Amid its ongoing efforts to trim $4 billion in spending in 2024, Pfizer in an SEC filing on Wednesday said it is looking to save an additional $1.5 billion over the next several years.
Pfizer in an SEC filing on Wednesday revealed its plans to implement a fresh round of cost cuts to generate savings of around $1.5 billion by the end of 2027.
According to the SEC document, the $1.5-billion savings scheme is just the “first phase” of a multi-year program designed to “reduce our cost of goods sold.” The program will include structural changes to its network, operational adjustments to boost efficiency and improvements to its product portfolio.
Pfizer expects to incur around $1.7 billion in one-time costs—primarily due to severance pay and implementation fees—as part of the first phase. The pharma will reflect these costs in 2024, while savings from the first phase will start being realized in 2025.
Wednesday’s announcement adds to Pfizer’s ongoing $3.5 billion cost-cutting initiative unveiled in October 2023 and another $500 million in targeted savings announced in December 2023. The “multi-year, enterprise-wide cost realignment program” is designed to help the pharma weather the sharp drop in COVID-19 demand, which bottomed out its revenues in recent quarters, according to the company.
In the third quarter of 2023, Pfizer reported its first quarterly decline since 2019. At the time, the pharma suffered a 42% year-over-year drop to bring in $13.2 billion in revenue. Sales of Paxlovid, its antiviral treatment for, cratered 97%, while its COVID-19 vaccine Comirnaty slipped 70%.
Pfizer reported a 42% hit in full-year revenues last year, driven by a 92% and 72% drop in Paxlovid and Comirnaty sales, respectively. Excluding Paxlovid and Comirnaty, Pfizer’s revenue grew 7% operationally last year.
The cost-cutting program will also involve layoffs, though the pharma has yet to specify how many employees will be affected. Pfizer expects to absorb a one-time upfront cost of $3 billion, primarily associated with severance and implementation fees.
Pfizer also announced in its first-quarter 2024 earnings report that it culled four programs from its pipeline. The pharma will no longer be working on VTX-801, a recombinant gene therapy for Wilson disease. Zavzpret (zavegepant), its migraine nasal spray, will also no longer be developed as an oral preventive therapy.
In Wednesday’s SEC filing, Pfizer cautioned that the savings from the first phase of its program are estimates and are “subject to a number of assumptions.” The pharma said its actual results may differ.
Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.
