Post by icemandios on Oct 14, 2023 15:07:29 GMT
October 13, 2023 05:35 PM EDTUpdated 06:13 PM
Pharma
Pfizer plans $3.5B in cost cuts as sales of Covid products continue to slide
Drew Armstrong
Executive Editor
Pfizer confirmed late Friday that it will launch a company-wide cost-cutting program this year and next as sales of the drugmaker’s Covid vaccine and antiviral slide.
The announcement came as the US government and the drugmaker on Friday afternoon revised terms of their supply agreement for Paxlovid. Under the terms, the government is returning large numbers of doses that had been distributed around the country as access to the drug switches from an emergency, government run-effort to one run through the commercial markets.
As a consequence of those returns and credits, Pfizer said that Paxlovid sales will be $7 billion lower this year than previously forecast by the company. Broadly, demand for Covid products has been slowing. The drugmaker said that it expects sales of its vaccine Comirnaty to be about $2 billion lower, as well.
The cost cuts will be “enterprise-wide,” Pfizer said in a press release, meant to “realign its costs with its longer-term revenue expectations.”
The announcement comes after Pfizer had been dropping hints that it might take drastic action if Covid sales fell more than expected. The revised deal with the US government seems to have prompted that action.
“If our Covid-19 revenues are less than what we assumed, we are prepared to launch an enterprise-wide cost improvement program aligned with the longer-term revenue projections for our business,” CFO Dave Denton said in August, warning of the potential for cuts.
The planned cuts aren’t enormous, but they will be felt, especially since $1 billion of them will be taken out by the end of this year. For comparison, in the second quarter Pfizer spent close to $10 billion on core operational expenses such as R&D, selling and administrative expenses, and cost of sales.
CEO Albert Bourla emphasized that the company expects its non-Covid revenue to grow by 6% to 8% this year, and Pfizer has hinted that it may continue to look at M&A as a way of building toward its long-term sales goals. The company reports earnings later this month.
Under the revised deal with the US government, Paxlovid doses that were distributed in the US under emergency use authorization will be returned, with stocks replaced by supply that was approved and is labeled as fully approved by the FDA. In total, Pfizer said it expects about 7.9 million returned courses of treatment.
In August, Pfizer said it expected Paxlovid sales to be $8 billion, and Comirnaty to sell $13.5 billion. Much of the reduction in Paxlovid revenue will be because of the returns.
Maybe they will get busy and do the Ngenla US launch.
Pharma
Pfizer plans $3.5B in cost cuts as sales of Covid products continue to slide
Drew Armstrong
Executive Editor
Pfizer confirmed late Friday that it will launch a company-wide cost-cutting program this year and next as sales of the drugmaker’s Covid vaccine and antiviral slide.
The announcement came as the US government and the drugmaker on Friday afternoon revised terms of their supply agreement for Paxlovid. Under the terms, the government is returning large numbers of doses that had been distributed around the country as access to the drug switches from an emergency, government run-effort to one run through the commercial markets.
As a consequence of those returns and credits, Pfizer said that Paxlovid sales will be $7 billion lower this year than previously forecast by the company. Broadly, demand for Covid products has been slowing. The drugmaker said that it expects sales of its vaccine Comirnaty to be about $2 billion lower, as well.
The cost cuts will be “enterprise-wide,” Pfizer said in a press release, meant to “realign its costs with its longer-term revenue expectations.”
The announcement comes after Pfizer had been dropping hints that it might take drastic action if Covid sales fell more than expected. The revised deal with the US government seems to have prompted that action.
“If our Covid-19 revenues are less than what we assumed, we are prepared to launch an enterprise-wide cost improvement program aligned with the longer-term revenue projections for our business,” CFO Dave Denton said in August, warning of the potential for cuts.
The planned cuts aren’t enormous, but they will be felt, especially since $1 billion of them will be taken out by the end of this year. For comparison, in the second quarter Pfizer spent close to $10 billion on core operational expenses such as R&D, selling and administrative expenses, and cost of sales.
CEO Albert Bourla emphasized that the company expects its non-Covid revenue to grow by 6% to 8% this year, and Pfizer has hinted that it may continue to look at M&A as a way of building toward its long-term sales goals. The company reports earnings later this month.
Under the revised deal with the US government, Paxlovid doses that were distributed in the US under emergency use authorization will be returned, with stocks replaced by supply that was approved and is labeled as fully approved by the FDA. In total, Pfizer said it expects about 7.9 million returned courses of treatment.
In August, Pfizer said it expected Paxlovid sales to be $8 billion, and Comirnaty to sell $13.5 billion. Much of the reduction in Paxlovid revenue will be because of the returns.
The drugmaker’s shares were down by 2.6% after hours.
Maybe they will get busy and do the Ngenla US launch.