Pfizer won plaudits from scientists and investors during the pandemic by developing highly effective Covid-19 vaccines and treatments that saved millions of lives and generated record sales.
But as the Covid emergency recedes, the US drugmaker is struggling to convince Wall Street that it can manage a transition that it forecasts will slash annual revenues by almost a third to about $70bn this year.
Pfizer expects sales of Comirnaty, the Covid vaccine it developed with German company BioNTech, and its antiviral pill Paxlovid, to fall 62 per cent to $21.5bn in 2023, compared to last year.
It also faces a patent “cliff” — the loss of market exclusivity for several blockbuster drugs, including cancer medicines Xtandi and Ibrance. This is expected to blow an additional $17bn hole in annual revenues by 2030.
![Six drugs facing the patent cliff this decade. Bar chart showing worldwide revenues ($bn) of 6 drugs that will lose their US exclusivity within 4 years](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F4d09e650-aeed-11ed-b49f-3b9fc0d62665-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700)
These challenges have made investors question whether the 174-year-old company can plug the revenue gap, even as it launches a record 19 drugs over the next 18 months in search of growth.
Pfizer shares have slid nearly 16 per cent to $43.21 since the start of the year and the company’s market capitalisation of $243bn has fallen by more than a quarter since it peaked in December 2021 during the height of the pandemic.
![A man walks pass a sign for the Sinovac vaccine in Hong Kong](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F6c75a1ce-3805-4ce8-ac71-285be3d668fd.jpg?dpr=1&fit=scale-down&quality=highest&source=next&width=700)
“The market remains nonplussed with Pfizer’s post-Covid story and limited business development in 2022,” said Evan Seigerman, analyst at BMO Capital Markets.
“Investors are looking for a transformative deal and simplified pipeline story — this is possible in the second half of 2023, but uncertain today.”
Seigerman said Pfizer’s expectations that Covid sales will rebound in 2024 — after US government stockpiles are exhausted and the market moves to a commercial footing allowing it to raise prices — may also be unrealistic.
At Pfizer’s glitzy new headquarters in New York, which is based in a 66-floor skyscraper called The Spiral on the banks of the Hudson River, no such doubts are evident. Last month the Pfizer team outlined a growth strategy centred on product launches, M&A and a rebound in Covid sales it predicted could last until the end of the decade.
Dave Denton, who joined Pfizer as chief financial officer in April from US retailer Lowe’s, told The Financial Times he is confident the company can manage the transition.
“What’s unique about Pfizer is no one’s really gone from a pandemic into kind of a stable, I’ll say, post-crisis stage of a pandemic. And with that, people don’t understand exactly what that means,” he said.
![How the Covid-19 pandemic shaped Pfizer’s share price. Chart showing Pfizer's share price since 2019. After a surge from around $30 when the pandemic struck to a peak of $60 at the beinning of 2022. Shares have pulled back to around $40, the level they were at the beginning of 2019](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd6c748xw2pzm8.cloudfront.net%2Fprod%2F5fd7cea0-b11d-11ed-9b05-216fe4fb755d-standard.png?dpr=1&fit=scale-down&quality=highest&source=next&width=700)
“Investors haven’t really spent a lot of time understanding the breadth of our pipeline and our capabilities in research and development . . . now we’re beginning to showcase that over the next 18 months.”
In the past, the group has relied on mega mergers such as its $68bn purchase of Wyeth in 2009 to drive growth. But the White House’s tough approach on antitrust makes large deals much riskier. Instead, since becoming chief executive in 2019, Albert Bourla, has sought to transform the company from a diversified pharmaceutical conglomerate into a nimbler, science-led business.
![A person holds packets of the antiviral drug Paxlovid](https://www.ft.com/__origami/service/image/v2/images/raw/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2Fd4b75868-3d13-4248-a05c-e839602acb1e.jpg?dpr=1&fit=scale-down&quality=highest&source=next&width=700)
The 19 drugs that are due to come to market this year and next are a mix of candidates developed by Pfizer scientists and external prospects acquired through bolt-on acquisitions or co-developed via partnerships with smaller biotechs.
