1 00:00:02,720 --> 00:00:10,559 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,600 --> 00:00:14,560 Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am 3 00:00:14,600 --> 00:00:17,840 Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg 4 00:00:17,920 --> 00:00:21,040 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:21,360 --> 00:00:23,080 Speaker 1: or watch us live on YouTube. 6 00:00:23,800 --> 00:00:27,080 Speaker 2: Walt Disney saying that Josh Tomorrow will succeed Bob Iger 7 00:00:27,200 --> 00:00:30,600 Speaker 2: as CEO of the company. This ends a three year 8 00:00:30,680 --> 00:00:33,479 Speaker 2: search to replace its long serving leader, who had to 9 00:00:33,520 --> 00:00:36,880 Speaker 2: come back after the first time around didn't quite work out. 10 00:00:37,120 --> 00:00:38,480 Speaker 3: Let's bring in Githa Ranganathen. 11 00:00:38,520 --> 00:00:41,400 Speaker 2: She is our US media analyst here at Bloomberg Intelligence. 12 00:00:41,600 --> 00:00:44,120 Speaker 2: And I want to contrast what happened this time around 13 00:00:44,159 --> 00:00:47,200 Speaker 2: with the succession planning Githa, with what happened in the 14 00:00:47,280 --> 00:00:50,960 Speaker 2: past when Bob Chapek, also of the Parks division, was 15 00:00:51,040 --> 00:00:54,280 Speaker 2: named CEO but didn't last too long on the job. 16 00:00:54,360 --> 00:00:57,680 Speaker 2: Can you compare and contrast the different succession efforts. 17 00:00:59,080 --> 00:01:01,800 Speaker 4: Yeah, I think it was a very different time Scarlet. 18 00:01:01,920 --> 00:01:05,600 Speaker 4: So remember he was appointed in February of twenty twenty. 19 00:01:06,160 --> 00:01:10,120 Speaker 4: March twenty twenty, everything closes down, including you know, Disney 20 00:01:10,160 --> 00:01:14,240 Speaker 4: Parks because of the pandemic. So it was kind of unfortunate. 21 00:01:14,319 --> 00:01:17,280 Speaker 4: The timing was all wrong, I would say for Bob Chapek. 22 00:01:18,160 --> 00:01:21,320 Speaker 4: And what happened then is, of course, you know, movies 23 00:01:21,800 --> 00:01:24,600 Speaker 4: were shut down a big part of Disney's business, movies 24 00:01:24,640 --> 00:01:27,440 Speaker 4: as well as the parks again. But then what really 25 00:01:27,560 --> 00:01:29,520 Speaker 4: kind of shot into prominence at that point was the 26 00:01:29,560 --> 00:01:32,880 Speaker 4: streaming business, a business that Bob Chapik was not really 27 00:01:33,000 --> 00:01:36,880 Speaker 4: very familiar with, and while he did have some experience 28 00:01:36,920 --> 00:01:39,240 Speaker 4: in content, obviously it was not enough. And we had 29 00:01:39,280 --> 00:01:43,920 Speaker 4: a whole bunch of different missteps with the content part 30 00:01:44,000 --> 00:01:46,839 Speaker 4: of the business, which kind of led to the whole 31 00:01:47,440 --> 00:01:51,280 Speaker 4: you know mess that we saw, you know follow I 32 00:01:51,280 --> 00:01:53,920 Speaker 4: think this time we were in a very very different position. 33 00:01:54,000 --> 00:01:55,760 Speaker 4: I think at that point Disney was still kind of 34 00:01:55,800 --> 00:01:57,480 Speaker 4: trying to figure out what it really was. Was it 35 00:01:57,520 --> 00:01:59,320 Speaker 4: a TV company, was it a studio, was it a 36 00:01:59,320 --> 00:02:01,360 Speaker 4: theme park company? Or was it really a streaming player? 37 00:02:01,720 --> 00:02:03,840 Speaker 4: And I think now the pieces have kind of fallen 38 00:02:03,840 --> 00:02:07,000 Speaker 4: in place. We are on much more steady ground. I 39 00:02:07,040 --> 00:02:09,800 Speaker 4: would say, you know, they have their clear mandates, whether 40 00:02:09,880 --> 00:02:12,840 Speaker 4: it isn't streaming, whether it's in studio, you know, the 41 00:02:13,160 --> 00:02:16,679 Speaker 4: clear what has really emerged clearly right now Scarlett is 42 00:02:16,720 --> 00:02:20,320 Speaker 4: that parks is the main core growth engine of the company, 43 00:02:20,520 --> 00:02:22,680 Speaker 4: and I think that is reflected in this choice today 44 00:02:22,720 --> 00:02:23,680 Speaker 4: with Josh Tomorrow. 45 00:02:24,280 --> 00:02:24,720 Speaker 5: So Keithan. 46 00:02:24,760 --> 00:02:28,560 Speaker 6: Josh is a twenty eight year veteran of Disney running 47 00:02:28,560 --> 00:02:31,160 Speaker 6: the parks. But of course the other big part of 48 00:02:31,200 --> 00:02:36,440 Speaker 6: the company is it's you know, entertainment business. Dana Walden 49 00:02:37,000 --> 00:02:40,200 Speaker 6: who runs the big part of that business, great reputation 50 00:02:40,280 --> 00:02:44,000 Speaker 6: in Hollywood. It's important to keep her at the Walt 51 00:02:44,000 --> 00:02:44,800 Speaker 6: Disney Company. 52 00:02:45,800 --> 00:02:46,800 Speaker 5: Are they going to be able to do that? 53 00:02:48,280 --> 00:02:50,680 Speaker 4: I absolutely think so. So, you know, they obviously this 54 00:02:50,800 --> 00:02:53,120 Speaker 4: was a very clever move by the board to kind 55 00:02:53,160 --> 00:02:56,520 Speaker 4: of create this new role for Dana Walden, make her 56 00:02:56,560 --> 00:02:59,600 Speaker 4: the president and the chief creative officer. They've never had 57 00:02:59,639 --> 00:03:03,680 Speaker 4: this before, but they specifically created this one for Dana Walden, 58 00:03:03,760 --> 00:03:07,359 Speaker 4: so that I think really kind of I think dispels 59 00:03:07,400 --> 00:03:09,520 Speaker 4: a lot of fears about what would happen from a 60 00:03:09,520 --> 00:03:13,160 Speaker 4: creative perspective. You know, last time, this was the same 61 00:03:13,240 --> 00:03:16,120 Speaker 4: problem that you know, many investors raised when Bob Japek 62 00:03:16,160 --> 00:03:19,119 Speaker 4: became CEO. So having her there in the creative role 63 00:03:19,200 --> 00:03:22,520 Speaker 4: I think definitely plays very well with Hollywood, with the 64 00:03:22,520 --> 00:03:25,519 Speaker 4: creative community. And ensures that, you know, Disney will still 65 00:03:25,560 --> 00:03:29,040 Speaker 4: have a top tier content coming to its streaming platforms 66 00:03:29,080 --> 00:03:30,320 Speaker 4: for the foreseeable future. 