Pfizer initiates US$1.5B cost-cutting drive amid slumping Covid-19 revenue

USA – Pfizer has initiated a cost-saving initiative projected to generate approximately US$1.5 billion in savings by 2027.

The program, slated to extend over several years, aims to streamline operations and enhance efficiencies, resulting in significant financial benefits.

The undertaking will encompass one-time expenses, including severance and implementation costs, totaling around US$1.7 billion.

The company has advised investors to expect cash outlays until 2026, anticipating that most of these expenditures will reflect on Pfizer’s 2024 balance sheet.

Although Pfizer provided limited specifics regarding the cost-cutting initiative, it outlined key focus areas, including operational efficiencies, network structure changes, and enhancements to its product portfolio.

The announcement of this cost-saving drive on May 22 led to a favorable market response, with Pfizer’s shares rising by 3.9% upon the close of trading that day.

Presently, the company boasts a market capitalization of US$167.7 billion.

The declining demand for COVID-19 products has significantly impacted Pfizer’s revenue, with a staggering 42% decline reported in 2023 compared to the previous year. 

In response, Pfizer initiated cost-saving measures in October 2023, targeting US$1 billion in savings by the end of 2023 and an additional US$2.5 billion in 2024. 

Subsequently, in December, Pfizer augmented its cost reduction program with a US$500 million expense reduction plan, aiming to achieve US$4 billion in savings by the current year.

Pfizer’s portfolio includes two COVID-19 products: the antiviral pill Paxlovid and the COVID-19 vaccine Comirnaty, developed in collaboration with BioNTech. 

Sales of both products witnessed significant declines, with Comirnaty and Paxlovid sales plummeting by 88% and 50%, respectively, in the first quarter of this year compared to Q1 2023.

Pfizer has intensified its focus on pipeline expansion to counterbalance the profit downturn stemming from COVID-19 products. 

Notably, the company bolstered its oncology pipeline in the preceding year by acquiring the antibody-drug conjugate specialist Seagen for US$43 billion. 

Pfizer envisions developing eight or more potential blockbusters by 2030. 

Biologics are projected to contribute to revenues substantially, propelling total oncology revenue from 6% in 2023 to 65% in 2030.

Moreover, Pfizer is actively exploring therapies for weight loss, a lucrative sector. 

While the development of one of its glucagon-like peptide-1 receptor agonist (GLP-1-RA) candidates, lotiglipron, was discontinued due to liver dysfunction, a Phase II trial with the second GLP-1-RA candidate, danuglipron, achieved positive outcomes. 

The therapy resulted in significant weight reductions, offering promising prospects for Pfizer’s future endeavors in this domain.

For all the latest healthcare industry news from Africa and the World, subscribe to our NEWSLETTER, and YouTube Channel, follow us on Twitter and LinkedIn, and like us on Facebook