Sometimes it doesn't seem like you're a chief executive because we saw you with Trump in the White House signing this drug pricing deal during the pandemic. You were flanked by Joe Biden at the G7 as you were donating vaccines to the poorer countries. You had Bibi Netanyahu on speed dial during the pandemic when Israel served as a kind of a huge clinical trial for your vaccine. So when you accepted the job, did you ever imagine that you would end up spending so much time with world leaders?
Not so much time, but we always knew that who is in the government is extremely important for our business because it is highly regulated. And also the government is either the biggest customer like in the US or the only customer like in Europe. So always the CEOs of Pfizer, they were spending time interacting with governments around the world, but what we are doing now I think is unique. It's not to say that I like it. I prefer to spend my time doing drugs for cancer, but I know how important it is to do that. And it started with COVID basically. So the need of all the governments to speak to us because we were basically the only solution and the only hope that they had from a disaster situation at that time. They forced all of them to call and I took all the phone calls and I couldn't deliver always what they wanted, but I would always talk to them and they appreciated it and we always tried. So that created a lot of goodwill and relationships with many including President Trump because there was the Operation Warp Speed, so he would call me every week to see how the vaccine is going. But also with President Biden because once the vaccine was there, basically it was the time that the government changed. And we actually the vaccine we knew that we had a vaccine just a few days after the elections. So we worked a lot with him to be able to distribute and deliver the vaccine. And so now health became extremely politicized also because of COVID way more than before. And so the need to stay close to the US Congress and the US government from both sides of the aisle and all the European governments is very high.
So you have some experience then as a diplomat as it were. One of the themes of this meeting appears to be that US European diplomacy has broken down. Any advice for how to get it back on track?
They need to keep talking. I mean many times I felt the disaster is here. The whole thing was destroyed and many times I was tempted to say what the hell I stop talking to you, but I didn't do it and it was the right thing. You keep discussing and engaging and hoping that you certainly you will have better influence if you don't do it.
And are you hopeful they can get things back on track?
I was. I was highly concerned at the beginning of the year for example in the US with tariffs that could be catastrophic for our industry and with most favored nation pricing discussions. And I was a little bit concerned at the beginning also about this anti-science and the vaccines rhetoric that some members of the administration were using, not the Trump, but Kennedy for example. And I felt that after a lot of effort and back and forth we were able to resolve the MFN uncertainty and the tariffs uncertainty for our industry with the deal that we signed, you referred to that in the White House with Trump and we were the first ones to do it and I knew that if I do it everybody will come into place and indeed now 17 companies have signed those deals. So I felt that that's behind us now and I started worrying with the thing that is not behind us which is this anti-vaccine anti-science basically rhetorics which they worry me now a lot.
So you in addition to being the chief executive of Pfizer you have been chair of the IFPMA which is one of the big industry bodies and then now Pharma which is one of the others. Now the main way you have sort of got successes in this administration is by dealing directly with Trump. You know, he likes you to go to Mar-a-Lago or to the White House and to do the deal, press the flesh and get it done. So do these sort of lobbying groups do they have any kind of purpose anymore? Do you still need them or is this a sort of deal direct administration?
No, you still need them because not always the situation will be like that. And you need a forum that we can all come together and discuss in a lawful way, right? Because you can't discuss certain topics as competitors. And so you need to be very careful how you do these discussions. But the truth is that President Trump wants one-to-ones. He values a lot that. And by the way, he gives a lot of access. So it's the easiest thing it is to not for all, but to get a call or a visit with President Trump. You have a lot of access. Problem is that he has ideas. And every day could be something as a surprise. But because of that we do a lot but we still coordinate with everybody else that doesn't have maybe the privilege to have the direct access to the White House. We speak to everyone and we update people how the discussions went and we jointly try to find the best path forward.
So this deal that you did is called most favored nation pricing. Explain to us a little bit about what that is. What did you kind of agree to with the White House?
What we agreed was that we will provide our products to Medicaid at the prices of the second lowest price of a basket of eight countries which they have similar, they have high income countries. They are basically the G7 with the exception of US, the G6 and then two other countries Denmark and Switzerland that we are here. So the agreement is that you look the prices of all of them and then the second lowest so you take out an outlier. We will give that to Medicaid and that's the first part. The second part is that going forward for new launches, new products that we will launch we need to make sure that there is a balance between the US and the basket of those eight countries and basically again it is the second lowest, but adjusted for the purchasing power of these countries and foreign exchange rates. So going forward our prices needs to be very similar in the high income countries.
