Pfizer Inc. (PFE) Earnings Call Transcript & Summary

Hello, and welcome to Pfizer's 2023 Annual Meeting of Shareholders. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Margaret Madden, Pfizer's Corporate Secretary. Ms. Madden, please begin.

Good morning. I'm Maggie Madden, Pfizer's Corporate Secretary. Welcome to this year's Annual Meeting of Shareholders. Today's meeting will be held in a virtual-only format. I am joined today by Albert Bourla, Pfizer's Chairman and Chief Executive Officer. We also have the inspectors of election with us today, John Laino and Catherine Ladyzinski from Computershare participating by phone. In order to ensure fairness for all shareholders, it is important that you abide by the rules of our meeting detailed in the rules of conduct and meeting procedures available on the virtual meeting website. During this meeting, we will provide projected financial and other forward-looking information, anticipated operating and financial performance, growth potential, our expectations for our product pipeline, in-line products and product candidates, business plans, strategy and prospects, which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. For additional information on these risk factors, I refer you to the Item 1A Risk Factors section in our latest annual report on Form 10-K, which is filed with the U.S. Securities and Exchange Commission, and also included as an appendix to our 2023 proxy statement and accessible via www.pfizer.com. These forward-looking statements speak only as of the date of this meeting. And we undertake no obligation to update or revise any of these statements. Now please join me in welcoming Pfizer's Chairman of the Board and Chief Executive Officer, Albert Bourla.

