The Pfizer logo is seen outside the pharmaceutical company’s manufacturing plant, in Newbridge, Ireland February 10, 2025.
Clodagh Kilcoyne | Reuters
Pfizer on Tuesday expanded its cost-cutting efforts and reported first-quarter profit that topped estimates, even as the company’s sales fell, largely due to dwindling revenue for its antiviral Covid pill Paxlovid.
The company previously said its cost-cutting program would deliver overall net cost savings of roughly $4.5 billion by the end of 2025. On Tuesday, Pfizer said it now expects additional savings of roughly $1.2 billion, primarily in selling, informational and administrative expenses, by the end of 2027.
The company said that will be driven in large part by “enhanced digital enablement,” including automation and artificial intelligence and streamlining business processes.
The expanded cuts also include expected research and development reorganization cost savings of around $500 million by the end of 2026, the company added. Those savings will be reinvested into Pfizer’s product pipeline.
Pfizer has a separate multiyear initiative to slash costs, with the first phase of the effort slated to deliver $1.5 billion in savings by the end of 2027. With the added cuts announced Tuesday, Pfizer now expects to deliver around $7.7 billion in savings by the end of that year from the two cost-cutting efforts.
The cuts aim to help the pharmaceutical giant recover from the rapid decline of its Covid business and stock price over the last few years, and appear to be paying off.
Here’s what the company reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 92 cents adjusted vs. 66 cents expected
- Revenue: $13.72 billion vs. $13.91 billion expected
‘Volatile external environment’
The results come as drugmakers brace for President Donald Trump’s planned tariffs on pharmaceuticals imported into the U.S. – his administration’s bid to boost U.S. manufacturing of medications.
Unlike other companies grappling with evolving trade policy, Pfizer did not revise its outlook.
The company maintained its full-year 2025 outlook, forecasting sales of $61 billion to $64 billion, with a similar performance from its Covid products as seen in 2024, however Pfizer noted in its earnings release that the guidance “does not currently include any potential impact related to future tariffs and trade policy changes, which we are unable to predict at this time.”
But on the earnings call on Tuesday, Pfizer executives said the guidance does reflect $150 million in costs from Trump’s existing tariffs.
“Included in our guidance that we didn’t really speak about is there are some tariffs in place today,” Pfizer CFO Dave Denton said on the call.
“We are contemplating that within our guidance range and we continue to again trend to the top end of our guidance range even with those costs to be incurred this year,” he said.
On the call, Pfizer CEO Albert Bourla said the company established a team to analyze a range of potential outcomes and develop strategies to help mitigate the potential impact of tariffs on its business in the short and long term. That team is managing current inventory levels in certain jurisdictions and leveraging Pfizer’s domestic manufacturing footprint, among other efforts.
“Should we be impacted by further tariffs in the future, we will assess the impact of the policies enacted and provide information at the appropriate time,” Bourla said.
He added that uncertainty around Trump’s pharmaceutical tariffs is deterring the company from further investing in U.S. manufacturing and research and development.
Pfizer still expects that changes to the Medicare program resulting from the Inflation Reduction Act will hurt sales by $1 billion, dampening growth by approximately 1.6% compared with 2024.
Stripping out one-time items, the company expects 2025 earnings to be in the range of $2.80 to $3 a share.
“With the underlying strength of our business, we believe we can be agile in navigating an uncertain and volatile external environment,” Bourla said in a release.
For the first quarter, the company booked net income of $2.97 billion, or 52 cents per share. That compares with net income of $3.12 billion, or 55 cents per share, during the same period a year ago.
Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of 92 cents for the quarter.
Pfizer reported revenue of $13.72 billion for the first quarter, down 8% from the same period a year ago.
Covid sales
The company said the decrease in sales was primarily driven by a decline in revenue for Paxlovid, which posted $491 million in sales during the first quarter, down 76% from the same period a year ago, in part due to lower Covid infections worldwide and reduced international government purchases of the drug.
The drop in sales also reflects a boost Pfizer got in the first quarter of 2024 from a final adjustment related to a previously recorded revenue reversal for Paxlovid.
Analysts had expected Paxlovid to generate $769.7 million in sales for the first quarter, according to StreetAccount estimates.
Meanwhile, the company’s Covid shot, Comirnaty, booked $565 million in revenue, up 60% from the same period a year ago. That’s above the $352 million that analysts were expecting, according to StreetAccount.
The results come as shot makers like Pfizer face uncertainty over immunization policy and regulation under Robert F. Kennedy Jr., a prominent vaccine skeptic who now oversees the nation’s federal health agencies.
As secretary of the Department of Health and Human Services, Kennedy has pursued a sweeping overhaul of different agencies, cutting staff, consolidating or eliminating offices and taking actions that could ultimately undermine vaccines.
