightning round of top-of-mind responses to three key areas of business life. The first one is what’s top of mind for you when you think about COVID?
Bourla (24:26): How to stay ahead of it. It is a virus that has some characteristics that why became a pandemic. One is that changes constantly. And the second it is that vaccinations or natural infection is actually even worse with natural infection doesn’t create durable immune protection. The new protection wanes you can get the disease and then you can get the disease again and then you can get it several times. So with that in mind, I know that we need to always be ahead of the virus to avoid the most challenging situation.
Murray (25:03): Okay, that’s scary. Ellen, move on to your second question.
McGirt (25:06): I know. This one is scary for you. Top of mind when you think about the global economy that’s scary, too. That’s what I was saying. That one’s scary for you, Alan.
Bourla (25:17): I think the biggest impact that we saw in the modern history on global economy was the impact of the pandemic, frankly. That you can measure the financial impact with anything else. But that setting aside I think it’s the geopolitical environment. I think we are moving to an era that from globalization, suddenly we are moving to supply chain challenge as a result of nationalization, and I think people are trying to find what is the best way to deal with a new situation of tensions between China and the U.S. were for me, high on the radar screen of what can go wrong, for seeing what’s happened with Russia. Now seems like a small list of the China U.S. relations now that we know that we have someone that threatens to use nuclear weapons. So I think we are in a phase that we need to reset the balance of the geopolitical balance. And we need to wait to see how things will settle.
McGirt (26:19): Finally, what’s top of mind for you in your development as a leader?
Bourla (26:24): To keep learning. I think that 29 years that I’m with Pfizer, and I think also the years before Pfizer, I was younger, I’m always a different, hopefully better manager at the end of the year than in the beginning of the year for 29 years. Actually, I say to my people that the moment that I will feel like I will be the same the end of the year when the beginning I know that that should be the time to go. So I learn from mistakes and through successes and through disappointments and then through let’s say, encouragements, and we can talk about what is the biggest lesson so far, but I think every year is different.
Murray (27:08): Albert Bourla, thank you for everything you’ve done. Thank you for the vaccine. And thank you for being with us on Leadership Next. I really enjoyed having you.
Bourla (27:16): Thank you very, very much.
Murray: Leadership Next is edited by Nicole Vergalla, written by me, Alan Murray, along with my amazing colleagues, Ellen McGirt and Megan Arnold. Our theme is by Jason Snell. Executive producers are Mason Cohn and Megan Arnold. Leadership Next is a production of Fortune Media. Leadership Next episodes are produced by Fortune‘s editorial team.
The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
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