Pfizer has revealed plans to boost its cost-saving measures by an additional $1.7 billion, focusing on its manufacturing and R&D operations. The announcement came as the pharmaceutical giant reported a dip in first-quarter revenues, largely due to declining sales of its COVID-19 treatment, Paxlovid.
Despite the setback, Pfizer reaffirmed its full-year outlook, and its shares climbed nearly 4% on the day of the announcement.
Focus on Efficiency Over Revenue Growth
Speaking to investors during a conference call, CEO Albert Bourla addressed the company’s near-term outlook. He signaled that while significant revenue growth may be elusive over the next few years—partly due to upcoming patent expirations—earnings will remain the focal point.
“The story of Pfizer for the next three years is not revenue growth, but earnings growth,” Bourla said.
The company now estimates it will achieve $7.7 billion in total savings by the end of 2027. This includes an extra $500 million in research and development cuts, following recent decisions to halt development of certain drugs, such as its experimental weight-loss pill danuglipron.
Preparing for Tariff Uncertainty
As discussions around potential pharmaceutical tariffs by the Trump administration continue, Pfizer is positioning itself to absorb the impact. Bourla mentioned the company’s large-scale manufacturing capacity in the U.S., particularly for injectable medicines.
“We have huge manufacturing capacity right now in the U.S., particularly for everything that is injectable,” Bourla noted. “If there is a need, it’s clearly there, and without the need to build new facilities.”
Pfizer operates ten manufacturing sites and two distribution centers in the U.S., employing close to 10,000 people. While the specifics and timeline of the proposed tariffs remain unclear, analysts believe pharmaceutical firms may bear the short-term financial burden if they are implemented.
Bourla also expressed hope that any action taken by regulators will focus on older, off-patent essential medicines produced mostly overseas. “I think that’s where the problem is. It’s not if an obesity drug is made in Ireland,” he added.
COVID Revenue Declines, But Profits Beat Expectations
Pfizer’s COVID-19 antiviral Paxlovid contributed just $491 million in sales, falling far short of analyst projections, which had already been revised downward to $794.3 million due to a mild U.S. winter COVID wave. The downturn contributed to Pfizer’s total quarterly revenue dropping 8% year-over-year to $13.72 billion, missing estimates of $13.91 billion.
Despite the revenue miss, the company posted an adjusted profit of 92 cents per share for the quarter—beating expectations by 26 cents—thanks in part to its aggressive cost-cutting initiatives and a favorable tax rate.
CFO David Denton remarked that Pfizer is “currently trending toward the upper end” of its full-year profit forecast, which remains between $2.80 and $3.00 per share on revenue expectations of $61 billion to $64 billion.
Looking Ahead: Productivity Over Pipeline?
Investors are now eyeing where Pfizer’s future top-line growth will originate. Portfolio manager Brian Mulberry of Zacks Investment Management, which owns more than two million Pfizer shares, acknowledged the company’s operational improvements but questioned the long-term revenue outlook.
“The cost savings are real, it does help drive better bottom line performance,” Mulberry said. “We just want to know where that top-line growth is going to come from.”
With top-selling drugs facing patent cliffs and COVID treatments no longer providing a major boost, the pressure is on for Pfizer to introduce new blockbuster products to maintain momentum.