The decline of Pfizer's new crown products: the government unsubscribed, P drug reduced its revenue by $7 billion, or planned a major layoff

Affected by the lower than expected sales of Star Xinguan products, Pfizer, the "Cosmic Drug Factory", also has to live a tight life.

On October 13 local time, Pfizer (PFE. US) again lowered its annual revenue guidance, ranging from $58 billion to $61 billion. When the second quarter report was released this year, Pfizer lowered its annual revenue guidance, from $67 billion to $71 billion, to $67 billion to $70 billion. The reason for the reduction given at that time was some 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 the new crown 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 guidance

With the end of the global new crown emergency, the demand for related products is also declining, and Pfizer's two star products have shown a downward trend in past financial reports. This amendment agreement between Pfizer and the US government around Paxlovid further affected the commercialization performance of the product. According to Pfizer, the content includes a non cash transaction. By the end of 2023, the U.S. government will return about 7.9 million Paxlovid treatment courses marked with emergency use authorization (EUA), and accept credit for future drug treatment courses marked with new drug application (NDA).

The above revised agreement also mentioned that credit will support the patient assistance plan, providing Paxlovid free of charge to the insured patients of the federal government before 2024, and providing Paxlovid free of charge to uninsured/underinsured patients before 2028, and Pfizer will recognize revenue when delivering products. In addition, Pfizer will provide the US government with 1 million treatment courses for national strategic reserve.

Pfizer reduced Paxlovid's revenue guidance by about US $7 billion, including US $4.2 billion in non cash income for the above-mentioned refunds. Pfizer also mentioned that due to the impact of the inventory of COVID-19 due to the lower than expected demand, Pfizer expects to accrue $5.5 billion in non cash expenses in the third quarter of 2023.

Paxlovid initially obtained the EUA in the United States during the COVID-19 pandemic. In May 2023, 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 press release on October 13 that the current trend of Paxlovid's global utilization rate is slightly higher than last year, but lower than the company's initial expectation.

Although the agreement was revised or affected short-term revenue, Pfizer CEO Albert gave an optimistic explanation. He believed that the agreement with the U.S. government made Paxlovid easier for patients to obtain, enabling the U.S. to have sufficient inventory for future use, and provided Pfizer with clearer information about the transition of this important therapeutic drug to the commercial market, This helps to eliminate some uncertainties about the business expectations of New Crown.

It is not only Xinguan Oral Medicine, but also Xinguan Vaccine that is influencing Pfizer's revenue guidance. Pfizer said that because the vaccination rate was lower than expected, the company expected to reduce the annual revenue of the new crown vaccine Comirnaty by about $2 billion in 2023. The annual revenue of Paxlovid and Comirnaty in 2023 is expected to be about $12.5 billion, a decrease of $9 billion compared with the original estimate.

However, Pfizer once again stressed that the company's performance of non crown 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 information at the same time of the official announcement of the reduction of performance expectations: the US FDA approved its oral selective sphingosine 1-phosphate (S1P) receptor modulator Velsipity to treat 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 at the same time as the performance expectations. The plan is expected to achieve the goal of saving at least $3.5 billion, of which $1 billion is expected to be achieved in 2023, and another $2.5 billion is expected to be achieved in 2024. The one-time cost of realizing the above plan is estimated to be about $3 billion, most of which is expected to be cash. These costs will mainly include severance payments and implementation costs. The "severance pay" here is also considered or related to layoffs.

Pfizer said that it will continue to improve the expected target savings and related costs in the rest of this year, and incorporate them into the 2024 annual guidance.

key word: U.S. government income annual influence