67 00:03:31,960 --> 00:03:36,080 Speaker 2: So Josh Deamarrow takes the job on March eighteenth, that's 68 00:03:36,120 --> 00:03:39,080 Speaker 2: when the succession is effective. And we talked about how 69 00:03:39,160 --> 00:03:42,000 Speaker 2: yesterday Disney came out with a forecast that was fairly tepid, 70 00:03:42,080 --> 00:03:44,280 Speaker 2: and one way of looking at that is it kind 71 00:03:44,280 --> 00:03:45,480 Speaker 2: of you know, clears the deck. 72 00:03:46,520 --> 00:03:48,200 Speaker 3: Lets him start off with the clean say. 73 00:03:48,200 --> 00:03:51,600 Speaker 2: And set expectations and kind of manage it for investors 74 00:03:51,640 --> 00:03:54,240 Speaker 2: a way that he sees fit. At what point does 75 00:03:54,280 --> 00:03:57,000 Speaker 2: he own everything that happens to Disney. 76 00:03:58,360 --> 00:04:00,240 Speaker 4: So actually a lot of the things that we're seeing 77 00:04:00,320 --> 00:04:04,720 Speaker 4: right now with the Parks has been under Josh Tomorrow's watch. 78 00:04:04,800 --> 00:04:09,920 Speaker 4: Remember once Bob Chapek was promoted to the CEO position, 79 00:04:10,040 --> 00:04:14,240 Speaker 4: Josh Tomorrow assumed the role of chief of the Parks, 80 00:04:14,240 --> 00:04:16,440 Speaker 4: and so all of the different initiatives that we've seen, 81 00:04:16,480 --> 00:04:18,960 Speaker 4: you know, whether it's Lightning Lane, whether it's Genie, whether 82 00:04:19,000 --> 00:04:22,400 Speaker 4: it's the sixty billion dollar expansion, a lot of that 83 00:04:22,600 --> 00:04:26,600 Speaker 4: has been you know Josh Tomorrow's doing. So yeah, I mean, 84 00:04:26,680 --> 00:04:28,400 Speaker 4: of course we're you know, I think the street is 85 00:04:28,400 --> 00:04:30,159 Speaker 4: definitely going to give him a few quarters to kind 86 00:04:30,160 --> 00:04:33,440 Speaker 4: of settle in, But he has pretty much been the architect, 87 00:04:33,440 --> 00:04:35,680 Speaker 4: along with Barb Aiger, I'm sure and the rest of 88 00:04:35,880 --> 00:04:38,880 Speaker 4: you know, the management team in kind of instituting the 89 00:04:38,880 --> 00:04:42,680 Speaker 4: strategy and making the parks a prominent, you know, part 90 00:04:42,720 --> 00:04:45,839 Speaker 4: of the portfolio going forward. So very soon, you know, 91 00:04:46,040 --> 00:04:48,120 Speaker 4: the short answer, Scarlett is very soon. I think he 92 00:04:48,200 --> 00:04:50,559 Speaker 4: owns pretty much all of this right away. 93 00:04:50,560 --> 00:04:53,720 Speaker 6: In fact, Keith I five Josh Tomorrow, day one of 94 00:04:53,760 --> 00:04:56,640 Speaker 6: my tenure CEO. I would go and I would say, hey, 95 00:04:57,240 --> 00:05:00,200 Speaker 6: explain to me why we are not spinning out are 96 00:05:00,440 --> 00:05:03,440 Speaker 6: broadcasting cable networks. They are businesses that are in a 97 00:05:03,440 --> 00:05:07,080 Speaker 6: secular decline. They're dragging down our multiple Let's cut them loose. 98 00:05:07,480 --> 00:05:09,360 Speaker 6: Do you think that's even an option for the Walt 99 00:05:09,400 --> 00:05:10,040 Speaker 6: Disney Company. 100 00:05:11,400 --> 00:05:13,839 Speaker 4: I think it is. I think everybody is considering that 101 00:05:14,040 --> 00:05:17,120 Speaker 4: right now. I mean we've just seen what you know, 102 00:05:17,200 --> 00:05:20,279 Speaker 4: Warner Brothers Discovery has been able to achieve by kind 103 00:05:20,279 --> 00:05:22,880 Speaker 4: of separating out it's a studio and streaming from the 104 00:05:22,920 --> 00:05:26,240 Speaker 4: TV network's business. So I definitely would not rule that out. 105 00:05:26,279 --> 00:05:29,320 Speaker 4: I'm sure Disney will consider and Josh Tomorrow will consider 106 00:05:29,480 --> 00:05:31,760 Speaker 4: all options once he becomes CEO. 107 00:05:33,080 --> 00:05:36,960 Speaker 2: What happens to Jimmy Pataro over at ESPN, I mean, 108 00:05:37,000 --> 00:05:39,480 Speaker 2: does that become part of the spinouts as Paul was 109 00:05:39,480 --> 00:05:42,200 Speaker 2: talking about it, Because there's different parts of Disney's media 110 00:05:42,240 --> 00:05:44,839 Speaker 2: business that are slowing down that are no longer the 111 00:05:44,839 --> 00:05:47,000 Speaker 2: crown rules the way they once were, whether you're talking 112 00:05:47,000 --> 00:05:50,760 Speaker 2: about the network television, or whether you're talking about ESPN, 113 00:05:50,880 --> 00:05:52,400 Speaker 2: or whether you're talking about the movie business. 114 00:05:53,640 --> 00:05:56,360 Speaker 4: Yeah, I think sports is still very core to Disney. 115 00:05:56,400 --> 00:05:58,800 Speaker 4: I mean they are so if you just kind of 116 00:05:58,839 --> 00:06:02,800 Speaker 4: look at the US sports landscape, ESPN actually owns majority 117 00:06:02,880 --> 00:06:06,599 Speaker 4: of the marquee US sports right almost about forty percent 118 00:06:06,680 --> 00:06:10,240 Speaker 4: of all sports viewing happens on ESPN platforms. So obviously 119 00:06:10,279 --> 00:06:12,720 Speaker 4: it's still very core to the company. As far as 120 00:06:12,800 --> 00:06:15,760 Speaker 4: Jimmy Pittaro is concerned. Scarlett, I mean, yes, he was 121 00:06:15,800 --> 00:06:19,200 Speaker 4: one of the you know, candidates that they were considering 122 00:06:19,279 --> 00:06:21,320 Speaker 4: to take on this job, but I think he himself 123 00:06:21,320 --> 00:06:24,000 Speaker 4: had many times indicated that he was not really interested 124 00:06:24,080 --> 00:06:26,480 Speaker 4: in the top spot. I think he kind of carries 125 00:06:26,520 --> 00:06:29,800 Speaker 4: on business as usual with ESPN. You know, it's a 126 00:06:29,800 --> 00:06:31,960 Speaker 4: little bit of a wait and watch what exactly happens 127 00:06:31,960 --> 00:06:34,680 Speaker 4: with the strategy. It is really instrumental, I think, to 128 00:06:34,720 --> 00:06:37,200 Speaker 4: their streaming business because you know, as they kind of 129 00:06:37,200 --> 00:06:40,240 Speaker 4: mentioned even yesterday on their earnings call, you know a 130 00:06:40,320 --> 00:06:43,679 Speaker 4: lot of people taking the bundle, the ESPN streaming plus 131 00:06:43,680 --> 00:06:45,560 Speaker 4: the Disney plus the Hulle. So it is a critical 132 00:06:45,600 --> 00:06:48,359 Speaker 4: portion of that. So I'm not really sure how exactly 133 00:06:48,680 --> 00:06:52,800 Speaker 4: a spinout Wood would work. But of course, again, you know, 134 00:06:52,920 --> 00:06:55,039 Speaker 4: we are in a very very different time and age, 135 00:06:55,080 --> 00:06:58,719 Speaker 4: and everybody is thinking about all possible options when it 136 00:06:58,720 --> 00:07:01,159 Speaker 4: comes to a media. 137 00:07:00,480 --> 00:07:03,599 Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this. 138 00:07:07,480 --> 00:07:11,200 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 139 00:07:11,280 --> 00:07:14,679 Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto 140 00:07:14,760 --> 00:07:17,840 Speaker 1: with the Bloomberg Business App. Listen on demand wherever you 141 00:07:17,880 --> 00:07:20,840 Speaker 1: get your podcasts, or watch us live on YouTube. 142 00:07:21,600 --> 00:07:26,960 Speaker 6: PayPal Holding said HP chief executive officer Enrique Lauris will 143 00:07:27,000 --> 00:07:30,200 Speaker 6: take the top job from Alex Chris, whose turnaround plan 144 00:07:30,800 --> 00:07:33,480 Speaker 6: failed to meet targets and streamline the payments business. The 145 00:07:33,520 --> 00:07:37,480 Speaker 6: stocks down nineteen percent today, fifty two week low, off 146 00:07:37,520 --> 00:07:40,400 Speaker 6: twenty seven percent year to date, off over fifty percent 147 00:07:40,840 --> 00:07:42,960 Speaker 6: over the trailing twelve months. This is a name I 148 00:07:43,000 --> 00:07:45,240 Speaker 6: thought at the beginning of this whole fintech thing that 149 00:07:45,320 --> 00:07:47,040 Speaker 6: this had This was a company that could really be 150 00:07:47,080 --> 00:07:49,000 Speaker 6: a leader there, but that has not been the case. 151 00:07:49,520 --> 00:07:50,520 Speaker 5: Dick sa Garrett joins us. 152 00:07:50,520 --> 00:07:53,960 Speaker 6: She's a senior fintech and payments analyst for Bloomberg Intelligence Dix. 153 00:07:54,240 --> 00:07:57,840 Speaker 5: Not a good day for PayPal. What's going on here? 154 00:07:59,440 --> 00:08:03,200 Speaker 7: Yeah, definitely right, like two big headlines. Hit At once 155 00:08:03,640 --> 00:08:07,480 Speaker 7: missed four Q expectations and then announced a CEO change. 156 00:08:07,960 --> 00:08:11,560 Speaker 7: So on the print side, adjusted EPs was about a 157 00:08:11,640 --> 00:08:14,960 Speaker 7: four percent miss and the revenue came in one percent lower, 158 00:08:15,520 --> 00:08:17,760 Speaker 7: and I should highlight this is like their first miss 159 00:08:17,760 --> 00:08:20,880 Speaker 7: in two years. But I think the bigger issue is 160 00:08:20,960 --> 00:08:25,800 Speaker 7: forward looking branded checkout, which is the main core high 161 00:08:25,880 --> 00:08:28,800 Speaker 7: margin business for PayPal that has slowed to one percent 162 00:08:28,840 --> 00:08:32,000 Speaker 7: in the fourth quarter. And PayPal is also flagging in 163 00:08:32,080 --> 00:08:34,800 Speaker 7: earnings decline for twenty twenty six, So those were the 164 00:08:34,880 --> 00:08:40,040 Speaker 7: key forward looking problem areas, and the CEO change definitely 165 00:08:40,080 --> 00:08:42,600 Speaker 7: was a surprise. I mean, the guidance division was driven 166 00:08:42,679 --> 00:08:47,560 Speaker 7: by their investments in some of the merchant business that 167 00:08:47,559 --> 00:08:52,920 Speaker 7: they're doing, but I think the market reaction goes beyond that. 168 00:08:53,040 --> 00:08:56,000 Speaker 7: I think it goes more around some of the serious 169 00:08:56,040 --> 00:09:00,720 Speaker 7: gaps that appear to have been discovered actually with Apple 170 00:09:00,760 --> 00:09:03,880 Speaker 7: Bay and all the product advancements that the competition has 171 00:09:04,360 --> 00:09:07,880 Speaker 7: come through, and I think, yeah, lots to unpack there today. 172 00:09:08,679 --> 00:09:11,840 Speaker 6: So just give us a sense of the competitive landscape 173 00:09:11,880 --> 00:09:14,840 Speaker 6: of the businesses that paypals and the financial technology and 174 00:09:14,920 --> 00:09:16,840 Speaker 6: kind of where do they fit in what are they 175 00:09:16,840 --> 00:09:17,960 Speaker 6: maybe not doing right here? 176 00:09:19,640 --> 00:09:24,040 Speaker 7: So PayPal has two parts of the ecosystem. It works 177 00:09:24,040 --> 00:09:26,280 Speaker 7: with the merchants where you see the PayPal button when 178 00:09:26,320 --> 00:09:28,800 Speaker 7: you check out, and it works with the consumers through 179 00:09:28,840 --> 00:09:32,960 Speaker 7: its app, the PayPal app and the Venmo app. What 180 00:09:33,120 --> 00:09:38,120 Speaker 7: is very interesting is that management kept highlighting execution, discipline 181 00:09:38,280 --> 00:09:42,440 Speaker 7: and prioritization, but honestly, like that is the main game. 182 00:09:42,559 --> 00:09:46,640 Speaker 7: PayPal's biggest A value ad is the two sided network. 