Pfizer's two top products, the Covid-19 vaccine and the antiviral pill Paxlovid, are expected to generate $56 billion in sales this year.
Pfizer's stock has gone from being a star in 2021 to a pharma laggard this year. Much of that has to do with the trajectory of the pandemic.
Like no other large company in the U.S., Pfizer's story has become uniquely tethered to Covid-19. Its two top products, the Covid-19 vaccine and the antiviral pill Paxlovid, are now expected to generate $56 billion in sales this year, Pfizer said Tuesday, raising the outlook for the vaccine by $2 billion. That represents around half of total sales, which the company on Tuesday predicted will come in the $99.5 billion to $102 billion range. The strong performance of its Covid-19 business helped send the shares 3.1% higher on Tuesday.
But Pfizer's reliance on the Covid-19 franchise has become a double-edged sword. Making money from a pandemic, of course, isn't as dependable as profiting from more ordinary areas of medicine such as heart disease and cancer. As hospitalizations and deaths from Covid-19 thankfully decline, demand for booster shots and pills will follow. Pfizer's Covid-19 vaccine sales are expected to drop from more than $32 billion this year to about $10 billion in 2024, analysts surveyed by Visible Alpha predict.
That is putting pressure on the stock. While the shares rose today on the earnings beat, they are down 18.8% this year, far worse than the 2.8% decline in the NYSE Arca Pharmaceutical Index. That is a reversal from last year, when Pfizer was one of the top performers, rising 60% compared with a 20% increase in the pharmaceutical index.
The rest of Pfizer's business is also under pressure. About $17 billion of annual revenue is at risk due to expected patent losses later this decade for key drugs such as blood thinner Eliquis and breast-cancer drug Ibrance. The question many investors now have on their minds is: Can Pfizer's pipeline—as well as the acquisitions that the company is vowing to make—not only make up for the overall decline in sales but also help drive growth?
In an interview Tuesday, Pfizer's Chief Financial Officer David Denton argued that the company is well on its way to doing that, and that investors should have confidence in its pipeline beyond the Covid-19 franchise. The company will launch several products in the next 18 months that are expected to deliver $20 billion in annual sales by 2030, he said. What's more, the company's strengthened balance sheet means it can continue its spree of deals even in a rising interest-rate environment, he said.
"The Covid discussion just took a lot of the oxygen out of the room for about two years and so what we're now trying to tell the investment community, and really to the patients that we serve around the world, is that you should be excited about the future of Pfizer," said Mr. Denton.
Pfizer has pledged to get to $25 billion in risk-adjusted annual revenue through acquisitions by 2030, and Chief Executive Officer Albert Bourla said during a call on Tuesday that the recent acquisitions of Arena, Biohaven , Global Blood Therapeutics and ReViral can get the company one-third of the way there.
That leaves the question of whether Pfizer needs a bigger, transformational deal to deliver on the other two-thirds, something Mr. Denton dismissed, arguing that Pfizer can get there without a "massive megadeal happening."
"You've seen us do deals anywhere from $10 billion or $12 billion down to a billion or two, and I think you're going to see us do a portfolio approach," he added.
While there is no arguing with Pfizer's eagerness to do deals, it does mean that some of these numbers remain aspirational.
Investors could wind up being surprised, though. For starters, there is lots to like in Pfizer's existing pipeline, including a new vaccine for respiratory syncytial virus (RSV) and an emerging migraine franchise. And finally, Covid-19 sales might prove more durable than Wall Street is crediting Pfizer for.
Asked during the call if it is realistic that the Covid-19 franchise could generate sales of $15 billion by 2030, Mr. Bourla left the door open, saying "it's not unreasonable." The idea is that by then Covid vaccines could be taken annually by many, much like flu shots.
The focus on Covid, when it comes to Pfizer, might not be going away anytime soon.