Thank you, Maggie. And good morning, everyone, and welcome to this year's annual meeting. We are also joined here today by Pfizer's Board of Directors, whom I will introduce to you later in the meeting, and members of our executive leadership team. I would like to ask the executive leadership team to please stand as a group. Thank you very much. 2022 was an outstanding year for Pfizer on multiple fronts. Most important, for the second year in a row, more than 1.3 billion patients around the world were treated with our medicines and vaccines, a truly humbling achievement. We maintained our industry-leading clinical success rates and further improved our cycle times, which already were among the industry's best. And we did all of this while maintaining our high standards of quality, safety and scientific rigor. We saw several important reputational gains. We were ranked in the top 10 on the Fortune Magazine's World's Most Admired Companies for the second year in a row. We were recognized as one of the world's most ethical companies by Ethisphere, also for the second year in a row. For the first time ever, Pfizer ranked first among all big pharma companies in the patient view global survey. And we were named to 10 different best employer lists, including those published by Forbes, LinkedIn, Glassdoor and others. We achieved record high brand equity for Pfizer with 80% brand awareness among consumers. We exceeded $100 billion in revenues for the first time in our 174 years history. And lastly, we continued to increase our dividend, having had 52 consecutive quarters of year-over-year dividend increases. This remains a priority for Pfizer, as it is a primary means to return value to shareholders who have entrusted their capital to us. During the year, we also continued to lead the battle against COVID-19. As the virus continued to evolve, Pfizer scientists were up to the challenge using our flexible mRNA platform to swiftly create a new vaccine candidate based on the then emerging Omicron BA.4 and BA.5 sub-variants. We believe our best-in-class mRNA capability, coupled with our proven and reliable manufacturing network, will ensure we are well-positioned to continue to adapt our vaccine as needed and get it to people around the world. Our COVID-19 oral treatment, PAXLOVID, has shown to be an important complementary tool to vaccination strategies for the estimated 40% of the global population at high risk for progressing to severe disease. PAXLOVID has demonstrated robust efficacy and consistent safety profile and potential to help mitigate the burden of COVID-19 on patients and their families, health systems and society. During the year, we also took bold actions to help ensure our breakthroughs get into the hands of those who need them. We are living in a time when science is increasingly demonstrating the ability to take on the world's most devastating diseases. Unfortunately, there is a huge health equity gap in the world that determines which of us can access these innovations and which of us can't. At Pfizer, we are committed to helping close this gap as quickly as possible. That's why we launched An Accord for a Healthier World. Through this groundbreaking initiative, Pfizer now offers on a not-for-profit basis the full portfolio of medicines and vaccines for which we have global rights to 44 lower-income countries with the hope of giving the 1.2 billion people living in these countries access to hundreds of life-saving and life-changing products that they couldn't access before. But as we learned in the COVID-19 vaccine rollout, ensuring supply is only the first step to helping patients. For this reason, another key element of the Accord is collaborating with governments and global health leaders to address gaps in diagnosis, education, infrastructure, innovative financing and more. Looking ahead, Pfizer's future appears to be even brighter than our present. We are in the midst of an 18-month period during which we expect to have up to an unprecedented 19 new products or indications in the market. 15 of these 19 are from our internal pipeline, with the remaining 4 coming to Pfizer via recent business development deals. These potential medicines and vaccines cut across a range of therapeutic areas, and include candidates for multiple myeloma, prostate cancer, respiratory syncytial virus, the RSV, flu, pneumococcal disease, migraine, ulcerative colitis and sickle cell disease, among others. This represents a tremendous opportunity to improve health outcomes for patients around the world. This is the promise of our science at work. And of course, we have many more potential vaccines and medicines in our pipeline, with numerous launches expected in the 2024 to 2030 time frame, if successful, of course, in clinical trials and approved. Some of the most promising assets include our oral GLP-1 candidate for diabetes and obesity, potential combination vaccines for flu, COVID-19 and RSV, our potential vaccines for Lyme disease and shingles, multiple new oncology product candidates, including potential next-generation breast cancer treatments, our gene therapy candidates for hemophilia A, hemophilia B and Duchenne muscular dystrophy, and many more. In addition, given the strength of our balance sheet and cash flows, we will continue to leverage business development opportunities to advance our business strategies and objectives. We will be looking primarily at therapeutic areas and platforms where we believe we have the scientific skills and acumen to add substantial value and select the most successful targets. We believe we have the ability to be successful to add at least $25 billion of risk-adjusted revenues to our 2030 top line expectations through business development activity. We believe the deals we have already done for Arena, Biohaven, Global Blood Therapeutics and ReViral have the potential to contribute approximately $10 billion in expected 2030 revenues. And we believe our recently announced plans to acquire Seagen also could potentially yield more than $10 billion in risk-adjusted revenues in 2030, assuming clinical trial success and regulatory approvals, which in that event would leave us with less than $5 billion needed to reach our $25 billion goal. Speaking of Seagen, we are very excited about this planned combination. Seagen is a pioneer in antibody drug conjugate technology, which is rapidly emerging as a powerful tool in cancer treatment. Think of ADCs as cancer-seeking guided missiles that deliver a potent cancer killing drug directly into the cancer cells with the goal of limiting damage to healthy cells. With more than 20 years of experience and an industry-leading ADC platform, Seagen's expertise in this technology is unsurpassed, as is Pfizer's ability to deliver life-changing solutions quickly and at great scale. We believe we can create significant value for patients by leveraging our global drug development expertise, our commercial reach, the potential for creating novel combinations using both companies' drugs to help patients and using our protein engineering and medicinal design capabilities to provide novel components for future ADCs. Oncology is a core therapeutic area for Pfizer. And we believe the proposed combination with Seagen will enhance our position in this important space, while significantly advancing the global fight against cancer, a disease that inflicts 1 out of 3 people in their lifetime and which continues to be the largest growth driver in global medicine. I want to close my Chairman's Report by thanking Pfizer's more than 80,000 bold, talented and purpose-driven colleagues. Our company is as strong as it has ever been. And this wouldn't be possible without our colleagues' continued hard work, ingenuity and laser-like focus on patients' needs. To each and every one of them, I say thank you. Thank you to all of our shareholders. Thank you for your continued support and for our important work. So now it's time to proceed with the business portion of the meeting. We are scheduled to end by approximately 10:00. And we want to maintain an informative, productive and orderly business meeting, marked by fairness to all shareholders. Therefore, we will follow the order of business available on the virtual meeting website, and we will get right to the first item of business, declaration of quorum. Notice of this meeting was given to all shareholders of record as of March 1, 2023. Shares representing at least 82.6% of the votes entitled to be cast at this meeting are present here today. This percentage represents a quorum. We now move to the next order of business items that are requiring your vote. We have 9 voting items in all, 3 that we address at every annual meeting, 1 that we address every 6 years, and 5 proposals from shareholders. Each item will be open for questions and discussion. To ensure fairness for all shareholders, it is important that you follow the rules of conduct and meeting procedures available on the virtual meeting website. Shareholders will be able to ask questions during the meeting after the presentation of its proposal and during the Q&A period later in the meeting. A telephone number is available to shareholders who entered the virtual meeting website using their control number. We have a lot of business to transact today, and we will reserve the right to move on to other questions or comments if a question or comment is out of order or has been substantially answered previously. In a moment, I will officially open the polls. Please note that if you have entered this meeting using a control number, you can still vote on all of the proposals that are included in the proxy statement, unless you are a participant in a Pfizer savings plan as the voting submission deadline has now passed. If you have not yet voted but would like to do so, or you have already voted but would like to change your vote, please use the annual meeting platform to vote your shares. We will pause for a moment to allow for vote. I declare the polls open as of 9:16 Eastern Day time on April 27, 2023. The polls will close today following the presentation of the items of business. We now turn to the first voting item, the election of directors. This year, the board has nominated 12 individuals in all to serve 1-year terms, all ending at our next Annual Meeting of Shareholders. You will find their extensive backgrounds in our proxy statement. In addition to me, the director nominees on item 1 are, and please stand as I call your name and remain standing while I introduce all nominees: Ronald Blaylock; Susan Desmond-Hellmann; Joseph Echevarria; Scott Gottlieb; Helen Hobbs; Susan Hockfield; Dan Littman; Shantanu Narayen; James Quincey; James Smith; and Susan Nora Johnson. Ms. Nora Johnson is unable to join us in person today, but is participating via 2-way audio link. Ladies and gentlemen, your Board of Directors. The Board recommends that you vote for all director nominees. If you have any comments or questions concerning this voting item, please access the dial-in information displayed on the meeting platform. Operator, are there any shareholders on the line who would like to ask a question or make a comment concerning any of the nominees?

[Operator Instructions] Our first question will come from Raymond Masri with Irsam Enterprises.

I just had a question in regards to the dividends that you were paying out.

Yes. I think this is a question that doesn't fit the current timing. You will have an opportunity to reconnect and answer your question when we have an open Q&A. Now we are open for questions about only the specific voting item, which is the election of 12 directors.

