Pfizer considers cost cuts as COVID product demand decreases.

Pfizer considers cost cuts as COVID product demand decreases.

Pfizer to Launch Cost-Cutting Program Amid Slumping COVID Product Sales

Pfizer

Pfizer, the prominent U.S. drugmaker, announced on Tuesday that it is prepared to launch a cost-cutting program if the demand for its COVID-19 products continues to underperform expectations in the coming months. This decision comes after both the vaccine and pill sales experienced a significant slump during the second quarter.

Potential Return to Growth

Despite the recent decline, Pfizer is cautiously optimistic about the future. The company anticipates that 2023 will mark a low point for COVID product sales, given the windfall gains it experienced at the peak of the pandemic. However, it expects a potential return to growth next year.

Pfizer believes that more clarity regarding COVID revenue will emerge in the second half of this year, as a rise in infections is likely during the fall season. Additionally, the U.S. is expected to shift from government contracts to a commercial market for COVID products, which could have a positive impact on Pfizer’s revenue.

David Denton, the company’s Chief Financial Officer, stated, “To that end, if our COVID-19 revenues are less than what we assumed, we are prepared to launch an enterprise-wide cost improvement program.”

Slumping Vaccine and Treatment Sales

Sales of Pfizer’s COVID-19 vaccine, Comirnaty, experienced a significant decline of 83% to $1.49 billion in the second quarter. However, this figure still exceeded analysts’ estimates of $1.40 billion. Similarly, revenue from its antiviral treatment, Paxlovid, tumbled by a staggering 98% to $143 million, compared to estimates of $1.08 billion.

To adapt to the evolving market landscape, Pfizer has revised its annual revenue forecast and trimmed the upper end by $1 billion, settling at $70 billion. The company is also facing various challenges, such as repairing damage caused by a tornado to its Rocky Mount facility, a narrower-than-expected recommendation for its RSV vaccine, and concerns about the patient population for its recently approved cancer drug, Talzenna.

Preparing for Competition and Strategic Acquisitions

In addition to addressing the impact of declining COVID product sales, Pfizer is preparing for increased competition from cheaper generics for many of its top-selling drugs. To counter this, the company has embarked on billion-dollar acquisitions, such as the $43 billion deal for cancer-therapy specialist Seagen, to strengthen its position and diversify its portfolio.

Financial Performance and Stock Market Reaction

During the second quarter, Pfizer’s total revenue fell by 54% to $12.73 billion, missing Refinitiv estimates of $13.27 billion. However, the company reported a better-than-expected profit of 67 cents per share (excluding items), surpassing analysts’ estimates of 57 cents.

Despite the mixed financial results, Pfizer’s shares experienced a marginal decline to $35.9 in early trading.

In conclusion, Pfizer is proactively addressing the challenges posed by slumping COVID product sales. The company is prepared to implement a cost-cutting program if needed, while also focusing on future growth opportunities. Furthermore, Pfizer is adapting to a changing market landscape through strategic acquisitions and preparations for increased competition. While the recent financial results have been mixed, the company remains optimistic about its long-term prospects.

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