Pfizer slashes revenue forecast on lower Covid-related sales, will cut costs

New Jersey — Pfizer has slashed its full-year revenue forecast 13% on Friday, and said it will cut $3.5bn worth of jobs and expenses due to lower-than-expected sales of its Covid-19 vaccine and treatment.

Pfizer earned record revenue in 2021 and 2022, topping $100bn in 2022, after developing its vaccine Comirnaty with German partner BioNTech SE and antiviral treatment Paxlovid on its own. In 2022, revenue from those two products exceeded $56bn.

But annual vaccination rates fell sharply since 2021, and demand for treatments declined and population-wide immunity increased from vaccines and prior infections. Pfizer and rivals have begun selling an updated Covid vaccine for this autumn.

“We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control,” Pfizer CEO Albert Boura said on Friday.  “As we gain additional clarity around vaccination and treatment rates for Covid, we will be better able to estimate the appropriate level of supply to meet demand.”

The drugmaker said it now expects 2023 revenue of $58bn-$61bn, down from its prior forecast of $67bn to $70bn. It said the reduction was due solely to lowered expectations for its Covid-19 products.

Inventory write-offs

Pfizer said it will take a noncash charge of $5.5bn in the third quarter to write off $4.6bn of Paxlovid and $900m of inventory write-offs and other charges for the vaccine.

The cost-cutting programme, which will target savings of at least $3.5bn a year by the end of 2024, will include layoffs, the group said. It gave no details on how many jobs will be cut or in what areas. One-time costs to achieve the savings are expected to be about $3bn.

The New York-based group’s share price was down about 7% in extended trading.

Pfizer slashed its forecast for sales of its antiviral Covid treatment Paxlovid by about $7bn, including a noncash $4.2bn revenue reversal, as it agreed to allow the return of 7.9-million courses purchased by the US government. It had previously expected Paxlovid revenue of about $8bn for the year.

Pfizer said that under a deal with the US government, a credit for the returned Paxlovid doses will underwrite a programme to supply the drug free-of-charge to uninsured and underinsured Americans through 2028 and to patients insured under the government’s Medicare and Medicaid programmes to the end of 2024.

Pfizer will also provide the US government 1-million courses of Paxlovid for the Strategic National Stockpile.

The company expects the drug will become commercially available to people with private insurance on January 1.

Pfizer also cut full-year revenue expectations for the Covid vaccine by about $2bn due to lower-than-expected vaccination rates. Pfizer said its non-Covid drugs remain on track for 6% to 8% revenue growth year on year in 2023.

Reuters