Affected by the lower than expected sales of star COVID-19 products, Pfizer, the "Cosmic Pharmaceutical Factory", also has to live a tight life.
On October 13th local time, Pfizer (PFE. US) once again lowered its annual revenue guidance, ranging from $58 billion to $61 billion. When announcing its second quarter report this year, Pfizer lowered its annual revenue guidance from $67 billion to $71 billion, and adjusted it to $67 billion to $70 billion. The reason for the downward adjustment given at that time was due to certain short-term adverse factors, including the impact of the US tornado on pharmaceutical factories in July this year. This time, Pfizer lowered the annual revenue guidance again, saying it was only because of COVID-19 products.
In addition, the adjusted earnings per share (EPS) decreased significantly from $3.25 to $3.45, to $1.45 to $1.65.
Pfizer's Adjusted Annual Revenue Guidelines
With the end of the global COVID-19 emergency, the demand for related products is also declining, and Pfizer's two star products have shown a downward trend in past financial reports. The revised agreement between Pfizer and the US government regarding Paxlovid further affects the commercialization performance of the product. According to Pfizer, the content includes a non cash transaction in which the US government will refund approximately 7.9 million Paxlovid treatment courses marked with Emergency Use Authorization (EUA) by the end of 2023, and accept credit for future drug treatment courses marked with New Drug Application (NDA).
The revised agreement also mentioned that the credit will support the patient assistance program by providing Paxlovid free of charge to federal government insured patients by 2024, and Paxlovid free of charge to uninsured/underinsured patients by 2028. Pfizer will recognize revenue upon product delivery. In addition, Pfizer will provide 1 million treatment courses to the US government for national strategic reserves.
Pfizer has reduced Paxlovid's revenue guidance by approximately $7 billion, including $4.2 billion in non cash income, for the aforementioned refund matters. Pfizer also mentioned that due to the impact of lower than expected demand on COVID-19's drug inventory, Pfizer expects to accrue $5.5 billion in non cash expenses in the third quarter of 2023.
Paxlovid first obtained the EUA in the United States during the COVID-19 pandemic. In May 2023, the FDA officially approved the drug for the treatment of adult patients with mild to moderate COVID-19 and with high-risk factors of severe progression (including hospitalization or death). Pfizer mentioned in its October 13th release that the current trend in global usage of Paxlovid is slightly higher than last year, but lower than the company's initial expectations.
Despite the modification of the agreement or its impact on short-term revenue, Pfizer CEO Abel provided an optimistic explanation for the matter. He believes that the agreement with the US government makes it easier for patients to obtain Paxlovid, enabling the US to have sufficient inventory for future use, and providing Pfizer with clearer information about the transition of this important therapeutic drug to the commercial market, This will help to eliminate some uncertainties about COVID-19's business expectations.
Not only COVID-19 oral medicine, but also COVID-19 vaccine is affecting Pfizer's income guidance. Pfizer said that because the vaccination rate was lower than expected, the company expected to reduce the annual revenue of COVID-19 Vaccine Comitraty by about $2 billion in 2023. Paxlovid and Comirnaty are expected to have annual revenue of approximately $12.5 billion in 2023, a decrease of $9 billion from initial expectations.
However, Pfizer once again stressed that the company's performance of non COVID-19 drugs is still strong, and the relevant data still maintain the original guidance, that is, it will achieve 6% to 8% revenue growth in 2023. Pfizer also announced a new drug approval message while lowering its official performance expectations: the US FDA has approved its oral selective sphingosine 1-phosphate (S1P) receptor modulator Velsipity for the treatment of adult patients with moderate to severe ulcerative colitis (UC).
It is worth noting that there is also a multi-year, company wide cost adjustment plan announced along with performance expectations. The plan is expected to achieve a savings target of at least $3.5 billion, of which $1 billion is expected to be achieved in 2023 and an additional $2.5 billion is expected to be achieved in 2024. The one-time cost of implementing the above plan is expected to be approximately $3 billion, with the majority expected to be in cash, which will mainly include severance and execution expenses. The 'severance pay' here is also considered or related to layoffs.
Pfizer stated that it will continue to improve its expected target savings and related costs for the remainder of this year and include them in its guidance for the entire year of 2024.
Perhaps influenced by the above news, the US stock market closed on October 13th, with Pfizer closing down 2.46% at $32.11 per share, with a market value of $181.29 billion. Compared to its high of $53.7 at the end of 2022, its stock price has fallen by about 40%.