Good morning, everyone, and welcome. I'm Maggie Madden, Pfizer's corporate secretary. Before I introduce Pfizer's Executive Chairman, Ian Read, and Chief Executive Officer, Albert Bourla, I'd like to give you some information related to today's meeting and your comfort and safety. First, let me introduce the Pfizer ambassadors who are here today. These are Pfizer colleagues from New York and New Jersey who are here to help during our meeting. I'll ask them to please raise their hands so you know who they are. If you have any needs or questions during the meeting, please call on them. I also know that we have a number of our retired colleagues joining us today.
I want to let you know that immediately following the annual meeting, a senior member of our human resources benefits team, Steve Pennacchio, will be available to answer questions you may have about your retiree benefits or other services. Steve, could you please stand briefly so that our colleagues know who you are? Steve will be available to answer your questions immediately following the meeting in the Hartshorn Room on the conference level. We also have the inspectors of election with us today, John Lano and Donna Bent from Computershare. Will you please stand so our audience knows who you are? I've also been asked by the hotel to point out that the emergency exits are to your right. In the event of an emergency, please walk calmly to and through these exits.
In order to make sure we have fair play for all shareholders, it is important that you abide by the rules of our meeting detailed in the order of business you were handed as you entered the ballroom. If you need an order of business, please raise your hand. During this meeting, we will provide projected financial and other forward-looking information, which is subject to substantial risks and uncertainty that could cause actual results to differ materially from those expressed or implied by such statements. For additional information on these factors, I refer you to 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 which is available at the registration desk for our meeting today, as well as our subsequent filings with the SEC.
These forward-looking statements speak only as of the date of this meeting. We undertake no obligation to update or revise any of those statements. In addition, during this meeting, we may discuss some financial measures that were not prepared in accordance with U.S. generally accepted accounting principles, GAAP. You can find the reconciliation of those measures to the most directly comparable U.S. GAAP financial measures in our 2018 financial report, which is included as an appendix to our 2019 proxy statement and as Exhibit 13 to our 2018 annual report on Form 10-K. Our 2018 financial report is also available at the registration desk, and all of our SEC reports are available on our website, www.pfizer.com, and on the SEC's website at www.sec.gov. Thank you. Please join me in welcoming Pfizer's Executive Chairman of the board, Ian Read, and Pfizer's Chief Executive Officer, Albert Bourla.
Good morning. Welcome to this year's annual meeting. We're here again in New Jersey, where approximately 3,000 Pfizer colleagues live and where we have about 2,000 Pfizer employees working primarily at our sites in Peapack, Madison, and Parsippany. I will start by introducing the members of our board who are standing for election today. You will find their extensive backgrounds in our proxy statement. We are fortunate to have such a distinguished board. I would ask you to hold your applause until all the directors have been introduced, and I've asked them to stand as a group. In addition to Albert Bourla and myself, the director nominees are Ronald Blaylock, W. Don Cornwell, Joseph Echevarria, Helen Hobbs, James Kilts, Dan Littman, Shantanu Narayen, Suzanne Nora Johnson, and James Smith. I would like to ask the board to stand as a group and face the audience.
Ladies and gentlemen, your directors. Thank you. Members of our executive leadership team are also here today. Please stand as a group. Yeah, well thank you, leadership team of Pfizer. I would also ask other Pfizer colleagues, either current or retired, to stand and be recognized. I want to thank you for your continued support. Please stand and be recognized. Thank you. Now it's time to proceed with the business portion of the meeting. We are scheduled to end by 10:00 A.M., 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, which you can see on the slide in front of you. We'll get right to the first item of business, which is a declaration of quorum.
Notice of this meeting was given to all shareholders of record as of February 26th, 2019. Shares representing at least 85.9% of the votes entitled to be cast at this meeting are present here today, either in person or by proxy. This percentage represents a quorum. We now move to the next order of business, items requiring your vote. We have eight voting items in all, three that we address at every annual meeting, one management proposal that we're required to put to shareholder vote, and four proposals from shareholders. Each item will be open for questions and discussions. To ensure fair play for all our shareholders, it is important that you follow the rules of our meeting in asking a question or making a comment. Please hold your questions or comment about an item until after it has been introduced.
Please focus your question or comments only on the voting item being discussed. Please note there will be a general question and answer session later on in the meeting. Before speaking, please wait for a microphone so that we can all hear you. When recognized, please state your name and confirm that you either are a Pfizer shareholder or acting on the behalf of a specific shareholder before making your comments or asking your question. Also, since we have a lot of business to transact today, 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. Please limit any comment to two minutes, unless you're presenting a shareholder proposal, in which case you will have three minutes to submit your statement. We will remind all speakers when your time is up.
In a moment, I will officially open the polls. Please note you can still vote on all of the proposals that are included in the proxy statement. If you have not yet voted but would like to do so, or if you've already voted but would like to change your vote, please fill out a ballot. If you would like a ballot, please raise your hand now and one of our ambassadors will bring it to you. Okay. I declare the polls open as of 9:08 A.M. Eastern Daylight Time on April 25th, 2019. The polls will close today when the last ballots have been delivered to the Inspector of Elections. Ballots will be collected after all the proposals have been presented and discussed. With that, let's move to voting item number 1, election of directors.
