Pfizer targets $2.5bn more in cost savings

Pfizer's second-quarter results update included news of an additional $2.5 billion in cost-cutting initiatives, taking the total targeted in the last three years above the $10 billion mark.

The new savings – which will be realised between 2027 and 2029 – are the latest instalment of a major restructuring that started in 2023, as Pfizer faced a steep decline in revenues from its BioNTech-partnered COVID-19 vaccine as the pandemic fizzled out.

An initial target of carving $3.5 billion off its annual costs was scaled up last year to $7.7 billion, with reductions in headcount of around 13,000 in 2024 and 2025 that mainly affected its operations in the US and Europe. It ended last year with a headcount of around 75,000.

In its announcement, Pfizer said the additional $2.5 billion is "associated with ongoing initiatives" to reduce its cost of goods sold (COGS) metric, and will focus on "network structure changes, product portfolio enhancements and additional operational efficiencies." The programme will come with a one-time cost of around $4 billion, said the company.

News of the expanded cost-reduction drive came as Pfizer recorded 1% sales growth to $15 billion, driven by continued strong demand for its anticoagulant product Eliquis (apixaban), partnered with Bristol Myers Squibb, which is nearing the end of its patent-protected life.

Eliquis grew 19% to $2.43 billion in the quarter, fuelled by higher net prices in the US and offset by the start of generic competition in some markets outside the US. Meanwhile, there were solid contributions from Astellas-partnered bladder cancer drug Padcev (enfortumab vedotin), up 23% to $667 million, and Lorbrena (lorlatinib) for lung cancer, which climbed 37% to $354 million.

Chief executive Albert Bourla said it was a "strong quarter" for the group, with recently launched and acquired products performing well as Pfizer advances its R&D projects, including its oncology pipeline and obesity programmes added through last year's $10 billion takeover of Metsera, which followed a tug-of-war with Novo Nordisk.

"I am confident we will create substantial future value for patients and shareholders," said Bourla.

The company is predicting annual sales this year of $60.5 to $62.5 billion, up from $59.5 to $62.5 billion previously, and a return to stronger growth from 2028 onwards, when the impact of the Eliquis patent loss will start to wear off.