Our next question will come from Michael Piccirillo with United Brotherhood of Carpenters.

My question is going to be on the Q&A also. Sorry for putting it in early.

Next, we have Ethan Peck, who is a shareholder.

I have a question about the election of directors. One of the Board members, James Quincey, is also the CEO of Pfizer. Why is it acceptable for James Quincey, who -- also the CEO of Coca-Cola, excuse me, as the CEO of Coca-Cola, a company that makes more people sick than virtually any other company in America, then also sit on the Board of Pfizer, a company who then provides supposed treatments for people that do suffer from being overweight. So is this acceptable sitting on the Board of a company like Pfizer or being the CEO of Coca-Cola? Explain yourself.

Thank you for your question. Mr. Quincey has been invited to join our Board after I consulted with our Board of Directors at the time, and after I personally also wanted him to join us. He brings a tremendous global experience with running an iconic company like Coca-Cola, that has operations all over the world. He has very high operational skills. He brings a lot of understanding about what creates shareholder value. He brings a lot of expertise in how to run complex businesses like Pfizer's business, and he's a very valuable member of our team. We think that his service in this company in the last year made tremendous contributions and we are overwhelmingly recommending him to be reelected. Thank you for your question.

We do have one more question from [ Eugene Balic ] with Pfizer.

Well, sorry, my question also will be more for the Q&A portion.

And at this time, there are no further questions in the queue.

Thank you. We will now move to our next item. Item 2 is to ratify the selection of KPMG LLP as the company's independent registered public accounting firm for 2023. Two representatives from KPMG are participating by audio connection with us today. Melissa Taylor and Nicole Bonelli. The Audit Committee of the Board of Directors has done a thorough job of reviewing the performance of KPMG in 2022 and has selected the firm as Pfizer's independent registered accounting firm. for the year 2023. The Board has ratified this selection and recommends that you vote for this proposal. Operator, are there any questions or comments on this voting item?

[Operator Instructions] Our first question will come from [ Eugene Balic ], private shareholder.

Yes. I was wondering if the representatives of the auditors would discuss just how independent they are. And I ask this question because I've worked for a Fortune 500 -- actually, a Fortune 10 company. And in my experience where there was a conflict between corporate management and the auditors, the order is always lost. So can we really depend on your opinion in this manner. And I don't mean to suggest that the corporation has done anything wrong, just that I think that the independent orders basically are fraud.

May I ask the representatives of KPMG to -- David, yes.

Thank you for the question. This is Dave Denton, Chief Financial Officer, I just want to say [indiscernible].

I can't hear.

Yes. Thank you for the question. This is Dave Denton, Chief Financial Officer of Pfizer. I'd just like to state that the Audit Committee and the Board determined that the retention of KPMG is in the best interest of Pfizer and our shareholders. The Audit Committee reviewed specifically KPMG's independence, and KPMG's engagement as our independent registered public accounting firm complies with all the requirements related to auditor independence, and we and they have rigorous controls in place to ensure that our auditors do, in fact, remain independent.

Thank you, David. Operator, is there any other question?

Our next question will come from Jerry Bowyer with Bowyer Research.

Yes. I'm not sure that this question is in the proper order, but I've reached out to Investor Relations department on this. A lot of shareholders are concerned about the use of material from embryonic stem cells from human abortions. What exactly is the company's policy on that, and what ethical guidelines guide that policy?

Yes. Thank you very much. As you predicted, this question needs to be addressed when we are having an open Q&A. So please reconnect and ask your questions so we can address it. Right now, we are having Q&A and comments on the voting item, which is related with the KPMG. Operator, any other questions.

And at this time, there are no further questions. No, sir.

Okay. Thank you very much. We will now move to our next item. Item 3 is a management proposal asking our shareholders to cast an advisory vote to approve the compensation of our company's named executive officers identified in the summary compensation trade in the Executive Compensation section of the 2023 proxy statement. While this advisory vote is nonbinding, the Compensation Committee and the entire Board of Directors will review the results of the vote. And consistent with Pfizer's record of responsiveness, we will consider the feedback of shareholders and take that feedback into account in future decisions relating to our executive compensation program. Accordingly, for the reasons set forth in the proxy statement, the Board recommends a vote for the resolution to approve on an advisory basis the compensation of the company's named executive officers as stated in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And we have no questions at this time.

Thank you. We will now move to our next item. Item 4 is a management proposal that we put to a shareholder vote every 6 years, asking our shareholders to cast an advisory vote on their preference as to how frequently we should seek future advisory votes on the compensation of our named executive officers. Since 2011, we have helped our advisory vote annually, consistent with the views of our shareholders expressed in 2011 and 2017. The Board recommends that the advisory vote on executive compensation continue to be every year, so that shareholders may continue to provide timely direct input on our executive compensation program. While this advisory vote is nonbinding, the Compensation Committee and the entire Board of Directors will review the results of the vote. The Board recommends that shareholders vote in favor of one year on the proposal. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And there are no questions at this time.

Thank you very much. We now move to our next item. This proposal was submitted by John Chevedden of Redondo Beach, California. The proposal requests that the Board seek shareholder approval of any senior manager's new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99x the sum of the executive's based salary plus target short-term bonus. Ms. Kam Franklin is representing Mr. Chevedden. Ms. Franklin, you have 3 minutes to move the proposal forward for discussion. Operator, please open the line to Ms. Franklin.

