Lower-than-expected revenues from sale of its COVID-19 vaccine and treatment, Pfizer has been forced to lower revenue estimates for the full year by 13% and announce that it would cut $3.5 billion in employees and expenses.

Following the development of the vaccine Comirnaty with German partner BioNTech SE and the antiviral medication Paxlovid independently, Pfizer generated record revenue in 2021 and 2022, surpassing $100 billion last year. The combined sales of those two products in 2017 were more than $56 billion.

But since population-wide immunity has developed from vaccines and prior diseases, annual immunisation rates have dramatically decreased since 2021, and demand for treatments has fallen. For this autumn, Pfizer and competitors have started offering an improved Covid vaccine.

“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 pharmaceutical company reported that its previous prediction of $67 to $70 billion in revenue for 2023 has been reduced to between $58 and $61 billion. It claimed that the decrease was the only result of diminished hopes for its COVID-19 goods.

In order to write off the $4.6 billion in Paxlovid as well as the $900 million in inventory write-offs and other costs associated with the vaccine, Pfizer said it will incur a non-cash charge of $5.5 billion in the third quarter.

The business stated that layoffs will be a part of the cost-cutting programme, which aims to save at least $3.5 billion annually by the end of 2024. However, it did not specify how many positions would be eliminated or from which departments. It will cost about $3 billion in one-time expenses to realise the savings.

Pfizer decided to allow the return of 7.9 million courses that the U.S. government had purchased, so it reduced its expectation for sales of the antiviral COVID medication Paxlovid by nearly $7 billion, including a non-cash $4.2 billion revenue reversal. Previously, it had projected Paxlovid sales to be around $8 billion for the entire year.

According to a contract with the US government, Pfizer said that a credit for the doses of Paxlovid that are returned will fund a programme that will provide the medication without charge to uninsured and underinsured Americans through 2028, as well as to patients covered by the government’s Medicare and Medicaid programmes through the end of this year.

Additionally, Pfizer will give the US government 1 million Paxlovid courses for the Strategic National Stockpile.

The business anticipates that starting on January 1st, the medication will be marketed to consumers with private insurance.

Due to lower-than-anticipated immunisation rates, Pfizer also reduced full-year revenue forecasts for the COVID vaccine by around $2 billion.

According to Pfizer, the company’s non-COVID medications would continue to expand their sales by 6% to 8% in 2023.

(Adapted from Nasdaq.com)