For long-term observers, the situation is reminiscent of the one Pfizer found itself in fifteen years ago, at the end of the great financial crisis of 2008.

Exactly as then, the group was emerging from a period of bliss marked by the success of a number of blockbusters, which boosted its share price to over fifty times its profits. A few months later, in a sudden turnaround, the said valuation had fallen back to less than ten times profits, and the market was openly questioning the relevance of the group's growth strategy.

Bis repetita today with the evaporation of the Covid windfall. Remarkably, Pfizer's market capitalization is barely three times greater than the value of its last two strategic acquisitions, in particular Seagen earlier this year for $43 billion.

Admittedly, the Group paid a high price, at more than twenty times Seagen's revenues. In fact, the size of the bill had caused Merck to back out a few months earlier. In its defense, however, we can appreciate that it has largely reinvested the miraculous profits from its Covid vaccine in its external growth strategy, rather than focusing on shareholder remuneration.

What's more, in addition to sitting on one of the best balance sheets in its sector, Pfizer is developing one of the best pipelines among its peers, with 83 ongoing research programs, including 23 in phase three and 4 in the approval phase, as well as a pronounced concentration in oncology.

In practice, the big unknown lies in the prospects of the acquisition strategy. Pfizer has committed more than $120 billion to acquisitions over the past decade, but has so far been slow to translate these investments into revenue and profit growth. For example, the group expects to achieve sales of $61 billion next year, compared with $51 billion ten years ago.

Pfizer has returned $138 billion to its shareholders over the last decade. The company's share buybacks between 2014 and 2019, when its valuation was around twenty times earnings, are regrettable, even if criticism is easy in hindsight.

Although in freefall, the current valuation does not yet reflect the worst-case scenario - i.e. the Group's inability to return as much capital to its shareholders over the next cycle.