183 00:09:46,679 --> 00:09:49,760 Speaker 7: They could not have afforded to either drop the merchant 184 00:09:50,000 --> 00:09:53,199 Speaker 7: or forget about the consumer. So it's been like it's 185 00:09:53,240 --> 00:09:57,959 Speaker 7: a very competitive landscape. You have Stripe, Aden, Apple, pay 186 00:09:58,080 --> 00:10:03,280 Speaker 7: Is you would have noticed recently revised their partnership from 187 00:10:03,520 --> 00:10:06,520 Speaker 7: they moved from Goldman's to JP Morgan. So everyone is 188 00:10:06,600 --> 00:10:09,600 Speaker 7: charging first there and PayPal needs to show up on 189 00:10:09,640 --> 00:10:12,040 Speaker 7: that and I thought they were getting that. But I 190 00:10:12,040 --> 00:10:16,400 Speaker 7: think this new CEO to change definitely puts a multi 191 00:10:16,480 --> 00:10:18,320 Speaker 7: year transformation back in the play now. 192 00:10:18,600 --> 00:10:21,760 Speaker 6: So what do you think is the is the next 193 00:10:21,800 --> 00:10:24,640 Speaker 6: step for this company here? I mean a can of 194 00:10:25,160 --> 00:10:28,400 Speaker 6: kind of remain competitive in this business going forward? Does 195 00:10:28,400 --> 00:10:31,360 Speaker 6: it need to think about a new structure or a 196 00:10:31,400 --> 00:10:32,319 Speaker 6: new strategy. 197 00:10:32,360 --> 00:10:33,560 Speaker 5: What do you think needs to happen here? 198 00:10:34,320 --> 00:10:36,360 Speaker 7: Yeah, that's the million dollar question, Paul. I think so 199 00:10:36,400 --> 00:10:39,160 Speaker 7: there are two things. One is, I think investors need 200 00:10:39,240 --> 00:10:43,480 Speaker 7: really need clarity now on how PayPal reaccelerates hiscore checkout business. 201 00:10:43,960 --> 00:10:48,160 Speaker 7: Is it conversion, is it pricing merchant value proposition, because 202 00:10:48,200 --> 00:10:51,280 Speaker 7: that's still the core engine. But I think secondly is 203 00:10:51,480 --> 00:10:55,200 Speaker 7: whether the new leadership really signals of broader strategic shakeup, 204 00:10:55,280 --> 00:10:58,040 Speaker 7: Like do they streamline initiatives, are they going to step 205 00:10:58,120 --> 00:11:01,560 Speaker 7: up cost discipline or capital return or if it doesn't 206 00:11:01,559 --> 00:11:04,560 Speaker 7: work out, maybe they'd consider like big assets like Venmo. 207 00:11:05,480 --> 00:11:08,040 Speaker 7: You know, strategically, the performance doesn't inflect from that. 208 00:11:08,559 --> 00:11:12,319 Speaker 6: So what's the fintech landscape like these Daystally, it seems 209 00:11:12,360 --> 00:11:15,960 Speaker 6: like it's very quickly evolving. Here, Just give us a 210 00:11:15,960 --> 00:11:18,000 Speaker 6: sense of the lay of the land airs ore. You 211 00:11:18,000 --> 00:11:20,640 Speaker 6: talk to anybody under the age of thirty, they ain't 212 00:11:20,640 --> 00:11:21,800 Speaker 6: got any cash in their pockets. 213 00:11:21,840 --> 00:11:23,120 Speaker 5: So what's the whole new world out there? 214 00:11:24,200 --> 00:11:26,560 Speaker 7: Yes, I'm with you that, which is why it was 215 00:11:26,640 --> 00:11:31,320 Speaker 7: quite interesting that they replaced Alex Chris is the CEO. 216 00:11:31,320 --> 00:11:35,480 Speaker 7: I think the landscape is intensely competitive. The two key 217 00:11:35,559 --> 00:11:39,480 Speaker 7: themes that are driving at the cutting edge of fintech 218 00:11:39,640 --> 00:11:43,480 Speaker 7: is the innovation around agentic payments, agentic commerce where paper 219 00:11:43,679 --> 00:11:45,800 Speaker 7: was showing up in a big way as well, and 220 00:11:45,880 --> 00:11:50,920 Speaker 7: stable coins, which is again like moving transactions on the blockchain. 221 00:11:51,640 --> 00:11:55,000 Speaker 7: And things are moving really fast, Paul, because as you 222 00:11:55,080 --> 00:11:58,480 Speaker 7: really pointed out, like nobody carries cash in their wallet. 223 00:11:58,960 --> 00:12:02,880 Speaker 7: The younger generations want transactions to happen in the flip 224 00:12:02,920 --> 00:12:05,720 Speaker 7: of a second. There is and you know, the base 225 00:12:05,760 --> 00:12:09,560 Speaker 7: at pitch software and AI has moved payments needs to 226 00:12:09,640 --> 00:12:12,959 Speaker 7: kind of keep pace with that. So and the regulatory 227 00:12:13,000 --> 00:12:15,800 Speaker 7: regime obviously has supported that as well. So there is 228 00:12:15,840 --> 00:12:18,720 Speaker 7: a lot going on, and I just worry that if 229 00:12:18,720 --> 00:12:20,600 Speaker 7: Peopal is going to get left behind. 230 00:12:21,280 --> 00:12:24,400 Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this. 231 00:12:28,320 --> 00:12:32,000 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 232 00:12:32,120 --> 00:12:35,160 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 233 00:12:35,200 --> 00:12:38,520 Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever 234 00:12:38,559 --> 00:12:41,680 Speaker 1: you get your podcasts, or watch us live on YouTube. 235 00:12:42,440 --> 00:12:44,240 Speaker 5: Pepsi out with some numbers today. 236 00:12:44,240 --> 00:12:47,480 Speaker 6: The earnings beat estimates, But for me, the big thing 237 00:12:47,600 --> 00:12:50,000 Speaker 6: is Pepsi's going to cut De Rito's prices by as 238 00:12:50,080 --> 00:12:52,440 Speaker 6: much as fifteen percent to boost demand. 239 00:12:52,440 --> 00:12:55,000 Speaker 5: When you see that, I just can't remember. 240 00:12:54,920 --> 00:12:56,000 Speaker 3: Double did your price cut? 241 00:12:56,040 --> 00:12:58,559 Speaker 6: Well, I just don't think you remember the prices of 242 00:12:58,800 --> 00:13:00,920 Speaker 6: sieyes one. 243 00:13:00,880 --> 00:13:02,880 Speaker 5: When all the supply chain stuff happened. Okay. 244 00:13:03,120 --> 00:13:05,040 Speaker 6: I could see how they were jacking up prices because 245 00:13:05,200 --> 00:13:09,320 Speaker 6: a pandemic, but they don't come down after the stuff's over, 246 00:13:09,480 --> 00:13:11,240 Speaker 6: do they. I mean, it's not like an avocado, which 247 00:13:11,280 --> 00:13:11,960 Speaker 6: is a commodity. 