Pfizer has unveiled another cost reduction programme, which is expected to run over multiple years and will result in savings of approximately $1.5bn by 2027.
The move will include one-time expenditures, such as severance and implementation costs, of approximately $1.7bn. The company expects most of this to be recorded in its 2024 balance sheet but did caution investors to expect cash outlays up to 2026.
Pfizer was sparse on details on the cost-cutting initiative, which will include “operational efficiencies, network structure changes, and product portfolio enhancements”.
Following the announcement of the cost-saving initiative on 22 May, Pfizer’s share was up by 3.9% by the time the market closed later that day. The company’s market cap stands at $167.7bn.
The demand for Covid-19 products has seen a significant decline over the past year. This has hit Pfizer hard, with the company’s revenue declining by 42% in 2023, compared to the previous year. In October 2023, Pfizer started cost-saving measures, to save $1bn by the end of last year and an additional $2.5bn in 2024. In December, Pfizer added a $500m expense reduction plan to its cost reduction programme, aiming for $4bn in savings by this year.
Pfizer has two Covid-19 products in its catalogue – an antiviral pill Paxlovid (nirmatrelvir/ritonavir); and the Covid-19 vaccine Comirnaty, developed in partnership with BioNTech. The sales for both continue to decline - Comirnaty and Paxlovid sales decreased by 88% and 50% respectively in Q1 this year, compared to Q1 2023.
To offset the profit decline from Covid-19 products, Pfizer has invested in expanding its pipeline. It doubled the size of its oncology pipeline with a $43bn acquisition of the antibody-drug conjugate specialist Seagen last year. Pfizer expects to develop eight or more “potential blockbusters” by 2030, as per a 29 February press release. The company also expects biologics to make a dent in revenues, increasing total oncology revenue from 6% in 2023 to 65% in 2030.
Pfizer is also investigating therapies for weight loss, a high revenue-generating sector. While it had to discontinue the development of one of its glucagon-like peptide-1 receptor agonist (GLP-1-RA) candidates, lotiglipron, due to liver dysfunction, a Phase II trial (NCT04707313) with the second GLP-1-RA candidate, danuglipron, met the primary endpoint. The therapy induced weight reductions of between 8% and 13% after 32 weeks, and 5% and 9% after 26 weeks, compared to baseline.
