Pfizer predicts big drop in revenue after record $100M revenue due to COVID

On Tuesday, Pfizer forecast a bigger-than-expected drop in sales of its COVID-19 vaccine and treatment in 2023, adding to investor concerns about demand for products as governments cut orders and work inventory.

CEO Albert Burla said 2023 should be a “transitional year” for Pfizer’s COVID-fighting products before it could return to growth in 2024.

Pfizer’s total annual sales topped the $100 billion mark for the first time in 2022, driven by more than $56 billion in sales of the COVID-19 vaccine and antiviral drug Paxlovid. Total revenue in 2023 is expected to be between $67 billion and $71 billion.

“We are backed by significant capital that we know how to use to drive growth,” Burla told analysts and investors on a conference call. “We are building an R&D engine that will be more productive than ever.”

The company launched five new products last year and hopes to introduce 14 more over the next year and a half, including a respiratory syncytial virus (RSV) vaccine and an mRNA flu vaccine.

Shares of Pfizer fell slightly to $43.53. Shares have fallen 15% this month to close on Monday.

Citi analyst Andrew Baum said the company is struggling to avoid dependence on COVID drugs.

“We don’t see anything here that would change our cautious view of Pfizer’s COVID-19 business,” Baum said in a research note.

The decline in COVID-related revenue is not the only headwind Pfizer is facing.

The US drug maker will lose patent protection for some widely sold drugs after 2025, including cancer treatment Ibrance and arthritis drug Xeljanz, and said it expects to lose $17 billion in annual sales between 2025 and 2030 due to expiration of the patent.

Pfizer has turned to acquisitions such as the $5.4 billion purchase of Global Blood Therapeutics and the $11.6 billion purchase of migraine drug maker Biohaven to bolster its portfolio of future products.

Citi’s Baum said he expects Pfizer to use the surge in revenue from its COVID products to “intensify and expand” its efforts to buy other companies or new products to fill its pipeline.

Excluding COVID-related sales, Pfizer expects 2023 revenue to grow by 7-9%.

Pfizer developed a COVID-19 vaccine with German partner BioNTech, and the companies split the profits. Pfizer forecasts sales of its vaccine at $13.5 billion in 2023, below analysts’ estimates of $14.4 billion, and predicts Paxlovid sales of $8 billion, short of Wall Street’s $10.33 billion estimate.

Burla said the company expects to start selling its COVID vaccine Comirnaty through commercial channels in the United States in the second half of 2023, rather than selling vaccines directly to the government. After this transition, the company hopes to roughly quadruple the price of the vaccine in the US.

Analysts and investors are seeking clarity on demand for Paxlovid in China, where the drug is only covered by the country’s extensive health insurance plan until the end of March.

Pfizer said its current 2023 sales forecast does not include any revenue from China after April 1, but Burla said the company plans to offer Paxlovid to the private market after that.

“There is an opportunity for a market in China that could be meaningful” outside of the country’s main insurance channels, said BMO analyst Evan Zygerman.