This year, the board has nominated 11 individuals to serve one-year terms, all ending at our next annual meeting of shareholders. I've already introduced them to you. The board has recommended that you vote for all director nominees. Are there any questions or comments concerning any of the nominees that have been previously introduced? I have a question. Please state your name, confirm you're a shareholder or acting on part of shareholders.
My name is Professor Ira N. Krasovsky, economic professor at CUNY University. Question I have is, are these the directors on the directorship of other drug company, which is in a violation of the Clayton Antitrust Act, interlocking directorship? Thank you.
Doug, would you like to answer? I don't believe we have any interlocking directorships. There's no violation of any antitrust laws here and no interlocking directorships. Thank you for the question. Question over there, number 5.
Good morning, Mr. Chairman. My name is Andrew McCary, and I represent a Carpenters U nion Pension Fund that holds shares in Pfizer. The carpenters pension fund collectively has assets of $60 billion, and they hold 1.285 million shares of the company's common stock. Mr. Chairman, as the board nominees are elected, I would like to ask a simple question about the board and the company's long-term strategic plan. Proxy statement's disclosure clearly references board and board committees' roles in monitoring aspects of the company's strategic plan, including assuring that the executive compensation plan is aligned with the long-term strategy. In the disclosure, there is little indication that the board plays any significant role in the development of the company's strategic business plan, along with the CEO and senior executive team.
Could you speak to the board's role in strategy development and indicate whether you think the board has it right? Thank you, Mr. Chairman.
Thank you. I think the board plays a very important role in strategic development. Clearly, it's the management's responsibility to formulate the strategic plan, and it's the board's responsibility to review that, comment upon it, and help management improve or refine that plan. This happens very actively at Pfizer. Management produces a strategic plan during the period of February through June. There are interactions with the board in June as a preliminary review of the strategic plan, and then the plan is reviewed and finally presented to the board in the September period. During that period, there is constant dialogue between the directors and management, and the result is that the plan is something that has ownership both by management and by the board.
I'm very satisfied that we have very clear procedures and policies to allow full interaction between management and board to get to the right strategic plan. Thank you for your question.
Thank you very much.
Thank you. Any more questions? If no more questions, we'll move on to the next voting item. Thank you very much. Item number 2 is to ratify the selection of KPMG as the company's independent registered public accounting firm for 2019. Two representatives from KPMG are here today, Paul Knorr and Greg Brunner. Could you please stand so people know who you are? Thank you. The audit committee of the board of directors has done a thorough job of reviewing the performance of KPMG in 2018 and has selected the firm as Pfizer's independent registered accounting firm for the year 2019. The board has ratified this selection and recommends that you vote for this proposal. Are there any questions on this voting item? Seeing no questions, we'll move on to the next item. Thank you very much. Voting item number 3, advisory approval of executive compensation.
Item number 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 table in the executive compensation section of the proxy statement. While this advisory vote is non-binding, the compensation committee and the entire board of directors will review the results of the vote. Consistent with Pfizer's regular responsiveness, we will consider the feedback of shareholders and take that feedback into account in future determinations relating to our executive compensation plan. Accordingly, the board recommends a vote in favor of the resolution to approve, on an advisory basis, the compensation of the company's named executives as stated in the proxy statement. Are there any discussions on this voting item? Okay, seeing no questions raised. Thank you. We'll move on to the next item. Approval of the Pfizer Inc. 2019 stock plan.
For the reasons discussed in the 2019 proxy statement, the board of directors is required to seek shareholder approval of the Pfizer Inc. 2019 stock plan. Accordingly, the board recommends a vote in support of this proposal for the reasons set forward in the proxy. Are there any questions on this plan? Seeing no questions. Thank you. We'll move on to the next voting item. Voting item 5, shareholder proposal regarding the right to act by written consent. This proposal, submitted by Kenneth Steiner of Great Neck, N.Y., requests that our board of directors undertake the steps necessary to permit written consent by shareholders. Tom McCaney is here representing Mr. Steiner. Mr. McCaney, would you like to move the proposal forward for discussion?
Good morning. Yes, I am presenting this proposal number 5 on behalf of Kenneth Steiner. Shareholders request that the board of directors take such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize such action at a meeting at which all shareholders entitled to vote thereon were present and voting. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. This proposal topic would have received a vote still higher than 67% at Allstate and Sprint if all Allstate and Sprint shareholders had access to independent proxy voting advice.
A shareholder right to act by written consent and to call a special shareholder meeting are two complementary ways to bring an important matter to the attention of both management and shareholders outside the annual meeting cycle. More than 100 Fortune 500 companies provide for shareholders to call special meetings and to act by written consent. We ask for your vote.
Thank you, Mr. McCaney. The board of directors opposes this proposal for the reasons set forth in the proxy statement. Is there any discussion on this voting item at this time? Please.