Can you hear me okay?

Yes, very well, Ms. Franklin.

Okay, here I go. Proposal 5, shareholder ratification of termination pay. Shareholders request that the Board seek shareholder approval of any senior manager's new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99x the sum of the executive's base salary plus target short-term bonus. Generous performance-based pay can sometimes be justified but shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99x base salary plus target short-term bonus better aligns management pay with shareholder interests. For instance, at one company that does not have this policy, if the CEO is terminated, he could receive $44 million in termination pay, over 10x his base salary plus short-term bonus. In the event of a change in control, the same person could receive a whopping $124 million in accelerated equity payouts even if he remained employed. It is important that this type situation be avoided at Pfizer. This proposal topic received between 51% and 65% support at FedEx, Spirit AeroSystems, Alaska Air and Fiserv. Contrary to the Board of Directors' statement next to this proposal, the Board of Directors has not adopted this proposal. If the Board of Directors had adopted this proposal, it would not be necessary to vote on this proposal today. Please vote yes, shareholder ratification of termination pay, proposal #5. Thank you.

Thank you very much, Ms. Franklin. The proposal has been moved. The Board of Directors opposes this proposal for the reasons set forth in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And there are no questions at this time.

Thank you. We now move to our next item. The next item is a shareholder proposal submitted by Mr. Kenneth Steiner of Great Neck, New York. The proposal requests that the Board of Directors adopt an enduring policy and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO. Ms. Kam Franklin is also representing Mr. Steiner. Ms. Franklin, you have 3 minutes to move the proposal forward for discussion. Operator, please open the line for Ms. Franklin.

Can you hear me okay?

Yes, very well. Ms. Franklin. Thank you.

Okay. Proposal 6, independent Board Chairman. Shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO as follows: Selection of the Chairman of the Board. The Board requires the separation of the offices of the Chairman of the Board and the Chief Executive Officer. Whenever possible, the Chairman of the Board shall be an Independent Director. This proposal topic won 52% support at Boeing and 54% support at Baxter International in 2020. Boeing then adopted this proposal topic. Perhaps there should be a rule against a person who has been a CEO and a Chairman at the same time being named as Lead Director. Mr. Narayen, Pfizer Lead Director, had years in the dual jobs of CEO and Chairman. Past and present holders of both jobs at the same time would seem to have a special affinity with the Pfizer person who now has the 2 most important single jobs at Pfizer, Chairman and CEO. A special affinity is inconsistent with the oversight role of a Lead Director. A lead director is no substitute for an independent Board chairman. A lead director can delegate most of his lead director duties to others and then simply rubber-stamp it. There is no way shareholders can be sure of what goes on. A lead director can be given a list of duties, but there is no rule that prevents the Chairman from overriding the lead director in any of the so-called lead director duties. It is time for an Independent Board Chairman since Pfizer stock in 2023 is below its Year 2000 price of $42. The Board says it is in favor of the flexibility to have an independent Board Chairman, the topic of this proposal, but failed to cite 1 example of Pfizer ever having an independent Board Chairman. Please vote, yes. Independent Board Chairman, Proposal 6. Thank you very much.

Thank you very much. The proposal has been moved. The Board of Directors opposes this proposal for the reasons set forth in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And we have a question from [ Eugene Balic ], private shareholders.

Without commenting on anyone in the job today or the Board of Directors, it seems incomprehensible to me how someone can hold both of these jobs and do them fairly and ethically. One job is to supervise the other. And I don't understand how someone can supervise him or herself.

Thank you very much. As we said, the Board believes the leadership structure best rated to meet the needs of Pfizer and our shareholders should be based on the particular circumstances and challenges confronting the Board and the company at any given time, as well as the individual skills and experience that may be required for an effective Chairman. So the Board currently evaluates its leadership structure annually and considers the merits of alternative leadership structures, among other criteria, during this evaluation. In the event that Chairman and CEO roles are held by the same individual, which is the case right now, the independent directors select a lead independent director with significant authority and well-defined responsibilities under a Board-approved charter. The proposal was voted at previous annual meetings in 2020 and 2021, for example. The proposal received shareholder support of 34% and 37%, respectively. So we believe that it is the best interest of the company to maintain the flexibility for the Board to decide every year what structure needs to follow. Thank you very much for your comments. Operator, are there any other questions?

There are no further questions in the queue.

Thank you very, very much. So now we move to our next item. The next shareholder proposal was submitted by Oxfam America, Inc., of Boston, Massachusetts, and some other co-filers. The proposal requests that Pfizer's Board of Directors commission a third-party report to shareholders, at reasonable expense, and omitting confidential and proprietary information, analyzing the feasibility of promptly transferring intellectual property (IP) and technical knowledge, know-how, to facilitate the production of COVID-19 vaccine doses by additional qualified manufacturers located in low- and middle-income countries as defined by the World Bank. Ady Barkan is representing Oxfam America, Inc. and the co-filers and is participating via a prerecorded video. Mr. Barkan, you have 3 minutes to move the proposal forward for discussion. Please play Mr. Barkan's remarks.

