As COVID revenues disappoint, once-high-flying Pfizer looks at possible cost cuts

As COVID-19 revenues ebb and flow—but mostly ebb—Pfizer is eyeing the cost-cutting shears.

“Clearly, there is a higher level of uncertainty regarding the demand projections for our COVID-19 products than for the rest of our business,” Pfizer chief Albert Bourla, Ph.D., admitted on a conference call Tuesday.

While the shift to a traditional commercial market for Paxlovid and Comirnaty could help, a veil of uncertainty persists. In turn, “we are also preparing to have the ability to adjust our 2024 total cost base” to align with future COVID needs, the CEO added.

“In fact, we have already identified specific areas where we can make adjustments primarily within our COVID-19 cost base,” he said.

Paxlovid generated just $143 million in worldwide sales for the second quarter, down 98% from the $8.1 billion it pulled down over the same stretch in 2022. MRNA vaccine Comirnaty, for its part, brought home $1.4 billion, down about 83% from the $8.8 billion it generated in last year’s second quarter.

Against the backdrop, Pfizer reported total second quarter revenues of $12.7 billion. That’s up 5% excluding contributions from Pfizer’s COVID portfolio but down a whopping 53% operationally when Paxlovid and Comirnaty are in the mix.

Pfizer’s chief financial officer David Denton added more color to the cost-cutting blueprint on Tuesday’s call.

“We are well aware that our 2023 profit outlook is currently being dampened by incremental cost in support of our launches as well as higher R&D investments aligned with the company’s current revenue base,” Denton said, adding that Pfizer remains “committed to both defending and growing our overall level of profitability.”

If COVID-19 revenues come in short of Pfizer’s expectations, the company is “prepared to launch an enterprise-wide cost improvement program," Denton said.

“This program will be designed to support our objective of growing our operating profit margin, and we expect to begin to yield results in 2024,” Denton continued.

The company will share more details on the potential cost cuts on future earnings calls, Denton added.

It's unclear whether these potential cost cuts have any relation to a clutch of Pfizer layoffs in Illinois. In a recent WARN notice, Pfizer said it's cutting 69 jobs at a Wyeth plant in Lake Forest, Illinois.

The company hasn't responded to a request for more information about the layoffs.

Pfizer's latest quarter proved “mixed,” according to Lee Brown, global sector lead for healthcare at research firm Third Bridge. The company’s sales missed consensus by roughly $700 million, or just over 5%, but earnings per share beat consensus by 9 cents or 15%.

Still, there is “reason to be excited about Pfizer’s future” given the company’s strong launch momentum—which includes 11 product debuts in the past 18 months—Brown pointed out.

Considering the company’s mixed performance, Pfizer is “narrowing” its revenue forecast for the year to a range between $67 billion and $70 billion for all of 2023. The company had previously thought it could potentially generate up to $71 billion.

Looking across some of Pfizer’s other franchises, the Prevnar vaccine family saw sales for the quarter decline 2% to less than $1.4 billion—an “especially disappointing” result given the launch of Prevnar 20 in kids, Third Bridge’s Brown said.

Elsewhere, heart med Vyndaqel delivered 42% year-over-year growth, posting sales of $782 million. Revenues from inflammatory drug Xeljanz grew 11% to $469 million, while breast cancer med Ibrance held up “for the most part,” according to Brown. That drug saw sales for the period slip 6%, with revenues landing at $1.2 billion.