Exterior view of the Pfizer headquarters building in New York City on January 29, 2023.
Kena Betancur | Corbis News | fake images
Pfizer On Wednesday it said it launched a new multi-year program to cut costs as it works to recover from the rapid decline of its Covid business.
The announcement comes on top of another $4 billion cost-cutting effort, which Pfizer announced last year as demand for its Covid vaccine and oral drug Paxlovid plummeted.
In a stock exchange filing, the pharmaceutical giant said the first phase of its new program focuses on operational efficiency and is expected to save the company about $1.5 billion by the end of 2027.
Extraordinary costs related to the initial stage of cuts are expected to be around $1.7 billion, including severance for an unspecified number of laid-off employees. The company expects to book most of those charges this year.
Pfizer also expects the program to include “product portfolio enhancements” and changes to the company's manufacturing and supply network, a spokesperson told CNBC.
“The program will focus on optimizing our ways of working, reducing complexity and increasing productivity at Pfizer Global Supply,” the spokesperson said in a statement.
In the filing, Pfizer added that “given the complexity of manufacturing and the longer timelines needed to make changes, this program will be a multi-phase effort.”
Pfizer is trying to shore up investor confidence after its shares fell nearly 50% in 2023, making it the worst-performing pharmaceutical stock last year. That stock drop wiped more than $100 billion off Pfizer's market value.
As demand for Covid products plummeted last year, Pfizer also disappointed Wall Street with the disappointing launch of a new RSV shot, a twice-daily weight-loss pill that failed to surpass expectations. clinical tests and an initial forecast for 2024 that did not meet expectations.
But Pfizer pleased investors earlier this month after it reported first-quarter revenue and adjusted earnings that beat expectations and raised its full-year earnings outlook. The pharmaceutical giant said its new profit guidance explains its “confidence” in its business and its ability to cut costs.
“We are cautiously optimistic about the year,” Pfizer CEO Albert Bourla said during a May 1 earnings conference call.
The company's shares closed 6% higher that day. Pfizer shares have risen nearly 14% since then.