Good morning. My name is Ady Barkan. I am the founder of Be A Hero, an organization working to achieve health justice. We believe that people everywhere deserve the health care they need, including access to life-saving coronavirus vaccines. I'm speaking on behalf of a resolution filed by Oxfam America and co-filers. We are in the fourth year of the COVID-19 pandemic and still access to coronavirus vaccines like Pfizer's remains grossly inequitable. When I presented this resolution last year, I said Pfizer was complicit in exacerbating this vaccine in equity, and that remains true today. I also said that it was not too late for Pfizer to do the right thing and help save more lives, including by sharing its technology with manufacturers in low and middle-income countries. Instead, in the last year, Pfizer's revenues have soared to record-breaking highs. In total, Pfizer has brought in nearly $75 billion in vaccine sales, and yet the company still plans to raise prices even higher, up to 10,000% of the estimated manufacturing cost. Pfizer says this represents a good value, but for who, for the company and its investors surely, as Pfizer pocketed $11 billion in share buybacks and dividends. But what about for the public. This vaccine was possible thanks to public funding and contributions from the global scientific community, a point Pfizer readily acknowledges in their legal disputes with competitors. And yet the company continues to squeeze more money out of the people seeking access to this life-saving medical tool. Pfizer is not only refusing to share technology, but also standing in the way of publicly funded researchers trying to develop even better vaccines. Vaccine inequality and short-term greed costs lives and trillions of dollars in economic damage. The World Health Organization and countries around the world have been clear. A sustainable solution for vaccine equity is diversified local manufacturing. Together with our 4 co-filers, we urge shareholders to support this proposal that Pfizer analyze the feasibility of transferring technology to facilitate the production of coronavirus vaccines by qualified manufacturers in low and middle-income countries. Thank you.

Thank you very much for your comment. The proposal has been moved. The Board of Directors opposes this proposal for the reasons set forth in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And there are no questions at this time.

Thank you. We now move to our next item. The next shareholder proposal was submitted by Trinity Health of the Bronx, New York, and other co-filers. The proposal asks the Board of Directors to establish and report on a process by which the impact of extended patent exclusivities on product access would be considered in deciding whether to apply for secondary or tertiary patents. Secondary and tertiary patents are patents applied for after the main active ingredient/molecule patent(s) and which relate to the product. The report on the process should be prepared at reasonable cost, omitting confidential and proprietary information, and published on Pfizer’s website. Cathy Rowan is representing Trinity Health and the co-filers. Ms. Rowan, you have 3 minutes to move the proposal forward for discussion. Operator, please open the line to Ms. Rowan.

Good morning, Dr. Bourla, members of the Board, and fellow shareholders. My name is Cathy Rowan. And on behalf of Trinity Health and the 7 co-filers, all members of the Interfaith Center on Corporate Responsibility, I present Item 8. We believe that the process and disclosure our proposal seeks would be beneficial to Pfizer because extended exclusivity periods gained from secondary patents and the resulting delay in the availability of less expensive generics can create regulatory and reputation risks to the company and impact patients' ability to access the medicines they need due to high costs. Our proposal does not seek to prohibit Pfizer from applying for secondary and tertiary patents. It only asks that the impact on patient access be part of the mix of considerations when the company applies for these additional patents. Companies like Pfizer play an important role in developing new and improved medicines for the benefit of society. Generic drug companies also benefit society by supplying cheaper equivalents of brand-name medicines, which leads to lower drug prices and facilitates access to affordable medicines. When the interests of these two sectors are kept in balance, society benefits from innovative and improved medicines as well as timely access to generic drugs. But we believe that balance is now out of whack. Given the high prices branded drugs command absent competition, companies have strong incentives to delay generic competition as long as possible. Congress members on both sides of the aisle and the Biden administration are taking a look at the patent system to ensure it is not being used to unjustifiably delay generic drugs and biosimilars from entering the market. The Director of the U.S. Patent and Trade Office and the Head of the Food and Drug Administration have stated that they will protect against the patenting of incremental obvious changes to existing drugs saying, "This effort can lead to lower drug prices because drug companies will not be able to unjustifiably delay generic competition based on trivial changes to a drug product." Our proposal would not limit, in any way, Pfizer's ability to obtain primary patents covering a drug's active ingredients or require a particular outcome when the company analyzes whether to pursue additional patents. We simply ask Pfizer to take the impact on patient access into account when making decisions about applying for such patents and disclose the process by which it does that. We appreciate the productive dialogue we've had with the company about this proposal and hope that we will be able to find a positive outcome that addresses our concerns. In the meantime, I ask fellow shareholders to vote in favor of Item 8.

Thank you, Ms. Rowan. The proposal has been moved. The Board of Directors opposes this proposal for the reasons set forth in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] And there are no questions at this time.

Thank you very much. We will now move to the next and the last voting item. The next shareholder proposal was submitted by Tara Health Foundation of San Francisco, California, and a co-filer. The proposal requests that Pfizer published an annual report at reasonable expense, analyzing the congruency of political lobbying and electioneering expenditures during the preceding year against publicly stated company values and policies including Pfizer's stated goal to end discrimination against the women, ensure equal opportunities for leadership, and access to reproductive health. Such a report should list and explain any instances of incongruent expenditures and state whether the identified incongruencies have led to a change in future expenditures or contribution. Ruth Saber is representing Tara Health Foundation and the co-filer. Dr. Saber is presenting via a prerecorded audio. Dr. Saber, you have 3 minutes to move the proposal forward for discussion. Please play Dr. Saber's remarks.