248 00:13:12,120 --> 00:13:14,160 Speaker 3: I want to see this charted out what it looks like. 249 00:13:14,240 --> 00:13:15,000 Speaker 5: Yes, over time. 250 00:13:15,160 --> 00:13:17,719 Speaker 6: Ken Chay, senior consumer Products analyst, joins us here from 251 00:13:17,720 --> 00:13:21,800 Speaker 6: Bloomberg Intelligence. Ken talk to us about Pepsi again. Came 252 00:13:21,800 --> 00:13:24,959 Speaker 6: out with some earnings results and then some interesting topics 253 00:13:24,960 --> 00:13:26,959 Speaker 6: about pricing some of their products. 254 00:13:27,720 --> 00:13:30,840 Speaker 8: Yeah, Hi, Paul, Yeah, PepsiCo's numbers today, as you alluded to, 255 00:13:31,320 --> 00:13:34,839 Speaker 8: they beat their expectations by a little bit. But I 256 00:13:34,880 --> 00:13:38,400 Speaker 8: think the broad takeaway for investors from today is that 257 00:13:38,480 --> 00:13:42,840 Speaker 8: PepsiCo is committed to bringing better focus to this company. 258 00:13:43,320 --> 00:13:45,400 Speaker 8: You know, I've covered this company a long time and 259 00:13:45,720 --> 00:13:49,800 Speaker 8: it's it's primary competitors, Coca Cola, Cure, Doctor Pepper, you 260 00:13:49,800 --> 00:13:53,760 Speaker 8: can say, Primal Water Monster. How they different from PepsiCo 261 00:13:53,880 --> 00:13:58,400 Speaker 8: is the much more focused particularly specific categories. But PepsiCo, 262 00:13:59,240 --> 00:14:03,480 Speaker 8: with the urge of the activists urging them on, is 263 00:14:03,520 --> 00:14:05,719 Speaker 8: bringing more focus to this company. And what I mean 264 00:14:05,800 --> 00:14:09,080 Speaker 8: is they're rationalizing a lot of the SKUs that really 265 00:14:09,160 --> 00:14:15,800 Speaker 8: aren't contributing much. They're consolidating plans, they are bringing more 266 00:14:15,880 --> 00:14:19,040 Speaker 8: rationality to the trade spending. So when I hear things 267 00:14:19,080 --> 00:14:22,160 Speaker 8: that like, you know, cutting prices, that's tactical. That's just 268 00:14:22,360 --> 00:14:24,360 Speaker 8: a way to move the need a little bit with 269 00:14:24,520 --> 00:14:27,280 Speaker 8: near term sales. But I think the bigger picture is 270 00:14:27,320 --> 00:14:29,840 Speaker 8: to bringing more focus to this enterprise, and I think 271 00:14:29,920 --> 00:14:31,960 Speaker 8: that's what's behind a lot of the enthusiasm behind the 272 00:14:32,000 --> 00:14:33,800 Speaker 8: share price today, right. 273 00:14:33,840 --> 00:14:37,160 Speaker 2: I mean, investors are excited about it strategy as opposed 274 00:14:37,200 --> 00:14:39,040 Speaker 2: to just kind of moving forward with the way it's 275 00:14:39,080 --> 00:14:42,200 Speaker 2: always been. When it comes to those price cuts, though, 276 00:14:42,280 --> 00:14:44,400 Speaker 2: I wonder if this is going to spark any kind 277 00:14:44,400 --> 00:14:48,040 Speaker 2: of price war, will other snack makers feel the pressure 278 00:14:48,080 --> 00:14:50,680 Speaker 2: to also reduce prices, even if they've gone up quite 279 00:14:50,680 --> 00:14:52,000 Speaker 2: a bit since the pandemic. 280 00:14:53,240 --> 00:14:56,600 Speaker 8: That's possible, Scarlett. In the case of free too lay though, 281 00:14:56,760 --> 00:14:59,200 Speaker 8: they have such a dominant market share, and they have 282 00:14:59,240 --> 00:15:01,520 Speaker 8: like sixty percent of the market in the in the 283 00:15:01,560 --> 00:15:05,960 Speaker 8: measure channels, and when you have that much of a share, 284 00:15:05,360 --> 00:15:10,440 Speaker 8: you deserve a premium. Particularly with Petsico's direct store delivery system. 285 00:15:11,200 --> 00:15:14,040 Speaker 8: What that means is that they help their retailers much 286 00:15:14,040 --> 00:15:16,720 Speaker 8: more than a lot of their competitors, and that is 287 00:15:17,480 --> 00:15:20,040 Speaker 8: they actually go to the store quickly, respond to out 288 00:15:20,080 --> 00:15:24,440 Speaker 8: of stocks, they help you know, position the product, they 289 00:15:24,480 --> 00:15:27,880 Speaker 8: create the end caps in the in the store. They 290 00:15:27,920 --> 00:15:31,280 Speaker 8: do a lot more for the retailer than the competitors. 291 00:15:31,280 --> 00:15:35,840 Speaker 8: And so that's how they are helped to get premium pricing. So, yes, 292 00:15:35,880 --> 00:15:38,920 Speaker 8: they're rolling back some prices. You know, it's no secret 293 00:15:38,960 --> 00:15:41,160 Speaker 8: that price increases have been up quite a bit since 294 00:15:41,160 --> 00:15:44,800 Speaker 8: the pandemic, and a lot of it's cost driven. Uh 295 00:15:45,160 --> 00:15:48,280 Speaker 8: and and private label has encroached a little bit on 296 00:15:48,360 --> 00:15:51,320 Speaker 8: PepsiCo share. But to answer your question directly, they are 297 00:15:51,320 --> 00:15:54,400 Speaker 8: the dominant player. I would not expect them to give 298 00:15:54,440 --> 00:15:58,920 Speaker 8: back too much over time. And while their competitors may 299 00:15:59,320 --> 00:16:03,280 Speaker 8: cut price as well, I think retail would be alienating 300 00:16:03,320 --> 00:16:07,800 Speaker 8: consumers if they pushed too hard on Petsico's price increases 301 00:16:07,800 --> 00:16:08,760 Speaker 8: down the road. 302 00:16:09,080 --> 00:16:10,760 Speaker 5: I was just in the shop rate in Bellmart, New 303 00:16:10,800 --> 00:16:13,920 Speaker 5: Jersey yesterday. Lots of private label stuff on the shelves. 304 00:16:14,000 --> 00:16:15,280 Speaker 5: I mean, prominent shows. 305 00:16:15,320 --> 00:16:16,160 Speaker 3: How are you reaching for this? 306 00:16:16,400 --> 00:16:18,720 Speaker 5: I am in many cases. I am in many cases. 