Mr. Chairman, my name is Michael Piccirillo, and I represent a Carpenter Union pension fund that holds shares in Pfizer. The Carpenter pension fund collectively have assets of $60 billion and hold 1,285,000 shares of the company's common stock. Mr. Chairman, as a large institutional investor, the Carpenters pension fund would again like to voice our support for the board's position in opposition to the written consent proposal. Pfizer's current governance structure and provisions afford shareholders appropriate mechanisms of board accountability. Pfizer was an early adopter of a majority standard for director elections, and we believe this fundamental voting right is the foundation of a strong governance system that provides for board accountability. Shareholder voting in director elections with the majority vote standard is a superior and more democratic means of focusing on a board on attaining long-term and sustained corporate value growth. Thank you, Mr. Chairman.
Thank you very much for your comments and support. I think that agrees with the comments the board made in the proxy statement, and thank you for the statement you made. Are there any other discussions on this item? Seeing none, we'll move on to the next item, which is a shareholder proposal regarding a report on lobbying activities. This proposal was submitted by the National Center for Public Policy Research, Washington, D.C., and requests that Pfizer prepare a report updated annually disclosing our policies and procedures governing lobbying activities. Justin Danhof is here representing the National Center for Public Policy Research. Mr. Danhof, would you please move the proposal forward for discussion?
Hi, thank you. I'm Justin Danhof, general counsel with the National Center for Public Policy Research. Let me tell you a little bit about our proposal. First things first, don't vote for it. We don't want you to. We had two goals in filing this proposal. The first goal was to block a shareholder resolution from the Teamsters Union from making it onto Pfizer's proxy statement. We succeeded in doing that. The second goal is to encourage the company to stand up for its values and a pro-capitalist agenda in the face of attacks from Teamsters and its cohorts. That's right, stand up for capitalism. Right now, the country faces an existential decision whether to continue down the road of market capitalism or to embrace socialism and ideas for Medicare for All.
If we do that, this could be the last annual meeting, because of course, the idea of Medicare for All would be to eradicate Pfizer and the entire pharmaceutical industry, and adopt it into a government-run program. We didn't know for sure that the Teamsters would be the specific group to file this anti-free speech proposal, but we had a good idea it would come from the anti-capitalists in the As You Sow network. We filed a resolution with similar language, but with a pro-business message. Since the SEC has a first in time rule, ours was in first, the Teamsters' proposal won't see the light of day. Pfizer's investors should cheer that result. The Teamsters are part of a broad network of liberal groups attempting to use American corporations to silence speech and defund advocates of free enterprise.
Following the Supreme Court Citizens United decision, this network has filed hundreds of shareholder resolutions complaining about an alleged lack of transparency and accountability in corporate lobbying and political activity. However, these groups never express concern about the billions of corporate dollars that go to fund liberal causes and politicians. Herein lies the hypocrisy of their proposal. This liberal network abhors corporate speech when it is perceived to skew to the political right, yet it remains completely silent when speech supports favored leftist causes. The As You Sow network has tried to co-opt Pfizer's investors into its anti-free speech efforts in the prior years, its proposals have received shockingly high percentages. Many investors were perhaps misled by As You Sow's calls for so-called transparency and accountability. We hope investors now understand this network's extremely partisan nature and deceptive tactics.
This network complains that corporate relationships with groups such as the U.S. Chamber of Commerce, the American Legislative Exchange Council, the Business Roundtable, NAM, PhRMA, and other pro-business groups expose companies such as Pfizer to, quote, "reputational risk." Considering that this is the network that regularly smears these free market groups, this is a circular argument with no basis in fact. Groups such as the Chamber, PhRMA, and ALEC promote a fair economic environment devoid of excessive government regulation and onerous corporate taxation. Such an environment helps, it doesn't harm Pfizer. That's just what the Teamsters and As You Sow network want, the end to American capitalism by destroying private enterprise.
Please don't vote for our proposal today, and in future years, and on other corporate proxy statements, if you see a proposal from the Teamsters or any other group in the As You Sow orbit that seems to beg for, quote, "transparency and accountability," vote all of those down, too. Thank you.
The board of directors opposes the proposal for the reasons set forward in the proxy statement. Is there any further discussions on this voting item? Seeing none, we will move on to the next voting item. Thank you. Policy shareholders' proposal regarding independent chair. This next proposal, submitted by the Sisters of St. Francis of Philadelphia of Aston, Pennsylvania, and other co-filers request that our board of directors adopt as policy and amend the bylaws as necessary to require the chair of the board of directors, where possible, to be an independent member of the board. This policy will be phased in for the next CEO transition. Mr. Thomas McCaney is also representing the Sisters of St. Francis of Philadelphia and other co-filers. Mr. McCaney, would you like to move the proposal forward?
Thank you. Good morning. My name again is Tom McCaney, and I'm here to present proxy item number 7 on behalf of the Sisters of St. Francis of Philadelphia. The shareholder proposal requests the company adopt a policy to require the chair of the board of directors to be, whenever possible, an independent member of the board. Similar to last year, shareholders make the case that an independent board is necessary to provide proper oversight of the CEO. Mr. Read, as the former CEO, does not offer an independent voice in his role as chair. Although we appreciate the company's desire for having flexibility to choose whether an independent chair is appropriate, we believe there is a need for a robust system of checks and balances at the highest levels of the company to protect shareholder interests.