Good morning, Mr. Chairman, Board of Directors, and my fellow shareholders. My name is Dr. Ruth Saber. I am Founder and President of Tara Health Foundation, which is dedicated to improving the health and well-being of women and girls. In addition to my practice in obstetrics and gynecology, I served in a senior role at Kaiser Permanente for many years. First, I want to commend Dr. Bourla for signing the recent industry letter in support of the FDA's authority to regulate medicines, specifically mifepristone, the primary medicine used in abortion and miscarriage care. However, in the wake of the Supreme Court's decision to overturn the long-standing precedent established in Roe v. Wade, affirming the constitutional right to abortion, more must be done. Our proposal asks Pfizer to publish an annual report analyzing the congruency of political and electioneering expenditures during the preceding year against publicly stated company values and policies. Pfizer manufacturers reproductive health products such as contraceptives and misoprostol, a drug commonly prescribed for use as an abortifacient in combination with mifepristone. A minority of Americans would also like to restrict the use of misoprostol and they may succeed. Like many companies, Pfizer engages extensively in the political process through lobbying and making political donations, both directly and through its employee packs. Unfortunately, these contributions sometimes end up undermining access to Pfizer's products and good work and high aspirations of our company's corporate responsibility initiatives. For example, as part of its commitment to support the United Nations' Sustainable Development Goals, Pfizer has stated "We aim to end discrimination against women, ensure equal opportunities for leadership and access to reproductive health." Yet Pfizer's political donations have helped set this goal back in the United States. Since the 2020 election cycle, Pfizer has made direct and indirect contributions of at least $5 million to candidates actively working to weaken women's access to reproductive health care. In the South during this period, Pfizer's contributions to anti-choice state candidates exceeded those to other candidates by a ratio of 3:1 and its contributions to federal anti-choice candidates exceeded those to other candidates by a ratio of 2:1. Inconsistencies such as this can pose risk to corporate reputation by leaving companies vulnerable to charges of hypocrisy or indifference. Studies have shown that nearly 2/3 of market value can be attributed to a company's overall reputation. Pfizer shareholders and its other stakeholders deserve a responsible, farsighted and coherent political spending strategy that aligns with the company's values and product offerings. We offer our proposal as a friendly amendment to your corporate governance processes. Companies like AT&T are leading the way and reporting on political spending misalignment. Pfizer can too. I ask my fellow shareholders to vote yes to move Pfizer toward a political spending footprint that is truer to our highest values and purpose. Thank you for your attention.

Thank you very, very much, Dr. Saber. The proposal has been moved. The Board of Directors opposes this proposal for the reasons set forth in the proxy statement. Operator, are there any questions or comments on this voting item?

[Operator Instructions] Our first question will come from [ Eugene Balic ], private shareholder.

I don't understand in the slightest, our company such as Pfizer, which is in the business of making people healthier, can donate to evil, un-American politicians who are looking basically to kill women. It just seems incomprehensible to me.

Thank you very much. As we have said in the proxy also, we believe our existing disclosures already meet the needs of our shareholders. Pfizer already publishes a PAC and Corporate Political Contributions Report annually, which we disclosed how our contributions relating to our participation in the political process, both to trade associations and to candidates and political committees, aligned with our purpose, values and policies. We also published an Industry Associations Congruency Report that outlines the public policy positions of Pfizer and 5 significant trade associations across 6 areas of public policy and of ESG significance for Pfizer and assesses the alignment between them. The focus of this proposal is not an increase in transparency, but instead diverting the company's focus from our core business priorities to social issues that are not central to achieving our business goals. The proponent's request, whether intended or not, would limit the impact of our bipartisan participation in this political process. And that's the reason why the Board proposed to oppose. Are there any other further questions?

No sir. Not at this time.

Thank you very much. That was a robust dialogue. So we have concluded the presentation of the items of business. We now move to the next order of business item, which is the final voting and the closing of the polls. If you would like to vote or change your vote, please submit your vote on the virtual meeting website at this time. Thank you. So I now declare the polls officially closed as of 9:56 Eastern Daylight Time on April 27, 2023. We now move to the next item of the order of business, the preliminary results of the voting. I will now ask Maggie Madden to provide the inspector's preliminary report on the voting. Maggie?

