After years of falling Covid treatment sales, lukewarm drug launches and a fizzled out weight-loss play, Pfizer is focusing on cost-cutting and reinvesting in new drug research in hopes that it can return to growth in three years.
The Hudson Yards-based pharma giant has boosted an existing cost-cutting initiative by $1.5 billion, aiming to save $7.7 billion by 2027. Pfizer aims to redirect that cash into research and development for diseases such as obesity and cancer, pursuing treatments with blockbuster potential, executives said during a first-quarter earnings presentation on Tuesday.
“We are not going to be a strong topline growth story in the next three years,” Pfizer CEO Albert Bourla said during an earnings call on Tuesday, pointing instead to an expected growth in earnings per share and an “acute focus” on increasing margins. “We expect, even more importantly, that we will be a pipeline story during the next three years.”
The company has contracted considerably since its Covid franchise, including the mRNA vaccine Comirnaty and Paxlovid, sent total revenues to a record-breaking $100 billion in 2022. Pfizer’s market capitalization was $148 billion at the end of 2024, a 43% decrease from its 2021 high of $258 billion. Meanwhile, Eli Lilly’s value has jumped to $779 billion, a 262% increase over the same period, and Merck’s reached $231 billion, a 20% jump.
Pfizer earned $13.7 billion in total revenue during the first quarter, coming in below Wall Street’s expectations of $14 billion due to low sales of the company’s Covid-19 antiviral medication, Paxlovid. Though total revenue was a miss, Pfizer reaffirmed its yearly sales outlook of $61 billion to $64 billion and increased adjusted earnings per share to $3 as it trimmed expenses, according to a statement released by the company.
“Their revenue base is not rapidly growing,” said Evan Seigerman, managing director and senior research analyst at BMO Capital Markets. “Maybe we need a refocus on the pipeline.”
Pfizer has not identified one drug to fill gaps, but is betting on specific disease areas, including cancer and obesity, to reverse sales trends. It has invested in oncology drugs, including by purchasing the cancer biotech Seagen for $43 billion in 2023, but many of the cancer medications in its pipeline are not likely to significantly change its earnings until 2026 and beyond, Chris Schott, managing director at J.P. Morgan, wrote in a research note Tuesday.
The company has also failed to break into the more than $100 billion weight-loss drug market, struggling to keep up with leading anti-obesity drug manufacturers Eli Lilly and Novo Nordisk. Pfizer discontinued its leading weight-loss drug candidate, danuglipron, earlier this month after a patient in its clinical trial developed a liver injury, marking the second time that the company pulled its leading anti-obesity candidate in the past two years.
“I think the question is, what are they doing in obesity,” Seigerman said. “Everyone is anxiously awaiting what that is going to look like.”
Pfizer says it is developing another weight-loss candidate in early-stage clinical trials, but it could also break into the market by acquiring another company, Seigerman said. The drugmaker has $15 billion to spend on acquisitions, though it’s unclear if an anti-obesity biotech is on its radar, he added.
The pressure to strategize on its pipeline comes as Pfizer prepares for new challenges. The company is bracing for a more than $15 billion loss over the next decade as patents for six major drugs expire, and the potential impacts of President Donald Trump’s looming tariffs on pharmaceutical products remain unclear.
Executives have sought out ways to slash expenses so that Pfizer can find its next blockbuster. The company expects to achieve $4.5 billion in savings by the end of this year, cutting costs by investing in technologies such as automation and artificial intelligence that will simplify business operations, Dave Denton, Pfizer’s chief financial officer, said during the earnings presentation.
Research and development will also take a hit. The company is aiming to cut $500 million in R&D from some of the products in its pipeline so it can funnel extra money into drugs with potential to boost sales in the long term, Denton said.
Seigerman said that Pfizer’s struggles to recover from waning Covid sales and identify a new revenue driver in its pipeline points to challenges of a rapidly evolving biopharmaceutical industry.
“When you have such rapid success that you become a household name, it can be very hard to maintain that,” Seigerman said. “Their acquisition spree, coming up with their next pipeline candidate, it just shows how hard good [business development] is.”