The proponents believe a lead independent director is no replacement for a fully independent chair of the board. In fact, with a board that utilizes an independent chair, the role of lead independent director is redundant and only forces an unnecessary level of bureaucracy on the board. Changing this policy will shift the board structure from a centralized power we have now to a new shareholder-focused model in the future. We ask for your support of this good governance measure. Thank you.
Thank you. The Board of Directors opposes this proposal for the reasons set forward in the proxy statement. Is there any discussion on this voting item? Seeing none, we will move on to the next voting item. The next and last proposal was submitted by Trinity Health, Bronx, New York, and other co-filers. The proponent requests that the Compensation Committee report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into Pfizer's incentive compensation policies, plans, and programs for senior directors. The Board of Directors opposes this proposal. Mrs. Cathy Rowan is here representing Trinity Health and co-filers. Mrs. Rowan, would you like to move the proposal for discussion?
Yes. Good morning, Mr. Read
Good morning.
Dr. Bourla, fellow shareholders, members of the board. My name is Cathy Rowan, on behalf of Trinity Health and other Pfizer investors who are members of the Interfaith Center on Corporate Responsibility, I present proposal number eight, which asks our board to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into our company's incentive compensation policies, plans, and programs for senior executives. The proposal requests information that will help investors assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. An analysis by the firm Leerink found Pfizer to be among the pharmaceutical companies most price-dependent for revenue growth between 2013 and 2017. This analysis highlights an overall concern for the pharmaceutical industry's reliance on price hikes for revenue growth.
According to their analysis, it looks like price growth alone has contributed, on average, 5% each year to industry growth over the last five years. While total revenue growth was only 1% from 2017 to 2018, without the price effect, revenue growth from 2017 to 2018 would actually have fallen 6%. We see executive compensation structures that may prioritize revenue sourced from price increases over innovation and stewardship as unsustainable. When one in four adults today say they or a family member have not filled a prescription, cut pills in half, or skipped doses because of cost, we must question the broader social and economic impacts and the risks that result from the current business model. Reaction from the public, healthcare payers, policymakers, and prescribers to high drug prices pose a serious risk, in our view, to sustainable value creation.
We need assurance that there are no situations of misaligned or long-term incentive pay that may encourage executives to sacrifice long-term sustainability for strategies that may pose business risks. Increasing drug prices may create risks to reputation, as what happened last July when Pfizer announced an increase in the list price of 40 prescription drugs, resulting in a negative response from the President of the United States and the subsequent announcement that Pfizer would defer the increases until the end of the year, or when the president's blueprint for lowering prescription drugs goes into effect, whichever came first. Legislative and regulatory risks are apparent, with at least 30 pieces of legislation addressing prescription drug prices being introduced in this Congress and various congressional meetings holding high-profile hearings. Last year, at least 24 states passed legislation to curb rising drug costs.
Pfizer's existing disclosures do not mention drug pricing risks, but rather describe compensation arrangements as required by SEC rules. We believe the information sought by our proposal would give shareholders valuable insight on how Pfizer's executive pay practices balance financial goals and manage price-related risks. For this, I urge shareholders to support Proposal eight. Thank you.
Thank you, Ms. Rowan. Is there any further discussion on this voting item? As I've stated, the board of directors opposes this proposal. Please.
Good morning, Mr. Chairman. Steven Sandick. I hold 30,000 shares of Pfizer stock. Would you explain to me the logical nexus between compensation of an executive and the necessary paradigm for pricing pharmaceuticals to the open market, please?
Thank you for the question. I believe that Pfizer's compensation policies are aligned both short-term and long-term in value creation. The vast majority of the compensation for the executives are of a long-term nature. Of course, pricing pharmaceuticals to their value to the marketplace is essential in a free market system where you're competing for capital and competing for necessary resources. I think that is basically the heart of your question. Thank you very much. If there are any other questions or discussions? If not, we move on to the next in the order of business, which is final voting and closing the polls. If you would like to vote or change your vote, please mark your ballot, sign it, and print your name beneath your signature. Once you've voted, please raise your hand. Our ambassadors can collect your ballots. Please, if we can do that.
Have all the ballots been collected? I believe so. I now declare the polls officially closed as of 9:30 A.M. Eastern Daylight Time on April 25th, 2019. We now move to the next order of business, the CEO report. At this point, I will turn it over to Pfizer's CEO, Albert Bourla. As you know, Albert succeeded me as CEO on January 1st of this year. As I said when we announced this transition, I can't think of a better choice to lead our company into what we expect to be an era of sustained growth. I'm pleased to say that Albert's tenure is off to a great start. Albert.
