Pfizer's Q2 profit slumps 77% as Covid product sales decline

Revenue dropped by a bigger-than-expected 54% to $12.73bn, from $27.74bn in the same period in 2022

Pfizer, which developed one of the major vaccines for Covid-19, is banking on product launches to boost its bottom line. AP

Pharmaceutical major Pfizer reported a 77 per cent annual drop in its second-quarter profit, as sales of its Covid-19 products declined.

Net income in the three months that ended in June declined to $2.33 billion, from $9.91 billion a year earlier, the New York-based company said in a statement on Tuesday.

Revenue missed estimates, dropping by a bigger-than-expected 54 per cent to $12.73 billion, from $27.74 billion in the same period in 2022.

The company, however, narrowed its 2023 revenue guidance range to $67 billion to $70 billion, while maintaining its outlook for adjusted diluted earnings per share of $3.25 to $3.45.

Pfizer, maker of one of the most-used Covid-19 jabs and an antiviral pill, had braced for a decline in demand for these products as the pandemic wound down.

In May, the World Health Organisation announced that Covid-19 no longer qualifies as a global emergency, marking an end – albeit a symbolic one – to the pandemic.

Pfizer hit a record-breaking $100 billion in revenue in 2022, spurred by earnings from those treatments. Chairman and chief executive Albert Bourla, in the company's first-quarter earnings call, said 2023 would be a “transition year” for Pfizer.

The company is now banking on product launches to boost its bottom line, Mr Bourla said in the statement.

“Pfizer has made significant progress toward our goal to launch 19 new products and indications in an 18-month span, having executed eleven launches thus far. We continue to build momentum in 2023, recently attaining key milestones for several products,” he said.

Pfizer's stock was flat at $36.06 in pre-market trading on the New York Stock Exchange on Tuesday.

The company is also looking forward to expanding its non-Covid portfolio in the second half of 2023, as the Covid environment “continues to evolve rapidly and remains highly unpredictable”, said chief financial officer and executive vice president David Denton.

“Despite a few near-term individual product revenue challenges, we believe the company is well positioned for accelerated growth of our non-Covid products,” he said.

“In spite of this uncertainty, the company is maintaining its focus on ensuring successful fall vaccinations during the respiratory infection season.”

For the first half of 2023, Pfizer's net income declined 56 per cent annually to $7.87 billion, from $17.77 billion in the same period a year ago.

Revenue in the six months that ended in June dropped 42 per cent year-on-year to $31.02 billion, from $53.4 billion in the same quarter in 2022.

Pfizer's global biopharmaceuticals business, which makes up nearly the entirety of its total operations, posted revenue of $12.42 billion, down 54 per cent from $27.43 billion a year earlier.

Its primary care division, consisting of the former internal medicine and vaccines product portfolios, products for Covid-19 prevention and treatment, and potential future mRNA and antiviral products, posted revenue of $5.81 billion, down more than three quarters from $20.98 billion, while revenue in its oncology unit declined 4 per cent year-on-year to $2.96 billion, from $3.09 billion.

Pfizer's specialty care business reported an annual revenue growth of 9 per cent to $3.65 billion, from $3.36 billion a year earlier.

During the second quarter, Pfizer successfully closed a $31 billion debt offering, which is intended for its proposed acquisition of Seagen, a biotechnology company focused on developing cures for cancer. The transaction is expected to be closed in late 2023 or early 2024.

“As we de-lever our capital structure after the close, we expect our strong balance sheet will continue to provide the flexibility for future dividend increases and share repurchases, as well as additional business development activity,” Mr Denton said.

Pfizer said it used its capital “in a variety of ways” in the first half of 2023. These included reinvesting in initiatives intended to enhance the future growth prospects of the company, including $5.2 billion invested in internal research and development projects.

It also returned capital directly to shareholders through $4.6 billion of cash dividends, or $0.82 per share of common stock, the company said.