The inspector's report is preliminary and is subject to the inspector's final tabulation, which should not significantly change the preliminary results. The final results will appear in a Form 8-K filed with the U.S. Securities and Exchange Commission within 4 business days of this annual meeting. The inspector's preliminary report shows that the shares representing 82.6% of the votes entitled to be cast at this meeting were represented in person or by proxy constituting a quorum. Proposal 1. The inspector's preliminary report further shows that each of the 12 nominees for election as director named in item 1 of the proxy statement received a favorable vote of at least 94.3% of the votes cast at this meeting. Proposal 2. The proposal to ratify the selection of KPMG LLP to serve as the independent registered public accounting firm for the company for 2023 received the following votes: 95.6% of the votes cast voted for the proposal, 4.4% of the votes cast voted against the proposal. Proposal 3. The 2023 advisory proposal on executive compensation received the following votes: 92.7% of the votes cast voted for the proposal, 7.3% of the votes cast voted against the proposal. Proposal 4. The shareholder proposal regarding an advisory vote of frequency of future advisory votes to approve executive compensation received the following votes: 97.3% of the votes cast voted for 1 year, 0.4% of the votes cast voted for 2 years, 2.3% of the votes cast voted for 3 years. Proposal 5. The shareholder proposal regarding the ratification of termination pay received the following votes: 10% of the votes cast voted for the proposal, 90% of the votes cast voted against the proposal. Proposal 6. The shareholder proposal regarding an independent Board Chairman policy received the following votes: 34.2% of the votes cast voted for the proposal, 65.8% of the votes cast voted against the proposal. Proposal 7. The shareholder proposal regarding the transfer of intellectual property to potential COVID-19 vaccine manufacturers feasibility report received the following votes: 12.3% of the votes cast voted for the proposal, 87% of the votes cast voted against the proposal. Proposal 8. The shareholder proposal regarding the impact of extended patent exclusivity on product access report received the following votes: 29.3% of the votes cast voted for the proposal, 70.7% of the votes cast voted against the proposal. Proposal 9. The shareholder proposal regarding a political contributions congruency report received the following votes: 13.7% of the votes cast voted for the proposal, 86.3% of the votes cast voted against the proposal. The results of this preliminary report indicate that the shareholders of the company have elected all nominees for the Board of Directors as named in the proxy statement; have approved the proposal regarding ratification of the selection of our independent registered public accounting firm for the 2023 fiscal year; have approved, on an advisory basis, the compensation of our named executive officers; have approved 1 year, on an advisory basis, on the frequency of future advisory votes to approve executive compensation; and have not approved the 5 shareholder proposals. This concludes the inspector's report.

Thank you, Maggie. We now move to the next order of business, the Q&A. Having completed the voting items and reported on the voting, we welcome questions from our shareholders via telephone. [Operator Instructions] Operator, we are now ready to take live questions. Please open the phone line and announce the name of the shareholder.

[Operator Instructions] And our first question will come from Raymond Masri with Irsam Enterprises.

I wanted to find that you had mentioned before record-breaking earnings last year. Different companies like Eli Lilly, Merck, Amgen have raised their dividends substantially more than Pfizer has. Prior up to about 2 or 3 years ago, you were raising your dividend $0.02. Since then, the dividend has been knocked down to $0.01. Why is the dividend so limited compared to all the other drug companies that are raising the dividend like Eli Lilly, almost 10% to 12%.

Thank you very much for your question and very clear. Look, dividends are a key component of our capital allocation strategy. And we realize that a growing dividend is important to many of our shareholders. Given Pfizer's strong operating cash flows, we anticipate continuing to have the ability to grow our dividend, while balancing that growth with other priorities for cash, including investing for growth. Regarding the proposed Seagen acquisition, which is subject to customary closing conditions and expected to close in late 2023 or early 2024, we have indicated our plan is to continue to grow Pfizer's dividend. Of course, all dividend decisions are subject to the discretion and approval of Pfizer's Board of Directors. I want to remind that since 2009, which is a long time back, we have increased the dividend by 7% on a CAGR basis. And in total, since 2009, and through the second quarter of 2023, we have had 52 consecutive quarters of year-on-year dividend increase. I realize that you have an appetite to see the dividend growing even faster than the growing rates that we have so far. And this is something that the Board will investigate, as I said, as we are exploring our capital allocation priorities. Thank you very much, and thank you for your support of our company.

Our next question will come from Michael Piccirillo with United Brotherhood of Carpenters.

Good morning, Mr. Chairman. My name is Michael Piccirillo. I'm speaking on behalf of the Carpenters Pension Fund. My question relates to the issue of offset personal liability for fiduciary duty violations. Delaware corporate law now permits corporations to amend their certificate of incorporation to limited personal liability of senior corporate officers for monetary damages in connection with an officer's breach of their fiduciary duty of care. This permitted amendment covers no senior officers. Has the Board discussed the officer exportation issue? And if so, is there a consideration of advancing a certificate amendment?

Thank you very much for your question. At this stage, the only thing I can say is that we are looking at this issue. And at the moment we have more information, we will accurate. Thank you.

Our next question will come from [ Eugene Balic ], private shareholder.

I was wondering if you could discuss 2 issues of the COVID vaccine. Number one, is there any attempt to develop a vaccine that will not require these regular boosters that we're faced with now practically every quarter. Second, do you expect to see a vaccine that's going to address some of the newer variants?

Thank you very much for your question. Clearly, our scientists are highly concerned with COVID. And as a result, we are investing a lot of resources, money and people's time to find better solutions. That involves both of the questions that you have asked. Our people are trying to develop vaccines with newer variances, and we are monitoring very carefully the effectiveness of our vaccine as new variants are emerging. Right now, there is a process where regulatory authorities over the world are the ones that are making the decision if a new variant vaccine will be needed based on data. And we stand ready in case that FDA or European authorities or Japanese authorities make this request from us to develop very, very fast a new version of our vaccine that is tailor-made to the variants that every country will be looking to use. Also, we are constantly looking to improve the effectiveness of our vaccines, so that they can last longer than the current ones. We have seen with COVID that the immune protection that both natural infection and vaccines are offering doesn't last very long and the that it is becoming even more complicated as new variants are emerging. However, we are working to see what improvements we can make to our current vaccines, so more powerful and durable versions will be developed. So please stay tuned, and I reassure you that our scientists are working tirelessly to develop new solutions to protect the world. Thank you.