Thank you. Thank you, Ian. Thank you, everyone, and good morning. Thank you for joining us. I'm pleased to share that Pfizer, once again, delivered a solid financial performance in 2018. Revenues up 2%, as we saw continued growth in several of our biggest selling medicines and vaccines. These include IBRANCE, ELIQUIS, XELJANZ, and Prevnar 13. We also generated growth in emerging markets and in biosimilars. The growth we achieved in these areas helped to absorb approximately $1.7 billion in lost revenue due to products that recently lost marketing exclusivity. We achieved these results while simultaneously investing $8 billion in research and development, and returning $20.2 billion directly to shareholders through a combination of dividends and share repurchases in 2018. At Pfizer, we take great pride in our financial performance in these results because we know what is behind these numbers. Our ability to have a demonstrable positive impact on patients.
We estimate that during 2018, more than 65 million babies and elderly people were protected from diseases by our vaccines. More than 48 million cardiovascular patients took our medicines to help reduce their risk of heart attack or stroke. More than 1.2 million people were treated with our cancer products, therapies. Overall, we reached more than 784 million people around the world with our medicines and vaccines last year. To reach even more patients, we want to continue to deliver breakthrough medicines. In 2018, we made significant progress towards doing just that. We received seven key approvals spanning both new molecular entities, including biosimilars, and product line extensions. These approvals will allow us to serve a broader patient population. I'm thrilled to say that we have continued this momentum in 2019.
Since the beginning of the year, we have received five additional approvals, two in the U.S., two in Europe, and one in Japan. Notably, two of these approvals were for lower-cost biosimilars, and one was an expanded indication of IBRANCE that will allow us to reach the underserved male breast cancer community in the United States. After prolonged periods of revenue decline due to significant loss of exclusivity impacts, and then stability as we began to launch new products, Pfizer is preparing for what we expect to become an era of sustained top and bottom-line growth. We expect this growth to begin following the impact of Lyrica LOE, which will negatively impact our growth in both 2019 and 2020. We are confident in our growth prospects for several reasons.
These include our strong pipeline, our financial strength and flexibility, the dramatic abatement of LOEs that we expect to benefit from until the second half of the next decade for a long period, and macro trends such as an aging population, a rising middle class, and a focus on wellness and prevention. Those we expect to drive increased demand for our portfolio. To seize the opportunities before us, we have reorganized the company into three businesses. Pfizer Biopharmaceuticals Group, Upjohn, and Consumer Healthcare to better capitalize on these macro trends. As Pfizer's new CEO, I would like to share a few words about Pfizer's purpose. We firmly believe that the biopharmaceutical companies that create meaningful value for patients over the next decade are the ones that will thrive. That's why we are putting a renewed emphasis on Pfizer's purpose, breakthroughs that change patients' lives.
The word breakthroughs speaks to the innovation, both scientific and commercial innovations, that we seek to deliver every day. The word change speaks to the fact that we don't just want to improve patients' conditions, but to dramatically change their lives for the better. The words patients' lives reflect the fact that we take into consideration not only patients, but everyone they touch, including their friends, families, caregivers, and everything they love to do. It's a very holistic view of the word patient. This is why we come to work every day. This is why we will continue to put patients at the center of all we do. Before I close, I would like to thank Ian for 8 years of outstanding leadership as our CEO and for his continued support as I have begun my tenure as CEO.
I also want to thank all of you for your continued confidence and support of the work we do every day. We believe we have the products, we have the pipeline, we have the people, and we have the purpose, and we will continue to create value for patients, colleagues, and shareholders. Thank you very much. Now I will turn it back over to Ian.
Thank you, Albert. I'll let you know the preliminary results of the voting. I'll ask Maggie Madden to review the inspector's preliminary report on the voting. Maggie?
The inspector's report is preliminary and 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 shares representing 85.9% 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 nominee for election as director received a favorable vote of at least 94.8% of the votes cast at this meeting.
Proposal two, the proposal to ratify the selection of KPMG LLP to serve as the independent registered public accounting firm for the company for 2019 received the following votes: 96.3% of the votes cast voted for the proposal, 3.7% of the votes cast voted against the proposal. Proposal three, the 2019 advisory vote on executive compensation received the following votes: 94.8% of the votes cast voted for the proposal, 5.2% of the votes cast voted against the proposal. Proposal four, the approval of the Pfizer 2019 stock plan received the following votes: 87.5% of the votes cast voted for the proposal, 12.5% of the votes cast voted against the proposal. Proposal five, the shareholder proposal regarding the right to act by written consent received the following votes: 11.7% of the votes cast voted for the proposal, 88.3% of the votes cast voted against the proposal.
Proposal six, the shareholder proposal regarding a report on lobbying activities received the following votes: 29.6% of the votes cast voted for the proposal, 70.4% of the votes cast voted against the proposal. Proposal seven, the shareholder proposal regarding an independent chair policy received the following votes: 26.5% of the votes cast voted for the proposal, 73.5% of the votes cast voted against the proposal. Proposal eight, the shareholder proposal regarding integrating drug pricing into executive compensation policies and programs received the following votes: 28.5% of the votes cast voted for the proposal, 71.5% of the votes cast voted against the proposal.
