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The Pfizer logo is prominently displayed at the pharmaceutical company’s manufacturing facility in Newbridge, Ireland, on February 10, 2025.
Pfizer has recently intensified its cost-reduction initiatives while announcing first-quarter profits that exceeded market expectations, despite a decline in overall sales primarily attributed to a decrease in revenue from its Covid antiviral medication, Paxlovid.
The company had earlier projected a total of approximately $4.5 billion in net cost savings by the end of 2025 as part of its cost-cutting strategy. On the latest announcement, Pfizer raised its savings forecast by an additional $1.2 billion, focusing on cuts related to selling, informational, and administrative expenses, which it aims to achieve by the conclusion of 2027.
This additional cost efficiency is expected to stem from advancements in “enhanced digital enablement,” which includes automation and artificial intelligence, alongside the streamlining of business operations.
Moreover, Pfizer anticipates significant savings in research and development through organizational restructuring, estimating around $500 million in savings by the end of 2026, which will be reinvested into its product pipeline.
The pharmaceutical firm has initiated a multiyear plan for further cost reductions, which is expected to yield $1.5 billion in savings by the end of 2027. With the recent updates, Pfizer now targets a total of approximately $7.7 billion in savings from these combined cost-reduction strategies by 2027.
This push towards cost savings appears to be a strategic response to recover from the significant downturn in its Covid-related business and stock valuation over recent years.
In its latest financial report for the first quarter, Pfizer reported the following results compared to analyst expectations, as per a survey conducted by LSEG:
Earnings per share: Adjusted at 92 cents, exceeding the anticipated 66 cents.
Revenue: Reported at $13.72 billion, slightly below the expected $13.91 billion.
Navigating a ‘Volatile External Environment’
The company’s results emerge during a challenging time when drug manufacturers are preparing for planned tariffs on imported pharmaceuticals by President Donald Trump. This initiative aims to enhance domestic medication manufacturing.
In contrast to some of its competitors that are adjusting forecasts, Pfizer has maintained its outlook for the full year of 2025, projecting sales between $61 billion and $64 billion and anticipating similar performance from its Covid products as observed in 2024. However, the company acknowledged that its guidance does not factor in potential impacts from future tariffs and trade policy shifts, which remain unpredictable.
In a prepared statement, Pfizer CEO Albert Bourla indicated that a specialized team has been established to evaluate various possible outcomes related to tariffs and to formulate strategies aimed at mitigating any potential business impacts in both the short- and long-term. This team is actively managing inventory levels across specific regions and optimizing Pfizer’s domestic manufacturing capabilities.
“If we are affected by additional tariffs in the future, we will assess the impacts of the enacted policies and provide updates when appropriate,” Bourla noted.
Further Insights on Market Changes
Moreover, Pfizer foresees that changes to the Medicare program associated with the Inflation Reduction Act may lead to a $1 billion reduction in sales, ultimately slowing growth by about 1.6% compared to 2024.
Stripping out non-recurring items, the company’s earnings forecast for 2025 is projected between $2.80 to $3 per share.
“Given the inherent strength of our business, we are confident in our ability to adapt to an uncertain and volatile external landscape,” Bourla commented in the release.
For the first quarter, Pfizer generated a net income of $2.97 billion, or 52 cents per share, in contrast to a net income of $3.12 billion, or 55 cents per share, for the same period last year.
Excluding certain factors, including restructuring costs and expenses tied to intangible assets, the company recorded an adjusted earnings per share of 92 cents for the quarter.
Pfizer’s revenue for the first quarter stood at $13.72 billion, marking an 8% decline from the previous year’s figure.
Sales Performance of Covid Products
The downturn in sales largely stemmed from a notable decline in Paxlovid revenue, which totaled $491 million in the first quarter, representing a 76% drop year-over-year due to a decline in global Covid infections and reduced government purchases internationally.
This decline was also influenced by an adjustment made in the first quarter of 2024 related to a previously recorded revenue reversal concerning Paxlovid.
Analysts had anticipated that Paxlovid would bring in $769.7 million during the first quarter, according to estimates from StreetAccount.
Conversely, Pfizer’s Covid vaccine, Comirnaty, generated $565 million in revenue, reflecting a 60% increase from the preceding year and surpassing expectations of $352 million as projected by analysts.
These results arrive during a period of uncertainty for vaccine manufacturers like Pfizer, especially regarding immunization policies under Robert F. Kennedy Jr., a noted vaccine skeptic now leading federal health agencies.
As the Secretary of the Department of Health and Human Services, Kennedy has been pursuing a broad overhaul of numerous agencies, which may influence vaccine-related strategies moving forward.
Ongoing Developments
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