Pfizer Slashes Revenue Forecast and Announces Cost-Cutting Measures
Pfizer Faces Revenue Drop and Implements Cost-Cutting Measures
Pfizer, the pharmaceutical giant, has announced a significant reduction in its full-year revenue forecast and plans to implement cost-cutting measures worth $3.5 billion. The company attributes these actions to lower-than-expected sales of its COVID-19 vaccine and treatment.
Pfizer’s Successful Vaccines and Treatments
Pfizer achieved record-breaking revenue in 2021 and 2022, with earnings exceeding $100 billion last year. This success was primarily driven by the development of its vaccine, Comirnaty, in collaboration with German partner BioNTech SE. Additionally, Pfizer’s antiviral treatment, Paxlovid, contributed to its financial growth. Both products generated over $56 billion in revenue.
Declining Demand due to Vaccination Progress
However, with the decline in annual vaccination rates and increasing population-wide immunity, the demand for COVID-19 treatments has diminished. As a result, Pfizer and other pharmaceutical companies are now focusing on an updated COVID vaccine to be released in the fall.
Proud of Scientific Breakthroughs
Pfizer’s CEO, Albert Boura, expressed pride in the company’s scientific breakthroughs and their significant impact on controlling the global health crisis. He also highlighted the importance of gaining further clarity on vaccination and treatment rates to meet future demand.
Revised Revenue Expectations and Charges
Pfizer now expects its 2023 revenue to range between $58 billion and $61 billion, a decrease from the previous forecast of $67 billion to $70 billion. This revision is solely attributed to lowered expectations for its COVID-19 products. The company will incur a non-cash charge of $5.5 billion in the third quarter, primarily for writing off inventory and other charges related to Paxlovid.
Cost-Cutting Measures and Job Reductions
To achieve annual savings of at least $3.5 billion by the end of 2024, Pfizer plans to implement a cost-cutting program. This program will include layoffs, although specific details regarding the number of job cuts and affected areas have not been disclosed. The company expects one-time costs associated with these measures to amount to approximately $3 billion.
Market Reaction to Pfizer’s Announcement
Following the news, Pfizer’s shares experienced a decline of approximately 7% in extended trading.
Revised Revenue Expectations for COVID Treatment
Pfizer has also reduced its sales forecast for Paxlovid, its antiviral COVID treatment, by approximately $7 billion. This adjustment includes a non-cash revenue reversal of $4.2 billion. The company made this decision after agreeing to the return of 7.9 million courses of Paxlovid purchased by the U.S. government. Previously, Pfizer had anticipated Paxlovid revenue of about $8 billion for the year.
Collaboration with the U.S. Government
Under an agreement with the U.S. government, Pfizer will provide a credit for the returned Paxlovid doses. This credit will support a program to supply the drug free-of-charge to uninsured and underinsured Americans until 2028. Additionally, Paxlovid will be available to patients insured under the government’s Medicare and Medicaid programs until the end of next year. Furthermore, Pfizer will contribute 1 million courses of Paxlovid to the Strategic National Stockpile.
Future Availability of Paxlovid
Pfizer expects Paxlovid to become commercially available to individuals with private insurance starting on January 1.
Positive Outlook for Non-COVID Products
Pfizer remains optimistic about its non-COVID products, anticipating a 6% to 8% year-over-year revenue growth in 2023.
