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Pfizer hopes 2025 is the year its revenue becomes predictable again. The company soared to new heights during the pandemic as its COVID vaccine and Paxlovid became mainstay treatments and earned it tens of billions of dollars.
But its executives have, over the past two years, struggled to accurately predict demand for booster shots, leading to guidance cuts , layoffs and reductions in spending . While issuing forecasts last year that widely missed Wall Street expectations, Pfizer laid out a plan to trim $4 billion from its budget by the end of 2024 — a plan it has since expanded with a target of finding $1.5 billion in manufacturing-related savings .
Both programs are on track, Pfizer said Tuesday, and moving forward the company anticipates less variability from its COVID products.
“We believe we are entering a phase of revenue stability as the uncertainty caused by COVID [is] mostly resolved,” said CFO Dave Denton, in a call with analysts and investors.
As Pfizer fends off Starboard, the company also wants to sell growth and, on Tuesday, predicted earnings per share would rise between 10% and 18% from 2024’s baseline on an adjusted, diluted basis. Its 2025 forecast of $2.80 and $3.00 in earnings per share is higher than what hedge funds had predicted before Tuesday’s call, according to Jefferies analyst Akash Tewari, and encompasses the higher “sell side” expectations of around $2.90 per share.
Pfizer anticipates selling, general and administrative expenses will come in about $500 million lower in 2025 than in 2024, while research and development costs will fall by about $300 million.
“We will be focused on driving efficiency in our R&D organization, with any resulting operational savings expected to be strategically adjusted in research to further fuel innovation and our long term product development,” said Denton.
However, Pfizer will face new headwinds from the Inflation Reduction Act, a law that in addition to permitting the U.S. government to negotiate certain drug prices within Medicare made a raft of changes to the “Part D” benefit.
A new $2,000 cap on out-of-pocket spending will help Pfizer’s business, the company said, but be offset by the addition of new required discounts and the expiration of a coverage gap-related program. Overall, Pfizer expects the Part D redesign to have a $1 billion, or 1.6%, negative impact on its topline revenue.
The law’s impact is greater on higher-cost medicines, Denton said, such as its rare disease drug Vyndaqel, breast cancer medicine Ibrance and arthritis treatment Xeljanz.
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