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.
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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.
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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.
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By GlobalDataTo 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.