The results of this preliminary report indicate that the shareholders of the company have elected the nominees for the board of directors as named in the proxy statement, have approved the proposal regarding ratification of our independent registered public accounting firm for the 2019 fiscal year, have approved the 2019 compensation for our named executive officers, have approved the Pfizer Inc. 2019 stock plan. The shareholder proposals have not been approved. This concludes the inspector's report.
Thank you, Maggie. We'll now move on to the next order of business. Having completed the voting on items and reported on the voting, we will now have 15 minutes set aside for general questions and comments. Albert and I will answer your questions. I will answer questions concerning board or governance-related topics, and will ask Albert to answer questions related to the business. If you want to ask a question, please raise your hand, wait for a microphone, and state your name. We will also be taking questions from shareholders in the overflow room. For those attendees in the overflow room, if you have a question, please inform an ambassador, who will escort you into the meeting room to ask your question. Please focus your questions on an issue of general importance to shareholders.
If you have a question that may be of interest only to you or only to a small group of shareholders, please see us after the meeting. We will try to answer your question. In the interest of fair play to all shareholders, if a question has already been substantially answered, we'll move on to another shareholder's question. Please raise your hand for the first question.
Good morning, Mr. Read, members, shareholders, and members of directors. Since a few weeks ago, I came from the Bristol Myers shareholder meeting out in New York City regarding the shareholders meeting. A majority shareholder had to approve it with some opposition. In order for this company to remain competitive against the other drug giants, are there any plans for Pfizer to acquire or merge with other companies in order to help them expand in the drug and medical field? Thank you.
Thank you very much for your question. First, let me start by saying business development is not a strategy per se. It is a means to execute a strategy. Our strategy, as our purpose is dictating, it is that we want to grow through innovation, innovating for growth. Right now, I believe that we are very well positioned to execute on this strategy organically. We have a period virtually free of marketing exclusivity losses in the next several years. That will be a positive drive. At the same time, we have a very strong portfolio of marketed products that demonstrate strong growth. Even more important, we have a very strong portfolio of pipeline products that are about to be launched in the next three years. Right now, executing a major business development activity would rather derail us rather than help us executing this strategy.
From one hand, a major M&A involves significant operating disruption, because hundreds of people, thousands of people around the world will have to work on it. Also when we are looking at potential targets, very few will be accretive to our growth profile rather than the opposite. As a result, we would never say never, of course. We are looking at all the opportunities. Right now, our business development focus is more towards early or mid-size clinical assets, research opportunities that will help us enhance our current pipeline through the organic development. In addition, I would like to say that Pfizer has a very strong balance sheet and the ability to execute virtually any M&A we would choose to do in this field. We will maintain that in the next few years.
However, right now we have a short window of opportunity to get it right with our new launches and with our pipeline, so I prefer to focus here.
Thank you. Any other questions?
Hello, good morning. My name is Leslie Hiaasen. I am a shareholder and a Pfizer retiree from this wonderful company. Recognizing that Pfizer's strength is in its diversification, my question is, what is your thinking about future investment strategies in therapeutic areas that are more inclined to be drug pricing reduction resistant than other areas? Recognizing that there are many factors in making that kind of decision. Thank you.
Thank you for your question, and it is an excellent point that you are raising. Pfizer is a very big corporation, and in order to fly, you cannot fly with one engine. You need multiple engines to help you fly. This is the reason why we have right now a significant presence in six therapeutic areas that we feel we have the right to win. These are areas that we have concentrated scientific excellence. These are areas that we have significant scientific substrate to support our pipeline, and these are areas that we know very well how to develop clinical programs so that we can bring value to the patients.
Of course, we are looking to enhance our pipeline, we are looking for assets that do not exist or platform technologies that will enable us to do much better work in serving the patient populations that we would like to serve. At large, our focus remains on those six therapeutic areas. The reason is because this is where I think we will make fewer mistakes as we are choosing to bring in clinical assets. This is the area where we have the ability to develop them the best. Of course, we take into consideration multiple things as we embark organically or inorganically, including the willingness of society to pay for the innovations that we bring. This is a very important part of all our research products. Also we take significant view as to where we have the expertise and the right to win.
Thank you for your question.
Any other questions?
Good morning. My name is Dr. Emily Trunnell. I'm here as a neuroscientist and on behalf of shareholder People for the Ethical Treatment of Animals and our more than 6.5 million supporters. PETA's question concerns the use of the forced swim test in our company's conducted and sponsored experiments, which have involved over 1,200 mice and rats. In the forced swim test, animals are subject to near-drowning. They struggle swimming in a cylinder of water until they float, at which point they're deemed to be depressed. However, evidence shows that floating is actually a learned and adaptive behavior, one that saves energy and is beneficial for survival. The test is also notoriously prone to false positives and experimental variances that can skew results.
Despite these realities, authors affiliated with our company have described the forced swim test as a model or test of depression and a test capable of demonstrating the antidepressant-like effects of compounds. These discredited theories were provided as our company's justification for using the test. In our company's published papers, PETA scientists identified five compounds used in forced swim test experiments, three of which have also been tested in human depression, and none of which are currently approved to treat the condition. The results of our analysis shows that in our company's use of the test, the forced swim test has not predicted the successful marketing of a compound for human depression. In other words, our company spends time and money on tests that do not further its goals. Ensuring high animal welfare standards as well as evidence-based responsible research is an integral part of our company's stewardship.