307 00:16:19,000 --> 00:16:20,680 Speaker 5: Ken talk to us about Elliott Management. 308 00:16:20,720 --> 00:16:23,280 Speaker 6: They've been in this company, they've owned this stock here 309 00:16:23,280 --> 00:16:24,440 Speaker 6: pushing for some change. 310 00:16:24,600 --> 00:16:26,600 Speaker 5: How much of an impact are they having. 311 00:16:28,400 --> 00:16:30,840 Speaker 8: I think on the margin there's an impact. Poll maybe 312 00:16:31,080 --> 00:16:34,440 Speaker 8: to the degree that Petsico is hastening. It's moved to 313 00:16:34,520 --> 00:16:36,920 Speaker 8: more focus, you know a lot of the things that 314 00:16:36,960 --> 00:16:40,600 Speaker 8: it's been doing all along, and that is upbringing their 315 00:16:40,600 --> 00:16:44,680 Speaker 8: portfolio with more functionality. This is some of the things 316 00:16:44,720 --> 00:16:47,200 Speaker 8: we talked about in the past. They're bringing more protein 317 00:16:47,280 --> 00:16:52,440 Speaker 8: to their mix, the poppy prebotic sodas, they're bringing i'm sorry, 318 00:16:52,720 --> 00:16:56,320 Speaker 8: more fiber, the probiotic sodus. They're bringing more protein by 319 00:16:56,360 --> 00:17:02,600 Speaker 8: restaging muscle milk, so bringing more value to to the beverages. 320 00:17:04,160 --> 00:17:07,200 Speaker 8: So they've always been doing that, but to your question, 321 00:17:07,280 --> 00:17:10,840 Speaker 8: Elliott is pushing them to do things like, Okay, you 322 00:17:10,880 --> 00:17:13,120 Speaker 8: can still do that, but also cut costs a little 323 00:17:13,119 --> 00:17:16,040 Speaker 8: more aggressively. You know, maybe maybe you don't need all 324 00:17:16,080 --> 00:17:19,679 Speaker 8: these plants, Maybe you can consolidate some. Maybe there's some SKUs, 325 00:17:19,720 --> 00:17:21,600 Speaker 8: you know, some products that aren't selling, well you can 326 00:17:21,680 --> 00:17:25,480 Speaker 8: roll those back. Be a little more nimble when it 327 00:17:25,640 --> 00:17:28,240 Speaker 8: comes to getting rid of some products that aren't winners, 328 00:17:28,440 --> 00:17:29,760 Speaker 8: because at the end of the day, you have to 329 00:17:29,760 --> 00:17:32,520 Speaker 8: grab as much shelf space as the retailer as possible, 330 00:17:33,040 --> 00:17:35,080 Speaker 8: and when you have products on the shelf that aren't moving, 331 00:17:35,119 --> 00:17:38,200 Speaker 8: you're not helping them, you know, with their business. So 332 00:17:38,800 --> 00:17:41,840 Speaker 8: be more a little more aggressive with that. So it's 333 00:17:41,840 --> 00:17:45,680 Speaker 8: helping and I think that's a positive thing for shareholders. 334 00:17:46,520 --> 00:17:48,360 Speaker 2: Is this a company that's going to have to separate 335 00:17:48,359 --> 00:17:50,159 Speaker 2: its drinks business from its back business. 336 00:17:51,960 --> 00:17:54,200 Speaker 8: Well, that's the age old question we've been talking about 337 00:17:54,280 --> 00:17:57,119 Speaker 8: for a while. And as I mentioned, if it can 338 00:17:57,240 --> 00:18:00,280 Speaker 8: prove to the market that this increased focus that they 339 00:18:00,320 --> 00:18:03,800 Speaker 8: have with just doing their you know, daily business or 340 00:18:03,840 --> 00:18:07,439 Speaker 8: running these operations, they can improve them. I think the 341 00:18:07,440 --> 00:18:08,960 Speaker 8: heat will be off for them to go to the 342 00:18:09,240 --> 00:18:13,760 Speaker 8: draconian measure of breaking up food and beverages. That's always, 343 00:18:13,880 --> 00:18:15,720 Speaker 8: you know, the wild card I think down the road, 344 00:18:16,000 --> 00:18:17,480 Speaker 8: and I think will be well received by the market 345 00:18:17,520 --> 00:18:20,960 Speaker 8: quite frankly, but I don't think it's necessary at this point. 346 00:18:21,680 --> 00:18:25,440 Speaker 6: What are you consumer product products companies telling you ken 347 00:18:25,480 --> 00:18:27,280 Speaker 6: about just the consumer out there? 348 00:18:29,440 --> 00:18:31,399 Speaker 8: Well, Altria just the other day. I mean, it's a 349 00:18:31,400 --> 00:18:34,480 Speaker 8: different market with cigarettes, you know. They noted that consumers 350 00:18:34,480 --> 00:18:37,560 Speaker 8: are still hesitant in paying up for premium products, and 351 00:18:37,560 --> 00:18:42,000 Speaker 8: the cigarettes mentioned isn't the same category as salty snacks, 352 00:18:42,520 --> 00:18:46,119 Speaker 8: but they do note that consumers are reaching for the 353 00:18:46,160 --> 00:18:49,200 Speaker 8: private label, the low priced alternative, more than they've done 354 00:18:49,200 --> 00:18:51,400 Speaker 8: in the past, and so the extent of that that 355 00:18:51,480 --> 00:18:54,520 Speaker 8: carries over to you know, sacks and beverages. I can 356 00:18:54,600 --> 00:18:58,639 Speaker 8: see some parallel lines here, and as more companies, uh 357 00:18:58,800 --> 00:19:00,720 Speaker 8: you know, release their numbers, I think that could be 358 00:19:00,760 --> 00:19:04,160 Speaker 8: a common theme here that private labels encroaching and maybe 359 00:19:04,200 --> 00:19:06,959 Speaker 8: there needs to be some more deceleration in the uh, 360 00:19:07,400 --> 00:19:10,840 Speaker 8: you know, reliance on price increases to stimulate sales growth. 361 00:19:13,800 --> 00:19:16,320 Speaker 5: Stay with us. More from Bloomberg Intelligence coming up. 362 00:19:19,920 --> 00:19:23,639 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 363 00:19:23,720 --> 00:19:26,760 Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android 364 00:19:26,800 --> 00:19:30,120 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 365 00:19:30,160 --> 00:19:33,280 Speaker 1: you get your podcasts, or watch us live on YouTube. 