The exterior of Pfizer’s headquarters building in New York City on January 29, 2023.
Kenna Betancourt | Corbis News | Getty Images
Pfizer The company said Wednesday it has launched a new multi-year plan to cut costs as it seeks to recover from a steep decline in business caused by the coronavirus.
The announcement is in addition to $4 billion in cost-cutting measures Pfizer announced last year in response to falling demand for its COVID-19 vaccine and oral drug Paxlovid.
The pharmaceutical giant said in a securities filing that the first phase of the new program will focus on operational efficiencies and is expected to generate savings of about $1.5 billion by the end of 2027.
One-time charges related to the initial phase of workforce reductions, including severance costs for an unspecified number of employees who are terminated, are expected to be approximately $1.7 billion. The company expects to record the majority of these charges this year.
A Pfizer spokesperson told CNBC the company expects the program will also include “enhancing its product portfolio” and changes to the company’s manufacturing and supply network.
“The program is focused on driving operational efficiency, reducing complexity and improving productivity at Pfizer Global Supply,” a spokesperson said in a statement.
“Given the complexities of manufacturing and the long lead times required for modifications, the program will be a multi-phase effort,” Pfizer added in the filing.
Pfizer is trying to shore up investor sentiment after its share price tumbled nearly 50% in 2023, making it the worst-performing pharmaceutical stock last year. That share price decline has wiped more than $100 billion off Pfizer’s market capitalization.
Last year, as demand for coronavirus-related products plummeted, Pfizer disappointed Wall Street with a disappointing launch of a new respiratory syncytial virus vaccine, a twice-daily weight-loss drug that performed poorly in clinical trials and an initial 2024 forecast that fell short of expectations.
But Pfizer pleased investors earlier this month when it reported first-quarter sales and adjusted earnings that beat expectations and raised its full-year profit outlook. The pharmaceutical giant said the new profit guidance reflected its “confidence” in its business and its ability to cut costs.
“We are cautiously optimistic about this year,” Pfizer CEO Albert Bourla said during the company’s earnings call on May 1.
The company’s shares closed up 6% that day. Since then, Pfizer shares have risen nearly 14%.