The forced swim test is not required by any laws. Our company has stated it's not currently using the forced swim test. Will our company continue to use or keep open its option to use the forced swim test, or will it enact a policy that Pfizer will not fund, conduct, or commission use of this test as our competitors Johnson & Johnson and AbbVie have both done? Thank you.
Thank you. Go ahead, please, Albert.
Thank you very much for your question. I need to assure you that animal welfare is something that we take very seriously into consideration. We recognize that ensuring the health and well-being of our research animals is not only an ethical imperative but also fundamental to good scientific practices. Also, I want to remind you that myself, I'm a veterinarian, so I took an oath to do exactly that. Given your specificity of your question, I will ask our head of research, Mikael Dolsten, to provide more specific information.
Thank you for your question. We have actually since 2009, so it's about 10 years period, not used the forced swim test in any of Pfizer's research facilities. There are no current approved protocols or plans to use it. However, we have not taken a policy against what may be or may not be possible for the future of Pfizer or any partners as science may change. As our CEO pointed out, we have very clear policies and guidelines to use animals in research in the most humane manner. We constantly review experiments that involve animals to find, if possible, alternatives to animal research, to reduce the number of animals if possible, or refine the experiments to minimize any burden on the animals. As you know, animal research serves also to increase the probability that future medicines will be safe and effective for human patients.
We think this policy that I summarized is in the best interest for our shareholders and patients.
Thank you. Any more questions?
Mr. Chairman, once again, Michael Piccirillo. I represent a Carpenters union pension fund that holds shares in Pfizer. The Carpenters pension fund collectively have assets of $60 billion, and they hold 1,285,000 shares of the company's common stock. Mr. Chairman, a topic that has received growing interest in the business press and at leading business schools is the growth in the size of the ownership interest held by mutual funds, particularly passive index funds. BlackRock, Vanguard, and State Street each own in excess of 5% of the company's outstanding shares. Could you speak to your view of the growing concentration of institutional investor ownership and its impact on corporate governance? Specifically, does the increasing concentration of ownership by passive investors aggravate short-termism in the market, or alternatively, enable companies to take a long-term strategic perspective?
Are there potential conflict of interest issues that average stockholders should be concerned about, given these same investment companies are involved with the administration and investment of corporate retirement funds at companies where they hold large ownership positions? Thank you.
Thank you for the question. I think it's a sort of a timely question. Certainly, the index funds have been growing because their performance has been better than individual funds that pick stocks. Money has flowed into them. I do believe that society and the financial community in general has to ensure that these index funds are responsive to the shareholders that actually own the stock, and that they should have a clear mandate to indicate to the index funds how they should vote. This is not the case at this moment in time, and I think there is a movement within society to ensure that there is that accountability from the index funds. In general, I think they're here to stay.
They're an important part of the marketplace, and they get involved in corporate governance, and we have a very good relationship with the index funds, and we have discussions, and we try and treat them as partners in improving the performance of the company. Thank you for your question. Any other questions?
Good morning. I'm Dr. Sharon Carney. I'm the Chief Clinical Officer at Trinity Health Mid-Atlantic. Mr. Read, healthcare in the U.S. has continued to progress towards a value-based system. These efforts aim at providing patients with high-quality, affordable care across the care continuum. To be successful, our entire healthcare community must move in this direction together. This includes aligning institutions and executive incentives with value-based goals to improve the health of the entire U.S. population. In access to care, the development of a medication access framework for quality measurement in March of 2019, the Pharmacy Quality Alliance describes medication-related costs as one of the top barriers patients face related to medication access. Clearly, lack of medication drives poor health outcomes, higher complication, and increases both hospital and emergency department utilization.
While the government continues to work on policy change related to drug pricing, the patients in this country face high drug costs, significantly higher than in other countries. Pfizer raised drug prices in 2019, and multiple references were cited not only to increases in prices to LYRICA, a high-revenue producer, but also delays in LYRICA's generic release. What will Pfizer do to align its organizational goals and executive incentives with the need to improve medication access and affordability to all patients, especially those who are vulnerable? Thank you.
Albert, perhaps make a couple of comments and then pass it over to you if you want to do that.
Thank you, Ian. Absolutely.
I totally agree with you that access to medication is a really serious problem in the U.S. Out-of-pocket expenditure on medications is about 15%. Out-of-pocket expenditure for access to hospitals is about three. There is a huge bias in our system towards burdening the patient with the cost of medication. The cost of medication as a percentage of total healthcare has not changed in approximately 30 years. I think the real issue that we need to settle and we need to look at is individuals cannot afford out-of-pocket access to medicines. They need good insurance. They need insurance policies that ensure access, and Pfizer is working with payers.
