The once popular Pfizer COVID-19 medicine has gone unnoticed.
Recently, Pfizer announced that its oral drug Paxlovid, an anti COVID-19 drug, will be converted to self funded mode. Meanwhile, the price of COVID-19 vaccine Comirnaty will also rise by 500%. Behind the price increase and sluggish sales, Pfizer recently announced a global layoff plan. The reporter contacted Pfizer China for confirmation, but the other party politely declined the interview.
Jiang Han, a senior researcher at Pangu Think Tank, stated in an interview with a reporter from China Times that from the perspective of the industry lifecycle, the explosive stage of rapid growth in the entire vaccine industry will come to an end. As the industry matures, all participants in the market will gradually enter a relatively flat stage, which is the trend of the times.
In this context, some conventional vaccines will inevitably undergo a process of market return, and almost all listed companies in the vaccine industry will face similar problems to some extent. This is a common problem in the industry and a development trend that must be borne, "he said.
Price increase
On October 19, Pfizer announced that Paxlovid, an anti COVID-19 drug, would be purchased by the government instead of at its own expense. The five-day treatment was priced at US $1390, which is more than three times the current government purchase price. The drug will begin to be sold in the commercial market at the end of this year.
The price of COVID-19 is not only increased. On October 22, the Associated Press reported that the price of Pfizer COVID-19 vaccine Comirnaty in the United States recently was $120 to $130, an increase of nearly 500% compared with the previous price.
Behind the price increase, stagnant sales are also an undeniable fact. On October 13, Pfizer issued the announcement of Pfizer's Revision of the U.S. Government's Paxlovid Supply Agreement and Update of 2023's Performance Guidelines, stating that since COVID-19 Paxlovid has changed from emergency supply by the government to commercial market supply, the U.S. government will return about 7.9 million Paxlovid courses marked with Emergency Use Authorization (EUA) by the end of 2023, and accept credit for future drug courses marked with New Drug Application (NDA).
The revised agreement also mentioned that the credit will support the patient assistance program by providing Paxlovid free of charge to federal government insured patients by 2024, and Paxlovid free of charge to uninsured/underinsured patients by 2028. Pfizer will recognize revenue upon product delivery. In addition, Pfizer will provide 1 million treatment courses to the US government for national strategic reserves.
Dr. Albert Bourla, Chairman and CEO of Pfizer, stated that this strategic adjustment will not only improve the accessibility of Paxlovid products to patients, but also help companies gain a clearer understanding of the market during the current commercial transition phase, and timely eliminate uncertainty regarding future business expectations. With further understanding of COVID vaccination rates and treatment needs, Pfizer will continue to evaluate and adapt to current supply levels to meet public health needs.
Performance decline
There is no doubt that the unsalable COVID-19 Pharmaceutical has delayed Pfizer's performance.
On October 13th, Pfizer announced plans to cut billions of dollars in expenses and lay off employees to meet the declining demand for its COVID-19 drug Paxlovid and vaccine Comirnaty. The company has also significantly lowered its revenue forecast for this year: adjusted to $58-61 billion, a decrease of $9 billion compared to the previously released forecast. Specifically, Paxlovid's sales this year will be $7 billion lower than previously predicted. In addition, because the vaccination rate is lower than expected, Pfizer will reduce the annual expected revenue of COVID-19 Vaccine Comirnaty by about $2 billion.
In fact, the decline of Pfizer COVID-19's product performance has long been predicted. On August 1st of this year, Pfizer announced its second quarter financial report, with revenue of $12.7 billion, a year-on-year decrease of 54%; If COVID-19 products are excluded, the year-on-year growth rate will be 5%. At this time, COVID-19 oral Paxlovid was no longer on Pfizer's best-selling drug list.
When announcing its second quarter report, Pfizer lowered its annual revenue guidance from $67 billion to $71 billion to $67 billion to $70 billion. At that time, Pfizer's downward adjustment was due to certain short-term unfavorable factors, including the impact of the US tornado on pharmaceutical factories in July this year.
It is worth mentioning that along with the performance guidelines, there is also a multi-year, company wide cost adjustment plan. The announcement states that the plan is expected to achieve a savings target of at least $3.5 billion, of which $1 billion is expected to be achieved in 2023 and an additional $2.5 billion is expected to be achieved in 2024. The one-time cost of implementing the above plan is expected to be approximately $3 billion, with the majority expected to be in cash, which will mainly include severance and execution expenses. The 'severance pay' here is also considered or related to layoffs. Pfizer stated that it will continue to improve its expected target savings and related costs for the remainder of this year and include them in its guidance for the entire year of 2024.
The company spokesperson subsequently confirmed that the plan involved layoffs, but did not disclose further details.
On October 25, it was reported that a suspected internal letter from Pfizer China pointed out that although COVID-19 vaccine accounted for a large proportion of Pfizer's global revenue, we did not commercialize Pfizer COVID-19 vaccine in China, so it had little impact on our business in China. As of now, our business has achieved double-digit growth compared to last year and exceeded our budget, indicating that the situation in China is different from that in other regions of the world. Therefore, cost reduction in China will be minimal.
Our reporter confirmed the news to Pfizer, but as of press release, the other party has not replied.
In fact, as early as September this year, Pfizer China had already made some adjustments: the organizational structure of Pfizer China's Vaccine Division, Hospital Emergency Division, and other departments had been adjusted, and Pfizer's global oncology department had been restructured into an independent business unit.
Specifically, Pfizer's China Vaccine Division has established North China, South China, and market platforms, respectively led by Hao Yikai, Shi Yinli, and Jin Xinqing. Among them, Hao Yikai will be fully responsible for the sales management of vaccines in 20 provinces and municipalities in the northern region of China. Shi Yinli is fully responsible for the sales management of vaccines in 9 provinces and municipalities in the southern region of China. Jin Xinqing will be responsible for building an innovation market platform, creating a vaccine ecosystem, promoting innovative market models, and improving business efficiency.
However, although COVID-19's business is expected to decline significantly, Pfizer still believes that the performance will continue to be good. The announcement points out that the company's non COVID-19 product revenue is still expected to achieve 6% -8% growth in 2023.
Obviously, as the epidemic enters the long tail stage, whether it is necessary to withdraw from the COVID-19 related tracks will become a new topic for Pfizer.