By Michael Erman
(Reuters) -Pfizer on Friday slashed its full-year revenue forecast by 13% and said it will cut $3.5 billion worth of jobs and expenses due to lower-than-expected sales of its COVID-19 vaccine and treatment.
Pfizer earned record revenue in 2021 and 2022, topping $100 billion last year, after developing its vaccine Comirnaty with German partner BioNTech SE and antiviral treatment Paxlovid on its own. Last year, revenue from those two products exceeded $56 billion.
But annual vaccination rates have dropped sharply since 2021 and demand for treatments has dipped as population-wide immunity has increased from vaccines and prior infections. Pfizer and rivals have begun selling an updated COVID vaccine for this fall.
“We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control,” Pfizer CEO Albert Boura said in a statement. “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 drugmaker said it now expects 2023 revenue of between $58 billion and $61 billion, down from its prior forecast of $67 billion to $70 billion. It said the reduction was solely due to lowered expectations for its COVID-19 products.
Pfizer said it will take a non-cash charge of $5.5 billion in the third quarter to write off $4.6 billion of Paxlovid and $900 million of inventory write-offs and other charges for the vaccine.
The cost-cutting program, which will target savings of at least $3.5 billion annually by the end of 2024, will include layoffs, the company said, without providing details on how many jobs will be cut or from what areas. One-time costs to achieve the savings are expected to be around $3 billion.
Shares of the New York-based company were down about 7% in extended trading.
Pfizer slashed its forecast for sales of its antiviral COVID treatment Paxlovid by about $7 billion, including a non-cash $4.2 billion revenue reversal, as it agreed to allow the return of 7.9 million courses purchased by the U.S. government. It had previously expected Paxlovid revenue of about $8 billion for the year.
Pfizer said that under a deal with the U.S. government, a credit for the returned Paxlovid doses will underwrite a program to supply the drug free-of-charge to uninsured and underinsured Americans through 2028 and to patients insured under the government’s Medicare and Medicaid programs through the end of next year.
Pfizer will also provide the U.S. government 1 million courses of Paxlovid for the Strategic National Stockpile.
The company expects the drug will become commercially available to people with private insurance in Jan. 1.
Pfizer also cut full-year revenue expectations for the COVID vaccine by about $2 billion due to lower-than-expected vaccination rates.
Pfizer said its non-COVID products remain on track to achieve 6% to 8% revenue growth year over year in 2023.
(Reporting by Michael Erman in New Jersey; Additional reporting by Sriparna Roy in Bengaluru; Editing by Bill Berkrot and Rod Nickel)