366 00:19:34,119 --> 00:19:35,159 Speaker 3: It is earning season. 367 00:19:35,200 --> 00:19:37,680 Speaker 2: We're knee deep in it and big pharma is reporting, 368 00:19:37,840 --> 00:19:40,360 Speaker 2: and let's start off with Pfizer. The shares are down 369 00:19:40,400 --> 00:19:44,399 Speaker 2: about three point four percent. Pfizer is trying to break 370 00:19:44,400 --> 00:19:49,240 Speaker 2: into the anti obesity market, the you know, the diet pills, 371 00:19:49,600 --> 00:19:52,000 Speaker 2: we don't call it die pills, weight loss waits, yes, 372 00:19:52,240 --> 00:19:54,680 Speaker 2: and not getting very far in it. They've made some big, 373 00:19:54,720 --> 00:19:57,119 Speaker 2: big investments and it's time now to see how it's 374 00:19:57,160 --> 00:20:00,000 Speaker 2: all paying off or perhaps not. Sam Fizzelli is out 375 00:20:00,000 --> 00:20:03,800 Speaker 2: our director of research for Global Industries and senior pharmaceuticals analysts, 376 00:20:03,800 --> 00:20:06,600 Speaker 2: and he's in London right now with a jacket that 377 00:20:06,680 --> 00:20:08,040 Speaker 2: says this. 378 00:20:08,160 --> 00:20:12,080 Speaker 5: BI drug Boss. BI is Bloomberg Intelligence. 379 00:20:11,960 --> 00:20:12,760 Speaker 3: And he's the drug Boss. 380 00:20:12,800 --> 00:20:13,920 Speaker 5: And he's the drug boss all right. 381 00:20:14,040 --> 00:20:17,199 Speaker 9: So your producer told me I can wear it, so 382 00:20:18,400 --> 00:20:21,160 Speaker 9: if I shouldn't have, a very good friend of BI 383 00:20:21,359 --> 00:20:23,720 Speaker 9: got this for me. So I thought that these ones 384 00:20:23,760 --> 00:20:26,520 Speaker 9: I should hear it otherwise that's my boring jacket on next. 385 00:20:26,359 --> 00:20:28,800 Speaker 2: No, no, no, we welcome it, mister drug boss, So 386 00:20:29,480 --> 00:20:30,760 Speaker 2: thank you for joining us again. 387 00:20:30,880 --> 00:20:31,280 Speaker 3: Sam. 388 00:20:31,800 --> 00:20:34,680 Speaker 2: Let's talk a little bit about these visor results because 389 00:20:34,760 --> 00:20:37,520 Speaker 2: it feels like it's the you know, people aren't paying 390 00:20:37,560 --> 00:20:39,840 Speaker 2: that much attention to what happened in the fourth quarter 391 00:20:39,960 --> 00:20:42,560 Speaker 2: or even the reaffirmed full year guidance. It's all about, 392 00:20:42,920 --> 00:20:46,320 Speaker 2: you know, the latest data on the obesity drug from 393 00:20:46,359 --> 00:20:47,920 Speaker 2: met Sarah, which Vizer is purchasing. 394 00:20:49,200 --> 00:20:51,600 Speaker 9: Yeah, yeah, so look they paid ten point one billion 395 00:20:51,600 --> 00:20:53,760 Speaker 9: dollars for this and the share price is down three percent. 396 00:20:54,200 --> 00:20:55,800 Speaker 9: If it all to do with that, there is it 397 00:20:55,880 --> 00:20:58,960 Speaker 9: people being reminded again that the next three four years 398 00:20:59,280 --> 00:21:03,520 Speaker 9: there's a may headwind from generic drugs coming for there 399 00:21:03,640 --> 00:21:07,960 Speaker 9: some of the key products on the market eyebrands, ex Standy, 400 00:21:08,760 --> 00:21:11,760 Speaker 9: et cetera. So that's partly the issue. And you know, 401 00:21:11,840 --> 00:21:14,800 Speaker 9: in order to deal with that, you need assets and 402 00:21:14,880 --> 00:21:17,440 Speaker 9: drugs that are going to try and hopefully fill the gap. 403 00:21:17,840 --> 00:21:19,919 Speaker 9: And maybe this is the problem with the data. The 404 00:21:19,960 --> 00:21:22,159 Speaker 9: thing is, we've looked at the data, as you know, 405 00:21:22,200 --> 00:21:24,680 Speaker 9: we have very deep obousity analysis. We've looked at the 406 00:21:24,760 --> 00:21:28,879 Speaker 9: data and it's not terrible. But as I said the 407 00:21:28,920 --> 00:21:31,880 Speaker 9: other day when Rash reported there's some numbers, I think 408 00:21:31,920 --> 00:21:35,960 Speaker 9: folks are getting over this percentage here, percentage there. You 409 00:21:36,040 --> 00:21:38,439 Speaker 9: can only to the point going forward you can't, I 410 00:21:38,440 --> 00:21:41,240 Speaker 9: mean unless you give out somebody that are thirty forty weights, 411 00:21:41,280 --> 00:21:44,560 Speaker 9: which of course nobody wants. So this is getting to 412 00:21:44,600 --> 00:21:47,439 Speaker 9: a point where now it comes to the nuance, and 413 00:21:47,480 --> 00:21:49,359 Speaker 9: unfortunately we don't have a lot of the nuance that 414 00:21:49,400 --> 00:21:53,080 Speaker 9: we need to know about this data set tolerability. And 415 00:21:53,160 --> 00:21:55,920 Speaker 9: it is good because it's a once monthly injection after 416 00:21:55,960 --> 00:21:58,760 Speaker 9: the first few weeks, so it's well set up, but 417 00:21:59,240 --> 00:22:01,200 Speaker 9: the market obviously doesn't like it because they're not getting 418 00:22:01,280 --> 00:22:04,880 Speaker 9: enough information about how good actually it is. Sam. 419 00:22:04,920 --> 00:22:06,440 Speaker 6: It seems like if you want to be an investor 420 00:22:06,440 --> 00:22:09,199 Speaker 6: in big cap farming, you really have to be a 421 00:22:09,240 --> 00:22:11,920 Speaker 6: stock picker. I've got stocks like Pfizer and Bristol on 422 00:22:11,960 --> 00:22:15,000 Speaker 6: a trailing twelve month basis that are down. But I've 423 00:22:15,000 --> 00:22:18,440 Speaker 6: got stocks like Johnson and Johnson and Eli Lilly and abby. 424 00:22:18,200 --> 00:22:19,760 Speaker 5: V They're are big. 425 00:22:20,040 --> 00:22:22,679 Speaker 6: And is that just because they've got the right portfolio 426 00:22:22,800 --> 00:22:26,000 Speaker 6: of drugs and the others don't. 427 00:22:25,600 --> 00:22:29,080 Speaker 9: Entirely entirely about that what is. What you don't want 428 00:22:29,240 --> 00:22:32,320 Speaker 9: is looking into the abyss of generic drugs coming for 429 00:22:32,400 --> 00:22:37,160 Speaker 9: your big earners with no obvious pipeline versus, let's take 430 00:22:37,160 --> 00:22:40,560 Speaker 9: it Johnson and Johnson. In this case, they have a 431 00:22:40,760 --> 00:22:45,200 Speaker 9: phenomenal set of drugs for the multiple miloma space or 432 00:22:46,160 --> 00:22:49,680 Speaker 9: a whole you know, other oncology spaces. This is the powerhouse. 