It's working with society to try and ensure that patients have that access via ensuring rebates that we pay to providers go to the patients, to ensure that the access plans of insurance companies are appropriate, to ensure out-of-pocket co-pays are appropriate. I would say that the issue, frankly, while we understand the burden of the price of pharmaceuticals is real, it's a burden that needs to be handled by good insurance and via society and not by individuals, given the expense and the investment required to develop modern pharmaceuticals. Pfizer is very focused on this debate, and Albert is leading, will lead those type of activities in the future. Albert, do you want to add anything to that?
Ian, you were very comprehensive. Maybe I can just add that when you speak about drug pricing, particularly in this country, we are speaking about two separate issues that they are not necessarily connected. One, it is the cost of medicines to the healthcare system, and this is something that we are responsible for, and the other, it is the cost of medicines to the individual patient that goes to buy his medicines in the pharmacy, and this is something that the benefit design manager is exclusively responsible for. On the first one, I think in the last few years, we have done tremendous progress on reducing this burden. To give you some statistics, last year, Pfizer recorded minus 1% or minus 2% in terms of pricing in the U.S. Overall, the pharmaceutical industry, it had well below the medical inflation net price.
We know very well that this minus 1% or minus 2% is not what the patients that are taking our medicines have experienced at the pharmacy point. Unfortunately, they have seen increases of 10%, 20%, 30%, 100% many times. This is because we have a system in the U.S. that has some perverted incentives. It's a broken system that creates disproportional burden for the out-of-pocket cost of medicines. Virtually, in the U.S., many patients are paying their medicines, although they are insured, like if they didn't have any insurance, and in many times, it's in higher prices than what we sell them.
We made a lot of proposals to fix that, and I will remind you that in the last opportunity that we had in front of the Senate hearing, we made four proposals to do that, and one is exactly to what you spoke. One was to make sure that rebates are passed to the patients. The second was less value, less pay, which is exactly what you say, which is we need to make sure that we have value-based agreements. To answer your question, yes, our executives have objective to bring value-based agreements into fruition right now. The third was to instill a cap out of pocket for patients, and the fourth was to knock down the barriers to biosimilars that are costing both to the system and to the patients.
Thank you. I think we have got time for one more question if there is another question.
Thank you. Good morning, Mr. Chairman, Dr. Bourla, and members of the board. My name is Meg Jones-Monteiro, and I'm from the Interfaith Center on Corporate Responsibility, a coalition of over 300 institutional investors. First, I want to just commend Pfizer for your participation in the Access to Medicine Index. It's an extremely important tool that investors use to evaluate companies. We appreciate and thank you for your participation in the index.
My question is, given your stated purpose of breakthroughs, Pfizer's purpose of focusing on breakthroughs that change patient lives, what is Pfizer doing to create global access plans earlier in the R&D process for new medicines and vaccines?
Albert, please.
Yes. We take access and affordability very seriously, we do many things both in developed world and in the developing world. The challenges typically are different in those cases. In terms of the developed world, we try to make sure that we advocate for systems, that everybody has a good insurance, then for affordability solutions, that everybody will have to be able to afford his medicines. When this is not possible, either we subsidize their co-pays, like we do in the U.S., but only where we can, which is the commercial plans. Unfortunately, 50% of the patients are in Medicare, and over there, we cannot do that. For this reason, we advocate that the rebates at least will pass to the patients.
Outside the U.S., we take it also very seriously, we have significant programs that either we donate medicines that are needed, and one of the most prominent, it is the partnership that we have with Gavi. We have given 400 million doses of vaccines through these organizations in places that they are really unprivileged so far. Also the last two years, we donated 450,000 doses for refugee camps, in partnership that we did with MSF, with Doctors Without Borders and others. We are also having a collaboration on research projects with the Gates Foundation, that they are interested in some projects that they are not maybe commercially viable, but they are going to address a significant unmet need. We have also in Africa, significant donations for trachoma with a major antibiotic that we are giving. Sally, would you like to add something that maybe I didn't
No, I think, Albert, you covered it very comprehensively. I would just like to add that working with the Access to Medicine Index has been a great experience for us, we have been working more closely to understand your input and your desires, it's helped us to shape our programs, which, as Albert said, is a mix of helping affordability in developing countries, working through organizations providing non-commercial pricing, and donation to try to make sure every person has the medicine they need. Our purpose statement of breakthroughs that change patients' lives really means all patients. We look forward to continuing to work together to improve our access initiatives. Thank you.
Okay. Well, thank you for your questions and comments. We now move to the last order of business. We're about to adjourn, but before we do, I'd like to ask everyone who worked on this meeting, both Pfizer colleagues and those of our valued business partners, including the wonderful people of the Hilton Short Hills Hotel, to stand and please accept our thanks. Please do so. Thank you. It has been our pleasure to come to Short Hills, this has been a valuable meeting. We appreciate the opportunity to listen and learn from our shareholders. Speaking for all of us in the executive leadership and on the board, I am grateful for your continued confidence in Pfizer and for your keen interest in the progress of our company. With that, may I ask for a motion to adjourn?
Moved.
All those in favor?
Aye.
Aye.
All opposed? Think the ayes have it. The meeting is adjourned. Thank you, and safe travels.
Thank you.
Thank you.