Pfizer Layoffs Confirmed As Vaccine Manufacturer Drives For Cost Savings

Key takeaways

• Pfizer is laying off an undisclosed amount of employees after confirming it’s shutting down its New Jersey facility
• Two other facilities are closing in North Carolina, with other layoffs in Illinois and Colorado
• Pfizer’s share price was flat as the company reported a narrower-than-expected loss for the third quarter

Pfizer has confirmed it’s laying off more staff as the company struggles to reckon with poor Covid sales after the world moved on. Staff from its New Jersey facility will be either relocated or have their employment terminated, with no news yet on the full headcount affected.

The pharmaceutical giant’s third-quarter results reflected a poor showing for Covid vaccine sales, with Pfizer’s share price ending Tuesday trading flat. But Pfizer has a few tricks up its sleeve that Wall Street is paying attention to for next year.

Here’s the latest on the Pfizer layoffs, the company’s financial situation and what the stock market reaction looked like.

What’s happening with Pfizer layoffs?

Pfizer has confirmed it will be downsizing its operations in New Jersey, and layoffs will happen as a result. Pfizer’s Peapack, New Jersey facility will be shut down in early 2024, with the job losses expected to come into effect in February 2024.

It was initially reported that the company would be laying off 800 workers, but Pfizer has confirmed it doesn’t have final figures yet on how many jobs will be axed. A company spokesperson said the “vast majority” of workers will be reassigned to Pfizer’s New York office instead and that the Peapack facility’s closure was first communicated in 2021.

Pfizer had already conducted layoffs at its Illinois base over the summer, where around 70 employees were fired. Early October also saw an undisclosed number of layoffs at the company’s Colorado location. Two further facilities will be closing in North Carolina, according to recent reports.

Pfizer’s latest financial results

The warning signs were on the horizon as Pfizer reported its third-quarter earnings expectations in October. The Covid vaccine producer slashed its full-year forecast by 13%, saying it now anticipates revenue of between $58 billion and $61 billion, down from its previous forecast of between $67 billion and $70 billion.

Pfizer also said it would take a non-cash charge of $5.5 billion in the third quarter to write of $4.6 billion worth of the antiviral treatment Paxlovid and $900 million in miscellaneous inventory write-offs. The only bright spot in the report was that Pfizer expected to see its non-Covid products reach 6% to 8% revenue growth year-over-year in 2023.

As a result, the company confirmed it was looking to make $3.5 billion in cost savings by the end of 2024. Pfizer plans to make $1 billion of the savings by the end of 2023.

“We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control,” Pfizer CEO Albert Boura said in a press statement, confirming the company needed “additional clarity around vaccination and treatment rates for COVID”.

Pfizer’s share price fell around 7% at the time.

Pfizer’s quarterly loss

Not much has changed in Pfizer’s financial situation since the preliminary Q3 earnings were announced two weeks ago. On Tuesday this week, Pfizer reported a narrower-than-expected loss for Q3, with a loss per share of 17 cents versus the 34 cents anticipated by analysts.

Pfizer’s sales underwhelmed for the third quarter, with revenue arriving at $13.23 billion for the quarter compared to the $13.34 billion expected. It’s a 42% drop from the same time last year when Covid vaccine sales were still booming.

Speaking of which, Pfizer’s Covid vaccine reported $1.31 billion in sales, a 70% decline from the year before. Wall Street had expected $1.53 in revenue. Paxlovid suffered an even sharper drop, with revenue of just $202 million – 97% down from last year.

This resulted in a net loss of $2.38 billion for Pfizer, or 42 cents a share, as the company reiterated the guidance it set out a few weeks ago.

What was the market reaction?

Pfizer’s stock closed flat on Tuesday, with the share price languishing this year so far: it’s suffered a 40% drop in 2023.

Its competitors that produced rival Covid vaccines have also seen their stocks plunge as demand for vaccines dropped: Moderna has plunged 57.5% this year, while AstraZeneca has declined 8.8%.

It’s clear there’s an adjustment period for Big Pharma and Wall Street – though there were some promising non-Covid results in Pfizer’s latest financial results. Excluding Covid products, revenue grew 10% for the quarter operationally.

The company’s new respiratory drug, Abrysvo, performed better than expected and posted $375 million in sales for the quarter. Pfizer’s heart disease drug Vyndaqel recorded $892 million in sales, a 48% increase from the Q3 quarter last year.

There’s a lot in the pipeline for the pharmaceutical, too. Pfizer anticipates closing its $43 billion acquisition of cancer therapy producer Seagen in either late 2023 or early 2024, while its oral obesity pill is in the midstage trials and could rival Novo Nordisk’s and Eli Lilly’s domination in the space.

The bottom line

It’s easy to look at Pfizer’s layoffs and dismal sales, and write the company off. But the reality is that the entire industry is going through a reset as the world adjusts to living with Covid.

Pfizer might have seen its stock plunge this year, but it has a promising pipeline ahead that investors can cling to when the going gets tough. In a couple of years, the share price of this year will most likely just be a bad dream.