Pfizer Slashes 2023 Revenue Forecast by 13% and Announces $3.5 Billion in Cost-Cutting Measures

This decline in anticipated earnings has prompted Pfizer to undertake cost-cutting measures, aiming to trim $3.5 billion in expenses and jobs.

Pfizer (PFE.N) announced a significant adjustment to its 2023 financial outlook, citing decreased demand for its COVID-19 vaccine and treatment.

The pharmaceutical giant, which achieved record-breaking revenues in 2021 and 2022, primarily thanks to its Comirnaty vaccine and Paxlovid antiviral treatment, revealed a substantial reduction in its full-year revenue projection by 13%.

This decline in anticipated earnings has prompted Pfizer to undertake cost-cutting measures, aiming to trim $3.5 billion in expenses and jobs.

While Pfizer played a pivotal role in combatting the global health crisis with its scientific innovations, the changing landscape of the pandemic has led to lower vaccination rates and a decline in treatment demand. In response, the company is adapting its operations.

Pfizer CEO Albert Boura acknowledged their contribution, stating, “We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control.”

He added that as they gain more clarity on vaccination and treatment rates, they will better assess the appropriate supply levels.

Pfizer’s adjusted 2023 revenue expectations now range between $58 billion and $61 billion, down from the earlier projection of $67 billion to $70 billion.

The revision is attributed solely to the shifting dynamics of COVID-19 product demand.

The company also disclosed that it would incur a non-cash charge of $5.5 billion in the third quarter, including write-offs of $4.6 billion for Paxlovid and $900 million for vaccine-related expenses.

To realize the targeted $3.5 billion annual savings by the end of 2024, Pfizer is launching a cost-cutting program, though specific details regarding job cuts and departments affected have not been provided.

The one-time costs associated with achieving these savings are estimated to be around $3 billion.

Pfizer’s shares experienced a decline of approximately 7% in extended trading following this announcement.

Additionally, Pfizer revised its Paxlovid sales forecast, reducing it by about $7 billion and agreeing to return 7.9 million courses to the U.S. government.

This adjustment includes a non-cash revenue reversal of $4.2 billion.

The returned doses will support a program providing free-of-charge Paxlovid to uninsured and underinsured Americans through 2028 and to Medicare and Medicaid beneficiaries until the end of next year.

Pfizer also plans to contribute 1 million courses of Paxlovid to the Strategic National Stockpile and make it available to individuals with private insurance starting on January 1.

Despite these adjustments in the COVID-19 product line, Pfizer maintains its growth expectations for non-COVID products, aiming for a 6% to 8% year-over-year revenue increase in 2023.