PFIZER: Duros "recortes"...

 

Pfizer announced late Friday that it plans to implement a company-wide programme aimed at cutting at least $3.5 billion in costs, spurred by declining demand for its COVID-19 vaccine Comirnaty and oral antiviral treatment Paxlovid (nirmatrelvir/ritonavir). 

The company, whose shares were down around 7% in extended trading, estimates it will save $1 billion this year through the initiative and another $2.5 billion in 2024.

"[The] multiyear, enterprise-wide cost realignment programme…will realign [the company's] costs with its longer-term revenue expectations," Pfizer stated, noting that "these costs will primarily include severance and implementation costs."

Shift to commercial markets

The announcement came as Pfizer and the US government revised terms of their supply agreement for Paxlovid. Under the new terms, the government is returning around 7.9 million courses of Paxlovid at the end of 2023 in return for a credit for future courses of the drug. The company cut its revenue guidance for the antiviral to about $7 billion, down from $8 billion forecasted in August. The move comes as access to the treatment switches from an emergency, government-run effort to one run through commercial markets.

According to Morningstar analyst Damien Conover, Paxlovid could be priced at up to $700 in the retail market, compared to the cost of $530 per course to the government. CEO Albert Bourla recently indicated there was uncertainty about when Pfizer would be able to sell Paxlovid in the traditional private healthcare system in the US, adding he was discussing the issue with government officials. On Friday, the company said it expects the drug will become commercially available to people with private insurance in January 1.

Pfizer also cut the full-year revenue outlook for its COVID vaccine by about $2 billion due to lower-than-expected vaccination rates. The company's most recent forecast saw Comirnaty sales reaching approximately $13.5 billion. It began selling its COVID booster vaccines to private-market buyers in September, at a list price of about $120, quadruple what it charged the government.

Sales outlook slashed

The company said it also recorded a charge of $5.5 billion in the third quarter primarily related to COVID inventory write-offs, with $4.6 billion related to Paxlovid and $900 million of inventory write-offs and other charges for the vaccine. "The burn down of inventory will be necessary before we launch in the marketplace globally. That has the effect of essentially dampening 2023 revenue performance," commented chief financial officer Dave Denton last month.

For the full year, Pfizer said it now projects 2023 revenue of between $58 billion and $61 billion, down from a range of $67 billion to $70 billion previously, saying the revision was "solely due to its COVID products." Adjusted earnings are expected to be between $1.45 and $1.65 a share, slashed from a prior range of $3.25 to $3.45 per share. Meanwhile, Pfizer said its non-COVID products remain on track to achieve 6% to 8% revenue growth year-over-year in 2023.

Ver