Now this is meant to correct this idea that Europe has been freeloading on American pharmaceutical innovation for decades I suppose or even longer. Do you have sympathy with that kind of point of view?
I do. I mean that maybe freeloading is a strong expression, but the fact is that they used the power of the government to impose prices that clearly did not value innovation for many years Europeans. And they paid the price for that. And the price was that all the pharmaceutical research in the previous centuries until 1999 2000 most was happening in Europe. Pfizer's largest research center was in UK. It was not in the US. All of that changed because of that. So everyone migrated to the US and this is where we do now all our research and that includes also the European companies that they are doing very very big part of their research in the US. I think for the first time the both European Commission, but also major leaders of Europe they realize that they are missing the train. They realize that the US is moving with medical innovation extremely fast and then suddenly they are losing ground and then Chinese are coming up. We have a meteoric rise of Chinese innovation. Very good innovation. They are not stealing all of this, that is not accurate. They are producing serious innovation, serious science. And they realize that something needs to be done. And it is the first time that I have seen at least as CEO and before CEO I was running Europe, so I was very close to the last 15 years to Europeans. It's the first time that I see them having a real positive attitude towards we need to step up our efforts if we want to be part of this big innovation wave.
So, the rise of Chinese innovation obviously a problem for Europe. Is it a problem for America? There is kind of you know, there are concerns with the NIH cuts and so on that American innovation is going to take a hit. Do you think that America also needs to be looking over its shoulder at what's going on in China?
Absolutely. I think it is a must to do it. And people now starting being aware of that and China is something by the way that is among the very very very few things that unites Democrats and Republicans and they are both under China. But the way that so far both the Democrats and also still it's changing a little bit now. Looking at things it is how can we slow down China because they are coming up to us. 80% of the energy and the focus it is how to slow down China. Big mistake. 80% of the energy needs to be how can become better than China. The whole name of the game it is that science is progressing and you can't stop China. You can't slow them down and you shouldn't by the way. Are you going to slow them down in discovering new cancer medicines? Why? What is the benefit to humanity for that? But if you don't want and I understand the reasons why you don't want to lose the scientific dominance that the US has in this field and this is a great ambition and I prescribe to it. We should do the things that will make us more competitive.
And what are they? Is this sort of like reducing the regulatory burden, the time to market, patents? Well, give us some examples.
I'll give you an example. Even the tariffs and MFN created the lowest ever historically multiple for the pharmaceutical companies and the lowest historically availability of funding for biotechs. All right? So, that's what happened because this uncertainty creates a lot of hesitation to investors to put their money there. At the same time, in China the investments are booming because the government has created a huge confidence to the investors that the returns of their investments will be there. How they did it? They have strengthened the IP rules. They respect all patents because who will put his money, a Chinese let's say investor. He will not invest his money if he knows that what they discover, which is a formula in a piece of paper, anyone can copy it. They created a judiciary system that they can dispute patents in a very expedited manner. They can do it faster than in the US now. They modernize their regulator, so they have an independent regulator that makes decisions based on quality rather than in other criteria. They brought a lot of talent. People that were doing PhDs in the US, they were repatriated in China. And now recently they started also inviting foreigners to go and work in Chinese universities. Their universities usually the top 10 universities of the world were American universities. At least eight for years of the 10 was Harvard, MIT, Stanford, all this. Right? Now there's only one American university in the top 10 and eight Chinese. So, this is the difference that I see in how they do things. And they improve the market so people can invest by providing bigger and bigger access. It's not that they do it by opening bigger and bigger prices. They are careful with their prices, but they give more and more and more people. So, there is a huge need for scientific innovation and people are investing. We do the opposite. You know the Ivy League universities also I was extremely annoyed with the anti-Semitism and all of that that happened there, what I think is true and it shouldn't never happen, but the solution is not to stop the funding of these universities. Solution is to do the funding in the right areas.
Yeah, sometimes they were not as productive as they should and sometimes the investments were going to these areas that were not the appropriate ones, but again the solution is not to cut the money. It is to make them more productive with the use of AI and to direct the funding into the right areas, which is what Chinese are doing. So, we should do all of the above.
This seems to all add up to one big flashing warning sign from China to America that it needs to kind of sort things out.
