USA — Pfizer has unveiled a cost-cutting strategy that includes staff layoffs and a significant reduction in expenses as the pharmaceutical giant grapples with decreased demand for its COVID-19 drug, Paxlovid, and the Comirnaty vaccine.
This move comes in conjunction with a substantial downward revision of its revenue projection for the year, now estimated to be between US$58 billion and US$61 billion, representing a US$9 billion reduction from its prior guidance.
A major component of this revenue adjustment is linked to the return of nearly 8 million Paxlovid treatment courses to the U.S. government, all of which were initially designated for emergency clearance.
The distribution of this product will cease in November as Pfizer transitions to commercial sales of Paxlovid, expected to commence on a large scale in January. Paxlovid gained full approval from the U.S. authorities in May.
To account for this shift, Pfizer is retroactively reversing US$4.2 billion in previously recorded revenue, a non-cash adjustment that will provide the U.S. government with a credit for future supplies of approved Paxlovid products.
A Pfizer spokesperson emphasized the company’s commitment to ensuring a seamless commercial transition and equitable access to Paxlovid for all eligible patients, collaborating closely with the U.S. government and healthcare stakeholders.
The cost-cutting initiative, spanning multiple years, is anticipated to reduce Pfizer’s expenses by a minimum of US$3.5 billion.
Although layoffs are part of this program, specific details were not disclosed. As of the end of the previous year, Pfizer employed approximately 83,000 individuals worldwide.
This development marks a significant strategic shift for Pfizer, which witnessed record-breaking revenue of US$100 billion in the previous year, with over half originating from the sales of Comirnaty and Paxlovid.
While the company had projected a decrease in earnings from these two products for this year, the actual demand has been even lower than anticipated.
Pfizer now foresees 2023 revenue from Comirnaty and Paxlovid amounting to US$12.5 billion, down from the previous estimate of US$21.5 billion.
Additionally, the company is revising its adjusted earnings per share forecasts, with the range now projected to be between US$1.45 and US$1.65, down from the prior estimate of US$3.25 to US$3.45.
Pfizer’s CEO, Albert Bourla, conveyed that the company’s ability to gauge the appropriate supply levels to meet demand and address public health needs will improve as more clarity emerges regarding COVID-19 vaccination and treatment rates.
Moderna, a key competitor in the U.S. vaccine market with its primary vaccine rivaling Comirnaty, has also experienced decreased demand for its vaccine.
Both companies have recently secured FDA approval for updated vaccine versions targeting more recent coronavirus variants.
Pfizer intends to provide further insights into its cost-cutting strategy and adjustments during an investor call on Monday.
Nevertheless, Pfizer remains optimistic about the growth of its non-COVID product revenues, forecasting a 6% to 8% increase for this year compared to 2022.
Earlier in the day, the company celebrated FDA approval for Velsipity, a new ulcerative colitis drug, which is anticipated to become a future blockbuster.
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