Pfizer launches cost-cutting drive as COVID sales fall
Pfizer has said it will shed staff and cut its operating costs by around $3.5 billion, as it faces a shortfall in COVID-19 vaccine and treatment sales, with revenues now expected to be down around $9 billion in 2023 compared to prior forecasts.
The company is aiming to trim $1 billion from its costs this year, and another $2.5 billion, as it responds to declining sales of its BioNTech-partnered COVID-19 vaccine Comirnaty and oral antiviral therapy Paxlovid (nirmatrelvir/ritonavir) that it said will reduce annual revenues to between $58 billion and $61 billion for the year.
Last year, the company’s revenues were more than $100 billion, swelled by $56 billion in sales for its COVID-19 products. It has not provided any indication of the number of job losses.
Around $4.2 billion of the correction will result from the US government’s return of 7.9 million treatment courses of Paxlovid at the end of this year as part of an amended supply agreement, with that and other factors reducing Paxlovid’s expected revenues for the year by $7 billion.
The return is on a non-cash basis, so the US government will have a credit note that will be redeemable for Paxlovid supplied in future. For now, the drug has been made available under emergency-use authorisation (EUA), but a full marketing application was approved earlier this year.
The commercial transition will begin in November, as the government begins to discontinue the distribution of EUA-labelled Paxlovid. The US will keep an ongoing stockpile of 1 million Paxlovid courses that will be refreshed as it expires, until 2028.
The drug will be made available to people with private health insurance from the start of next year, said Pfizer.
Comirnaty sales, meanwhile, are expected to be around $2 billion lower than earlier forecasts, as the COVID-19 vaccination market transitions to commercial-led, rather than government-led, sales, and Pfizer will also take a $5.5 billion charge in the third quarter due to inventory write-offs and lower demand.
“We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control,” said Pfizer's chief executive, Albert Bourla (pictured above), in the company’s update.
“As we gain additional clarity around vaccination and treatment rates for COVID, we will be better able to estimate the appropriate level of supply to meet demand.”
The announcement of the cost-reduction programme on Friday came shortly after Pfizer picked up its first approval – from the FDA – for S1P inhibitor Velsipity (etrasimod) as a treatment for ulcerative colitis (UC). The drug has also been submitted for approval in Europe, with a decision expected in the next few months.
Velsipity is the second drug in the class to be approved for UC after Bristol-Myers Squibb’s Zeposia (ozanimod), cleared by the FDA in 2021, which made $127 million in sales in the first half of this year from its use in UC, as well as in multiple sclerosis.
Pfizer has suggested that Velsipity – acquired as part of its $6.7 billion purchase of Arena Pharmaceuticals last year – could have a best-in-class profile, with a higher rate of clinical remissions and better tolerability than BMS’ drug in clinical trials, and no need to titrate the dose at the start of treatment.