433 00:22:49,720 --> 00:22:52,320 Speaker 9: And of course they've also still got the other divisions 434 00:22:52,800 --> 00:22:58,160 Speaker 9: medical devices growing quite nicely so and no massive I mean, 435 00:22:58,160 --> 00:23:01,800 Speaker 9: there's one that's coming up, big hole that's coming in 436 00:23:01,880 --> 00:23:04,440 Speaker 9: terms of generics, but they've still got these things that 437 00:23:04,480 --> 00:23:08,320 Speaker 9: are growing at phenomenal speed. And one of their drugs, Dolllects, 438 00:23:08,480 --> 00:23:11,320 Speaker 9: is very close to twenty billion dollars and that's just 439 00:23:11,400 --> 00:23:14,760 Speaker 9: one indication in multiple myloma. So they've done everything right 440 00:23:14,800 --> 00:23:17,240 Speaker 9: in that case, and that's what the market likes. 441 00:23:17,440 --> 00:23:19,520 Speaker 2: So in other words, Sam, this is something that can 442 00:23:19,560 --> 00:23:23,080 Speaker 2: be managed. The fact that Pfiser hasn't managed this well 443 00:23:23,400 --> 00:23:26,560 Speaker 2: raises a lot of questions here, because I mean it's 444 00:23:26,600 --> 00:23:28,520 Speaker 2: not like just one day they woke up and oh, 445 00:23:28,640 --> 00:23:31,679 Speaker 2: you know, there's suddenly a lot of competition for some 446 00:23:31,680 --> 00:23:34,119 Speaker 2: of their best selling drugs, or people are no longer 447 00:23:34,160 --> 00:23:38,440 Speaker 2: paying up for COVID treatments COVID vaccines. In terms of management, 448 00:23:38,680 --> 00:23:42,680 Speaker 2: do investors need to question whether adviser has right management 449 00:23:42,680 --> 00:23:43,040 Speaker 2: in place? 450 00:23:44,480 --> 00:23:44,680 Speaker 8: Yeah? 451 00:23:44,720 --> 00:23:48,520 Speaker 9: I mean, look, this is a tough game, right, not 452 00:23:48,600 --> 00:23:51,080 Speaker 9: a game of course, this is a very tough set 453 00:23:51,119 --> 00:23:56,000 Speaker 9: of issues to deal with. Creating pipeline takes a lot 454 00:23:56,040 --> 00:23:59,720 Speaker 9: of effort. Let's take Eli Lilly. For years, nobody was 455 00:23:59,760 --> 00:24:02,720 Speaker 9: paid too much attention to their potential margin expansion that 456 00:24:02,840 --> 00:24:05,520 Speaker 9: was coming and they were arguing for it, et cetera. 457 00:24:05,800 --> 00:24:08,320 Speaker 9: Maybe they were lucky they hit on these obesity drugs 458 00:24:08,400 --> 00:24:10,920 Speaker 9: you get. Ask for Zeneca. It took quite a lot 459 00:24:10,920 --> 00:24:14,720 Speaker 9: of pain for Pascal Soio. You should write that ship 460 00:24:14,760 --> 00:24:17,920 Speaker 9: when he took it. So management's part of it. Then 461 00:24:17,960 --> 00:24:20,920 Speaker 9: you need to be lucky. You cannot have just one 462 00:24:21,000 --> 00:24:23,960 Speaker 9: or the other and pipeline. You know, we'll see what 463 00:24:24,040 --> 00:24:26,520 Speaker 9: Filer shows us over time. They have assets that are 464 00:24:26,520 --> 00:24:29,160 Speaker 9: in earlier development that we need to start seeing their fruit. 465 00:24:29,480 --> 00:24:32,040 Speaker 6: Hey, Sam John from the Jersey Short times in any 466 00:24:32,119 --> 00:24:35,000 Speaker 6: ass will AI have a meaningful impact on coming up 467 00:24:35,040 --> 00:24:36,840 Speaker 6: with new drugs, new therapies? 468 00:24:36,920 --> 00:24:38,919 Speaker 5: Is this going to really be a game changer? 469 00:24:39,960 --> 00:24:42,560 Speaker 9: It will be. You need mich Colle Andrew galler on, 470 00:24:42,640 --> 00:24:44,920 Speaker 9: because it's done a lot of work on this, and yes, 471 00:24:45,000 --> 00:24:47,880 Speaker 9: the answer is it will be depending on what area 472 00:24:47,880 --> 00:24:50,200 Speaker 9: you're looking at. We think it can cut the time 473 00:24:50,440 --> 00:24:52,800 Speaker 9: to get a drug to market by a year or 474 00:24:52,880 --> 00:24:56,359 Speaker 9: so in the next five to ten years. By the 475 00:24:56,400 --> 00:25:00,280 Speaker 9: fact that you could use it for doing much better 476 00:25:00,320 --> 00:25:02,840 Speaker 9: work in the very early stage, in the pre clinical stage, 477 00:25:02,840 --> 00:25:05,120 Speaker 9: you can shave some serious time of that. We talk 478 00:25:05,200 --> 00:25:07,240 Speaker 9: to a lot of hospitals, a lot of clinicians, a 479 00:25:07,240 --> 00:25:09,800 Speaker 9: lot of scientists, and they're all super excited by that. 480 00:25:10,080 --> 00:25:12,480 Speaker 9: One of the key things that people are using is 481 00:25:12,520 --> 00:25:15,520 Speaker 9: this thing called Alpha fold that was developed by Google's 482 00:25:15,520 --> 00:25:17,840 Speaker 9: Deep Mind, and that is really making a difference to 483 00:25:17,880 --> 00:25:21,400 Speaker 9: people hunting for drugs at that early stage. 484 00:25:21,440 --> 00:25:26,119 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify, 485 00:25:26,320 --> 00:25:29,800 Speaker 1: and anywhere else you get your podcasts. Listen live each 486 00:25:29,840 --> 00:25:33,560 Speaker 1: weekday ten am to noon Eastern on Bloomberg dot Com, 487 00:25:33,720 --> 00:25:37,240 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 488 00:25:37,680 --> 00:25:40,600 Speaker 1: You can also watch us live every weekday on YouTube 489 00:25:41,000 --> 00:25:44,119 Speaker 1: and always on the Bloomberg terminal