Pfizer said on Friday afternoon it plans to cut billions of dollars in spending and lay off staff as it adjusts to lower demand for its COVID-19 drug Paxlovid and vaccine Comirnaty.
The pharmaceutical company is also significantly revising down its revenue forecast to between $58 billion and $61 billion for the year, a $9 billion cut from its previously issued guidance.
The bulk of that adjustment is due to the return by the U.S. government of nearly 8 million treatment courses of Paxlovid labeled under the drug’s emergency clearance. Distribution of that product will be stopped in November as Pfizer shifts to selling Paxlovid commercially, which it now expects to begin on a wide scale in January. The antiviral treatment won full U.S. approval in May.
As a result, Pfizer is reversing an associated $4.2 billion in revenue it had previously recorded. The move is being done on a non-cash basis, and the U.S. government will receive a credit for future supply of approved Paxlovid product.
“Pfizer is committed to a smooth commercial transition and is working collaboratively with the U.S. Government and healthcare stakeholders to ensure broad and equitable access to this potentially life-saving medicine for all eligible patients,” said a company spokesperson, in an email.
The cost-cutting program, which will take place over multiple years, is expected to shave at least $3.5 billion from Pfizer’s expenses, meanwhile. The spokesperson confirmed that layoffs are involved, but did not share further details. The company employed roughly 83,000 people worldwide at the end of last year.
It’s a major retrenchment for Pfizer, which saw its revenue swell to a record $100 billion last year, more than half of which came from sales of Comirnaty and Paxlovid. While the company had projected it would earn significantly less money from the two products this year, demand has been even lower than it expected.
Pfizer now expects 2023 revenue from Comirnaty and Paxlovid to be $12.5 billion, down from $21.5 billion previously. The pharma is also halving its estimates for adjusted earnings per share to between $1.45 and $1.65, from $3.25 to $3.45 before.
“[A]s we gain additional clarity around vaccination and treatment rates for COVID, we will be better able to estimate the appropriate level of supply to meet demand and continue to address any ongoing public health needs,” said Pfizer CEO Albert Bourla in the company’s statement.
Moderna, which sells the main competing vaccine to Comirnaty in the U.S., has also seen lower demand for its shot. Both companies recently secured Food and Drug Administration approval for updated versions of their vaccines that are targeted to a more recent coronavirus variant.
Pfizer said it will provide more details on its adjustments and cost-cutting plan in a call with investors Monday. Shares fell in after-hours trading Friday.
The company confirmed that it continues to expect revenue from its non-COVID products to grow by 6% to 8% this year, compared to 2022. Earlier in the day, it announced the FDA OK of a new ulcerative colitis drug, Velsipity, that it’s projected as a future blockbuster.