By Tom Ozimek
Pfizer on Tuesday reported a deep revenue slump and billions of dollars in losses as sales of its COVID-19 vaccine and antiviral treatment slowed sharply as many Americans seem to have put the pandemic behind them.
Pfizer’s total third-quarter revenues totaled $13.2 billion, a decrease of $9.4 billion, or 42 percent, compared to the year-ago quarter, the company said in a release on Oct. 31. The drop is mostly due to a slump in sales of its COVID-19 products, the company said.
Softer demand led Pfizer to report a $3.1 billion decline in third-quarter sales of its COVID-19 vaccine, a drop of 70 percent. Sales of Paxlovid, the company’s COVID-19 antiviral pill, dropped by $7.3 billion, or a whopping 97 percent in the third quarter.
This led Pfizer to report $2.4 billion in losses in terms of reported net income in the third quarter, compared to $8.6 billion in profit in the same quarter last year.
Adjusted income, another measure of profitability, was a negative $968 million in the third quarter, after posting a $10.2 billion profit in the year-ago quarter.
Pfizer also reported on Tuesday that it was forced to take a $5.6 billion in non-cash inventory write-offs due to declining demand for its COVID-19 products.
The hit to Pfizer’s bottom line comes as the COVID-19 public-health emergency in the United States ended in May and many Americans consider the pandemic—as well as the various controversial restrictions on business and movement that accompanied it—as consigned to the dustbin of history.
Even though new strains of the virus continue to circulate, infections and hospitalizations remain well below their peak levels, with demand waning for various COVID-19 products.
Recent data show that vaccine uptake appears to be relatively slow this season. Around 10 million people, or roughly 3 percent of Americans, have received a COVID-19 booster. That figure is up from 7 million a week before.
“We have rebased our COVID expectations,” Pfizer CEO Albert Bourla said on a call with investors to discuss the quarterly results.
Several weeks ago, Pfizer warned that sales of its COVID-19 products were weaker than expected, prompting the company to cut its annual revenue expectations by $9 billion.
In guidance released on Oct. 13, Pfizer said that it expects full-year 2023 sales of between $58–61 billion, down from previous forecasts of $67–70 billion.
The revenue outlook was slashed, Pfizer said at the time, “solely due to its COVID products” such as its vaccine and antiviral drug.
In Tuesday’s earnings release, Pfizer reaffirmed the guidance it provided on Oct. 13, saying it was encouraged by expected revenue contributions from new non-COVID products.
“With expected contributions from our new product launches, this puts us squarely on track to meet our full-year non-COVID operational revenue growth target of 6% to 8%,” Pfizer CFO David Denton said in a statement.
The company’s earnings report showed that, not counting COVID-19 vaccines and treatments, sales were up 10 percent in the third quarter, largely on the back of the company’s two new vaccines: one for the respiratory syncytial virus and the other for the pneumococcal vaccine.
“Pfizer is looking to counteract this loss in their vaccine market by focusing on new launches including Abrysvo and Prevnar 20,” Citeline analyst Zhyar Said told Investor’s Business Daily. “Though these two products have already driven Pfizer’s non-COVID product sales by 10 percent, this margin was not enough to make up for the 41 percent drop due to COVID sales.”
Mr. Denton said that, besides the expected revenue contributions from the two non-COVID vaccine products, Pfizer is also pressing ahead with a cost-cutting initiative worth billions of dollars.
“We are extremely pleased by the strong 10% operational revenue growth of Pfizer’s non-COVID products in the third quarter of 2023,” he said.
“In addition, we launched our cost realignment program, from which we expect to achieve at least $3.5 billion of net cost savings by the end of 2024,” he continued.
“Combined with the momentum of our non-COVID product portfolio and U.S. commercialization of Paxlovid, we expect the program to yield improved operating margins this year and help drive Pfizer’s growth through the end of the decade and beyond,” Mr. Denton added.
Pfizer Shares Take a Beating
Tuesday’s earnings report initially sent Pfizer stock down around 1 percent. Though as markets digested the report, the share price rebounded and was roughly flat intraday at $30.56 per share, as of the time of reporting.
Still, Pfizer stock remains down roughly 40 percent so far this year.
Over the last two years, sales of Paxlovid and Pfizer’s COVID-19 vaccine boosted revenue to record levels. But as population-wide immunity levels have increased, annual vaccination rates have dropped sharply while demand for treatments has also fallen.
During the pandemic and after, Pfizer introduced its widely used mRNA vaccine, sending its shares on an upward trajectory.
In mid-December 20221, Pfizer stock peaked at around $59 per share, but as of Oct. 31, it was trading at around $30 per share.
“The weakening demand for the vaccine and Paxlovid goes to show this really is the transition to post-COVID,” Max Nisen, an analyst at Bloomberg Intelligence, told Bloomberg.
“People are going to have to figure out what that looks like well beyond Pfizer.”