Pfizer is experiencing a challenging financial period, as evidenced by its slashed full-year revenue forecast by 13% and plans to cut $3.5 billion in costs annually by the end of 2024. These measures include layoffs, and one-time costs to achieve these savings are expected to be around $3 billion. The primary drivers for these financial difficulties are lower-than-expected sales of its COVID-19 vaccine and treatment, with revenue expectations for the COVID vaccine cut by approximately $2 billion and Paxlovid sales by about $7 billion. This includes a non-cash $4.2 billion revenue reversal due to the return of 7.9 million Paxlovid courses purchased by the U.S. government.
The company's 2026 guidance indicates modest revenue growth, with forecasts of $59.5 billion to $62.5 billion, which would be largely flat compared to its new 2025 sales guidance of $62 billion. This outlook is partially attributed to a projected $1.5 billion year-over-year drop in sales from COVID products and another $1.5 billion hit due to the loss of market exclusivity for certain products, such as its pneumonia vaccine Prevnar. Patent expirations, primarily in 2026 and 2028, are expected to impact $17 billion in revenues. Furthermore, Pfizer anticipates deeper discounts in its Medicaid business as part of a deal with the Trump administration.
Despite these challenges, Pfizer is actively pursuing strategies to mitigate the impact. The company is targeting over $7 billion in cost cuts by 2027, with the majority expected by next year, and has already exceeded its cost-saving goals for 2025. It has also made significant acquisitions, such as the $10 billion purchase of obesity biotech Metsera and the $43 billion tie-up for cancer drugmaker Seagen in 2023, to build new revenue streams and pipeline. However, analysts like JPMorgan's Chris Schott view the outlook as "largely expected," with COVID headwinds and R&D investments partially offset by ongoing restructuring. BMO Capital Markets analyst Evan Seigerman notes that the slightly lower 2026 outlook "leaves room [for] adjustments in light of vaccine policy uncertainty." The company does not expect to return to revenue growth until 2029.