Our next question comes from Peter Kaiser, private shareholder.

Yes. Thank you. Greetings, Pfizer Directors and CEO and fellow shareholders. We challenge Pfizer to focus on appropriate corporate business and reasonable, safe and healthy and godly practices and profits. We need to protect life by stopping making Pfizer's abortion pills and stopping supporting LGB trans free surgeries and policies and stop selling and making dangerous COVID-19 vaccines. Many of our Pfizer leaders and shareholders are Christian worldview holders and believe in the Holy Bible and covenantal marriage between a man and a woman, and we want to protect life of the unborn. So thanks, and please change your policies to reflect these true Christian values of many of our leaders in the company and many of our shareholders. God bless, Peter Kaiser.

Thank you for your comments. I don't think there was a question asked. But of course, clearly, you expressed your opinion as to how we should behavior our policy. And I just want to add that we are very proud for the impact that we are having on public health through the medicines that we have developed. We have saved millions and millions of lives during COVID, but not only, with our portfolio, every day, we are making the difference to parents that they will have the time to see the graduation of their son or the daughter. And we are very, very proud of our work. Thank you for your comments, though.

Our next question will come from Jennifer Reid with Oxfam America.

Equitable COVID-19 vaccine distribution could have prevented an estimated 1.3 million deaths in the first year of vaccine rollout alone. What is Pfizer doing to ensure that the lessons are learned from this initial extreme COVID-19 vaccine inequity to prevent such needless tragedy moving forward for COVID-19 and for future health needs.

Thank you very much for bringing something that is very close to our heart and our efforts. We know that in a pandemic, everyone is as protected as his neighbor, and also that there is a basic human right, which is the right of health. So for this reason, we did everything that we could to make sure that everyone in the world will have access eventually to these life-saving vaccines. The first thing that we had to do was, of course, to discover the vaccine, which was a green check mark. The second was to make sure that we make it in quantities enough for all, and we were able, through the extraordinary work of our manufacturing people, to develop 3 billion doses in the first year of vaccine. And the third was to make sure that the vaccine is affordable to everyone. I want to provide some statistics. So far, we have provided more than 4.6 billion doses around the world to 180 different countries. Particularly, on low to middle income countries, we have provided more than 1.6 billion doses. Also, we have organized programs that doses will arrive at low and middle income countries completely free through a major donation program we have executed with the U.S. government. Unfortunately, although the program was built to deliver 1 billion doses, only 500 million doses have been delivered, as I said, completely free because the demand is not there. Unfortunately, it's not enough to provide the vaccine to low-income countries. You need to provide education to the population, but the vaccination is a good thing and they need to do it. They need to provide support to the government to organize vaccination campaigns and vaccination centers, which unfortunately is not in place in all the countries. But nevertheless, we are very, very proud for already, despite these difficult conditions, the impact that we had, and as you said, in low income countries and around the world, through this effort, millions of lives have been saved. Thank you very much.

Our last question will come from Jerry Bowyer with Bowyer Research.

This is Jerry Bowyer again. Same question, I hope now is the right time in the meeting representing institutional investors. We'd like to know exactly what the company's policy is because there's been a lot of press on this and confusion on the matter of using material from human abortions, embryonic stem cells, either directly or through lineal descent of stem cells through the cloning process. And also, what is that policy? And what ethical guidelines, principles guide the formation of that policy?

Thank you. The long-established cell lines of human fetal origin are commonly used in biomedical research. And we have used one or more such cell lines in the research development and analysis of some of our products. Animal or human fetal embryonic cells are not used to produce Pfizer COVID vaccine, that involves both the original or the bivalent vaccine, which consists of -- because these consist of synthetic and enzymatically produced components. One or more cell lines with an origin that can be traced back to humans are used in laboratory tests when we do some of the quality tests for these vaccines, but we have not used them for the production of our COVID vaccine. The cell lines used in the research and development of vaccines have been based on their ability to generate the data needed to support the authorization of the life-saving vaccines. So there are requirements from regulatory authorities that we need to comply so that we can get registration. Thank you for your interest on this question. So dear shareholders, thank you for your questions and comments and support through the voting process. If your question was not answered at today's meeting, you may submit your question on the virtual meeting platform, which will be open until 11 a.m. Eastern Daylight Time. We will post the answers to all unanswered pertinent questions on our website. Now we are moving to our last order of business, the adjournment. We are about to adjourn, but before we do, I would like to thank everyone who worked on this meeting, both Pfizer colleagues and our valued business partners. It has been our pleasure to be able to conduct our Annual Meeting of Shareholders virtually today. This has been a valuable meeting. We appreciate the opportunity to listen and learn from our shareholders. Speaking for all of us in executive leadership and on the Board, I'm grateful for your continued confidence in Pfizer and for your continued interest in the progress of our company. Please stay safe and healthy. And with that, the meeting is adjourned.

This concludes the meeting, and you may now disconnect.