Yahoo Finance Pfizer reports mixed quarterly results on uncertain COVID outlook
Pfizer (PFE) reported mixed second quarter earnings as uncertainty around COVID remains a headwind for the company and its COVID vaccine and Paxlovid treatment.
Pfizer reported a 53% decline in revenue of $12.7 billion year over year, including the decline in COVID assets. Non-COVID segments saw 5% growth, but that isn't enough for the company to maintain a strong 2023 outlook.
The company reduced the upper end of its guidance by $1 billion, for a new range of $67 billion to $70 billion for 2023, and reduced from 7%-9% growth (non-COVID) to 6%-8%.
Pfizer CEO Albert Bourla acknowledged the uncertainty of waning demand for COVID products but said it wouldn't last.
"We are all almost in agreement that the uncertainty of COVID — which is there and it is real and it is quite significant — will disappear by the end of the year," he told Yahoo Finance in an interview Tuesday.
"Whatever will be the vaccination rates this fall ... and whatever will be the treatment and infection rates for COVID this fall, there is no reason to think that that will not be repeated in the years to come," Bourla added.
"When we come to some certainty of what COVID will be ... even if it is very little, still remains a strong product in our pipeline," Bourla said.
CFO David Denton said he knows analysts have been waiting to see how the company performs outside of the pandemic, which is why it didn't get a boost in recent years despite the COVID windfall.
"Our cost structure and our investment focus will be aligned to the revenue going forward, so that people can get comfort that we have levers to pull financially so that we ... can make sure we deliver financially on our promise to investors," Denton said.
Beyond COVID
Beyond COVID, the company is working on building up its pipeline as it faces patent cliffs for some of its products. That is what drove its acquisition of Seagen (SGEN), which is still in the works awaiting Federal Trade Commission (FTC) clearance. Denton said once that deal closes it should also help with investor confidence.
Pfizer has received six FDA approvals so far this year and expects another half dozen through the rest of the year.
One of those approved is its RSV vaccine for adults ages 60 and older, the demand for which will be tested in the upcoming cold and flu season.
That, in addition to mixed revenue on some of Pfizer's top products, is why JPM analysts called Tuesday's report "mixed."
"Overall, we view today’s update as a mixed one for (Pfizer). On one hand, new product guidance is coming in below expectations for 2023, and (Pfizer) is acknowledging a highly uncertain COVID outlook. On the other, the company appears willing to adjust its cost base to better match its revenue output in the event COVID sales do not live up to expectations," the firm said in a note to clients.
Medicare drug negotiations
Pfizer's focus on its pipeline comes at a time when the industry is awaiting a list of target drugs that Medicare will negotiate prices for as part of its new powers under the Inflation Reduction Act (IRA).
Big pharma firms like Merck (MRK), Johnson & Johnson (JNJ), and Bristol Myers Squibb (BMY) have independently sued the US Health Department, calling the law unconstitutional. They claim the law is an unfair way for the government to set prices. In addition to the companies, the US Chamber of Commerce and lobbying firm PhRMA have also filed separate suits.
Pfizer has not filed on its own but is a member of some of the other organizations. Bourla said he agrees with the other companies that the law is going to hurt innovation — a common refrain among critics.
"They will hurt innovation and they are already having a damaging impact on some of the decisions companies are making," Bourla said. "It's going to kill a lot of small biotech companies," he added.
While Pfizer hasn't filed a suit independently, the option is still on the table.
"We retain all our rights to do what we think is appropriate," Bourla said.
Follow Anjalee Khemlani on Twitter @AnjKhem.
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