As the COVID-19 pandemic transitions into an endemic phase, pharmaceutical companies have been bracing for a decline in demand for pandemic-related products. Pfizer recently issued a significant update, revising its 2023 revenue projection downward by $9 billion. The company now anticipates sales in the range of $58 billion to $61 billion, a reduction from the previous estimate of $67 billion to $70 billion.
This adjustment from Pfizer is primarily attributed to a $7 billion decrease in sales projections for its oral antiviral drug, Paxlovid. Additionally, the company has revised its revenue outlook for the COVID-19 vaccine Comirnaty, lowering it by $2 billion. Earnings per share are also expected to decline, with a new range of $1.45 to $1.65, down from the prior estimate of $3.25 to $3.45.
In response to these changes, Pfizer has announced plans for an “enterprise-wide cost realignment program,” aimed at reducing annual costs by $3.5 billion by the end of 2024, with $1 billion of savings to be realized this year.
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Pfizer’s announcement had ripple effects in the pharmaceutical industry, as other companies involved in COVID-19 products also experienced share price declines. Novavax’s shares dropped by 4.5%, and Pfizer’s COVID vaccine partner, BioNTech, saw a 6.6% decrease in its share price.
Moderna, however, reasserted its 2023 revenue projection between $6 billion and $8 billion, emphasizing that it is too early in the US vaccination season to accurately predict full-year vaccination rates.
These adjustments come on the heels of Pfizer’s historic achievement in 2022, becoming the first pharmaceutical company to surpass $100 billion in sales. The success was driven by $38 billion in revenue from Comirnaty and $19 billion from Paxlovid. Nevertheless, Pfizer now anticipates combined sales of these two products to reach $12.5 billion in the current year.
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Reflecting the waning demand for Paxlovid, the US government is returning approximately 7.9 million courses of treatment to Pfizer in a “non-cash transaction.” In return, the US will receive credit for future updated versions of Paxlovid, which will be distributed at no cost to Medicare and Medicaid patients and uninsured individuals through an assistance program. This exchange paves the way for Paxlovid to be commercially available starting on January 1 of the next year.
Additionally, Pfizer will incur a noncash charge of $5.5 billion in the third quarter for inventory write-offs due to “lower-than-expected demand.” Of this amount, $900 million is attributed to Comirnaty. BioNTech clarified that the write-offs for Comirnaty do not extend to their new vaccine adapted for the XBB.1.5 variant.
