Exterior view of Pfizer’s headquarters building on January 29, 2023 in New York City.
Kenna Betancourt | Corbis News | Getty Images
Pfizer said Wednesday it has launched a new multiyear program to cut costs as it seeks to recover from a steep decline in business caused by the coronavirus.
The announcement is in addition to a $4 billion cost-cutting package Pfizer announced last year after demand for its coronavirus vaccine and oral drug paxlobid fell.
The pharmaceutical giant said in a securities filing that the first phase of the new program will focus on operational efficiency and is expected to generate approximately $1.5 billion in savings by the end of 2027.
One-time costs related to the initial round of layoffs are expected to be approximately $1.7 billion, including severance payments for an unspecified number of laid-off employees. The company expects to record the majority of these costs this year.
Pfizer also expects the program to include “changes to its network structure” and “enhancements to its product portfolio.”
“Given the complexity of manufacturing and the length of lead time required for changes, this program will be a multi-phase effort,” Pfizer said in the filing.
Pfizer is trying to shore up investor sentiment after its stock fell nearly 50% in 2023 and was the worst performing drug stock last year. The drop in stock prices wiped out more than $100 billion in Pfizer’s market value.
Last year, as demand for its COVID-19 products plummeted, Pfizer also struggled with the underwhelming launch of its new RSV vaccine, a twice-daily weight-loss drug that underperformed in clinical trials and a lower-than-expected initial launch in 2024. The forecast disappointed Wall Street.
But Pfizer delighted investors earlier this month when it announced first-quarter sales and adjusted earnings that beat expectations and raised its full-year profit outlook. The pharmaceutical giant said its new profit outlook reflects its “confidence” in its business and its ability to reduce costs.
“We are cautiously optimistic about this year,” Pfizer CEO Albert Bourla said on a May 1 earnings call.
The company’s stock closed the day up 6%. Since then, Pfizer’s stock price has increased nearly 14%.