They include several potential blockbusters capable of generating $1bn or more in annual sales, including treatments for respiratory disease RSV, migraine and blood cancer.
“Elranatamab could potentially become a mega blockbuster,” said Chris Boshoff, chief development officer of Pfizer’s oncology and rare disease unit, referring to a drug candidate targeting multiple myeloma, a type of incurable blood cancer.
He said Pfizer had made great progress in oncology over the past decade, building what was a pipeline of only two or three molecules into one of the largest therapeutic areas in the group. A new combination therapy targeting an aggressive form of prostate cancer is another drug with big potential and could be approved this year, said Boshoff.
Pfizer’s expertise in mRNA — the core technology used in the Covid vaccine — also provides opportunities, he added.
But in the short term, Pfizer is reliant on its existing pipeline. It forecasts the 19 drug launches will generate about $20bn in annual revenues by 2030, enough to cover the hit to sales caused by the loss of exclusivity on six blockbuster drugs between 2024 and 2027.
Not everyone is convinced the pipeline will deliver, though.
“We just struggle to align with Pfizer’s expectations. In very few categories are [the 19 drugs] either first in class or best in class. And that’s a problem,” said Colin Bristow, analyst at UBS, which downgraded Pfizer to a sell rating last month.
He singles out two of Pfizer’s best prospects — the drug targeting RSV and an oral treatment for diabetes and obesity. The company forecasts the second of these could generate $10bn a year in sales.
These drugs face competition from the likes of GSK, Moderna and Eli Lilly and there is no evidence Pfizer has a particular edge, he said. “It’s a similar story across the board,” he added.
Being first to market or best in class does not always guarantee success. Pfizer’s expertise in manufacturing, sales and marketing helped to make cholesterol-lowering Lipitor the best-selling drug in the world in the early 2000s, even though it was late to market.
It repeated this success with its Covid treatments and could do so again with its new drugs, said Louise Chen, analyst at Cantor Fitzgerald.
“That [manufacturing] expertise will be important, especially with diabetes, which is more of a primary care market,” said Chen, adding that rivals Lilly and Novo Nordisk have experienced supply issues because of surging demand.
Pfizer also has plenty of options to replenish its pipeline through M&A due to cash reserves amassed from sales of its Covid vaccines and drugs, she said.
The US drugmaker has spent almost $30bn on acquisitions over the past two years, snapping up Arena Pharmaceuticals, Biohaven Pharmaceuticals, Global Blood Therapeutics, ReViral and Trillium Therapeutics. It forecasts these deals should generate about $10bn a year in annual revenues by 2030.
Most analysts have praised Pfizer’s selection of acquisitions but some say it is moving too slowly on M&A, given that it still needs to buy companies capable of generating an extra $15bn in annual revenues by 2030 to meet its growth targets.
“Pfizer has a lot of capacity to act, we estimate above $100bn. But they only did a couple of deals last year. That is not enough to move the needle,” said Seigerman.
Finding and assessing prospects in the pharma market takes time, according to Denton, an experienced dealmaker who when working as chief financial officer at pharmacy giant CVS in 2018 oversaw its $68bn acquisition of Aetna.
“We are not investing with a focus of driving synergies. We are investing with the focus of acquiring science that allows us to accelerate the development of medicines,” said Denton.
He said the company could spend an extra $50bn to achieve the revenue goals it has set for 2030.
Les Funtleyder, a healthcare portfolio manager at E Squared Capital Management, said he expected Pfizer would make a series of acquisitions this year. These would likely focus on companies that are typically $10bn or below with products close to being commercialised, he said.
“Pfizer is very good at selling but historically not renowned as having the R&D engine of a Merck or Lilly. And it takes time to change the culture,” said Funtleyder, whose fund owns shares in Merck and Lilly but not Pfizer.
“But they have a big portfolio of drugs and it just takes one of them, one wildly successful drug to become a mega blockbuster. And if they get that then everyone will say Bourla is a genius.”
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