Pfizer may cut costs later this year if sales of its COVID-19 vaccine and antiviral drug remain slower than expected through the fall, when the company plans to roll out an updated booster shot.
The warning Tuesday came as Pfizer disclosed second quarter earnings showing a 53% year-over-year decline in revenue due to reduced demand for it and partner BioNTech’s vaccine, Comirnaty, and its coronavirus pill, Paxlovid. Excluding those two products, Pfizer revenue grew by 5%.
Widespread use and government stockpiling of Comirnaty and Paxlovid in 2021 and 2022 supercharged Pfizer’s business, handing the pharmaceutical giant tens of billions of dollars that it used to acquire half a dozen biotechnology companies and fund its shareholder dividend.
But fewer COVID vaccine doses are now being administered amid lower case counts in the U.S. and Europe. The U.S. government, meanwhile, has stepped back from bulk purchases as sales and distribution move to the commercial market.
The shifts in demand are making it harder for Pfizer to predict how much revenue Cominarty and Paxlovid will earn — uncertainty that executives cited in discussing whether they might reduce spending in the future.
“We expect this fall’s performance of our COVID-19 products to help us more effectively forecast future sales performance,” said Pfizer CFO David Denton on a conference call with analysts and investors Tuesday.
“To that end, 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.”
Albert Bourla, Pfizer’s CEO, added that, should they be necessary, any cuts would likely focus on the company’s “COVID-19 cost base.”
The slowdown in COVID product sales was largely expected, as Pfizer previously set expectations for significantly lower revenue this year than last. The company is maintaining its forecast of $21.5 billion in full-year sales of Comirnaty and Paxlovid combined, and indicated it expects faster sales in the fall when infections typically rise.
Regulators in the U.S. and Europe are currently reviewing an updated formulation to Pfizer’s vaccine that’s targeted to a subtype of the omicron variant. Pfizer said it is ready to ship this adapted vaccine as soon as it receives regulatory authorization.
Excluding Comirnaty and Paxlovid, Pfizer now projects between 6% and 8% growth in operational revenue this year, down from a previously set range of between 7% to 9%. The guidance cut is due to several factors, among them a narrower-than-sought approval for Pfizer’s prostate cancer medicine Talzenna, a softer-than-anticipated U.S. recommendation for the company’s new respiratory syncytial virus vaccine and storm damage at a North Carolina factory.
That damage, caused by a tornado striking the facility, threatens to disrupt supply of certain sterile injectable drugs used in U.S. hospitals. Pfizer said it’s working to move product to other sites for storage and is exploring alternative manufacturing locations as it repairs the damage.
Elsewhere, the pharma company is working to close a $43 billion acquisition of cancer drug developer Seagen that it announced earlier this year. Seagen shareholders approved the deal, but antitrust regulators in the U.S. are still reviewing it and recently requested further information from the companies.
In preparation for integrating Seagen, Pfizer recently promoted Chris Boshoff to the company’s executive leadership as chief oncology research and development officer. He’ll report to Bourla directly and be accountable for Pfizer’s entire cancer drug pipeline.
On Tuesday’s call, Bourla said this structure mirrors the organization Pfizer successfully set up for its vaccines R&D.