Pfizer signals big M&A plans with new CFO Denton, the money manager behind the CVS-Aetna merger

Pfizer has signed on a new chief financial officer whose dealmaking experience could prove invaluable for the New York pharma as it looks to deploy its COVID-19 vaccine and drug windfall.

David Denton is joining Pfizer as chief financial officer, succeeding company veteran Frank D’Amelio starting May 2, Pfizer said Monday.

Denton was most recently CFO at American home improvement retail giant Lowe’s. But it’s his previous stint in the healthcare industry that drew Pfizer’s attention.

The incoming Pfizer CFO “played a key role in CVS’s transformational journey from a retail pharmacy to the health solutions company it is today,” Pfizer noted. Denton was CVS’s CFO who drove the company’s $69 billion acquisition of health insurance giant Aetna. His “pivotal role” in the deal includes “structuring and negotiating the terms and financing for the transaction,” Pfizer said.

Denton joined CVS in 1999 and jumped to Lowe’s in 2018 right after the CVS-Aetna deal. During his tenure at CVS, he also led the integration of pharmacy benefit manager Caremark into CVS in a $26.5 billion transaction first unveiled in 2006.

Thanks to his past experience at CVS, Denton brings to Pfizer “a unique perspective on the role of payers, the needs of patients, and the rapidly evolving healthcare landscape,” the pharma company said.

By hiring a chief finance executive with a track record of big M&A, Pfizer is hinting that it could be eying deals, especially given the huge load of cash it has generated from selling COVID-19 products.

Pfizer thinks it can add $25 billion of risk-adjusted revenues to its 2030 top line through dealmaking, CEO Albert Bourla told investors during a conference call in February. The company’s business development efforts will target both late-stage assets and early innovation, he said. The focus will be on therapeutic areas and platforms it can add value to.

In addition, the company’s clinical development, manufacturing and commercial capabilities make Pfizer “a very attractive partner across a variety of deal arrangements,” Bourla said.

“I see this pace of business development accelerating going forward, and I’m confident it will be an important driver in ensuring Pfizer as a growth company in the back half of this decade,” Bourla said. Pfizer is “agnostic to size,” he said.

After reeling in $12.5 billion in fourth-quarter revenues from BioNTech-partnered COVID shot Comirnaty, Pfizer had about $8.93 billion of cash and cash equivalents at the end of 2021, up from $1.83 billion the prior year, Cantor Fitzgerald analyst Louise Chen noted in February.

At that time, Pfizer said it expected $32 billion of revenue for Comirnaty this year, plus $22 billion for COVID oral drug Paxlovid. As a result, Chen figured Pfizer’s cash could rocket to $20.6 billion at the end of 2022.

When factoring in debt financing, Pfizer could gun for transactions many times larger than its cash position. In a December analysis, SVB Leerink analyst Geoffrey Porges figured Pfizer could have M&A capacity of $175 billion by the end of 2022.

Pfizer is historically known as an aggressive buyer, having pulled off some of the biopharma industry’s largest M&As, including the $110 billion merger with Warner-Lambert in 2000 and the $68 billion acquisition of Wyeth in 2009. The New York pharma in 2014 failed in an attempt to take over AstraZeneca for $118 billion.

But the Pfizer these days has been slimming down while being relatively quiet on the acquisition front with small purchases. The company has recently offloaded established medicines unit Upjohn to Mylan to form Viatris, and its consumer health joint venture with GlaxoSmithKline is slated to become a standalone public company later this year.

Meanwhile, Pfizer did just buy Arena Pharmaceuticals for $6.7 billion to get its hands on an S1P modulator for inflammatory diseases, and it absorbed Immuno-oncology firm Trillium Therapeutics for $2.2 billion last year. Just last week, Pfizer unveiled a $525 million deal to buy respiratory syncytial virus specialist ReViral.