BUSINESSWEEK ONLINE : MARCH 27, 2000 ISSUE
COVER STORY Q&A with Pfizer's William Steere "I think there will be a rotation back into [pharmaceutical] stocks" Pfizer Inc. Chairman and CEO William C. Steere Jr. made headlines last year when he launched an ultimately successful hostile bid for competitor Warner-Lambert Co. Even before that move, Pfizer had been one of the most successful pharmaceutical operations in recent years, with products like the anti-impotence drug Viagra and the antidepressant Zoloft. He recently spoke with Business Week Philadelphia Bureau Manager Amy Barrett. Edited excerpts follow: Q: Most people think you did the Warner-Lambert deal just to get Lipitor, the cholesterol-lowering drug. Is that accurate? A: If Warner-Lambert did not have Lipitor, we would not have done this. On the other hand, Warner Lambert is a lot more than Lipitor. They have very good research and marketing capabilities. Q: Why have the pharmaceutical stocks done so poorly in recent months? A: Back in 1993, we had a lot of concern about a move to nationalized health care, and there was a huge rotation out of big pharmaceutical stocks. Now, there's nervousness about what will happen in terms of adding a prescription-drug benefit to Medicare. I think that is unfounded. I think [any such benefit] will increase utilization. So while there could be pricing pressure, I think if anything, it will be a wash. In six to nine months, when some of that nervousness is gone, I think there will be a rotation back into the stocks. Q: Pfizer has excelled at marketing other companies' drugs. Much of your growth recently has come from co-marketing products like Warner-Lambert's Lipitor or GD Searle's arthritis drug Celebrex. Why have you done those deals? A: We manage to instill a sense that not all great ideas reside at Pfizer. There is a lot of intellectual property outside Pfizer that we ought to have access to. Q: Are those licensing deals the reason your margins have expanded? A: Our margins have been expanding for close to 10 years. We had one of the lowest margins in the peer group, and it has been driven up by productivity increases across the board, including the closing of older plants and the addition of modernized plants. Q: We have seen a wave of pharmaceutical mergers. Why is scale becoming more important in this industry? A: Scale is particularly important when it comes to research. Research is a process of large numbers. You need to put a lot of products and compounds through screening [to get a winner]. The more compounds you have to screen, the higher your probability of success. But we didn't do [the Warner deal] to get bigger. We did it because of some of the things that Warner had that we wanted. I'm still not convinced that really big is better. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The 50 Best Performers COVER IMAGE: The BW 50: The Best Performers TABLE: The 50 Best Performers TABLE: Total Return TABLE: Sales TABLE: Net Margin TABLE: Earnings Decline TABLE: Earnings Growth CHART: The Fast-Changing BW 50: A Breakdown by Industry TABLE: Return on Equity Follow the Leaders CHART: Beating the Indexes--Again Great Performances, and How to Spot Them Sifting for Clues TABLE: How to Pan for Gold TABLE: Business Week's Performance Rankings of the S&P 500 (.pdf) TABLE: Business Week's Industry Rankings of the S&P 500 (.pdf) TABLE: Alphabetical Index (.pdf) ONLINE ORIGINAL: Q&A with Biogen's Jim Vincent ONLINE ORIGINAL: Q&A with AOL's Steve Case ONLINE ORIGINAL: Q&A with General Dynamics' Nicholas Chabraja ONLINE ORIGINAL: Q&A with MBNA's Charles Cawley ONLINE ORIGINAL: Q&A with Pfizer's William Steere ONLINE ORIGINAL: Q&A with Kansas City Southern's Landon Rowland ONLINE ORIGINAL: Q&A with Omnicom Group's John Wren INTERACT E-Mail to Business Week Online

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