An exterior view of Pfizer's headquarters building in New York City on January 29, 2023.
Kina Bettencourt | Corbis News | Getty Images
Pfizer It said on Wednesday it has launched a new multi-year cost-cutting program as it works to recover from the rapid decline of its coronavirus-related business.
The announcement comes in addition to another $4 billion cost-cutting effort that Pfizer announced last year as demand for its Covid vaccine and oral drug paxlovid declined.
In a securities filing, the pharmaceutical giant said the first phase of its new program focuses on operational efficiency and is expected to save the company about $1.5 billion by the end of 2027.
One-time costs related to the initial phase of cuts are expected to be approximately $1.7 billion, including severance pay for an unspecified number of laid-off employees. The company expects to record the majority of these fees this year.
Pfizer also expects the program to include “product portfolio improvements” and changes to the company's manufacturing and supply network, a spokesperson told CNBC.
“The program will focus on simplifying the ways we work, reducing complexity and increasing productivity at Pfizer Global Supply,” the spokesperson said in a statement.
“Given the complexity of manufacturing and the longer lead times needed to make changes, this program will be a multi-phase effort,” Pfizer added in its filing.
Pfizer is trying to shore up investor sentiment after its shares fell nearly 50% in 2023, making it the worst-performing pharmaceutical stock in the past year. This stock decline wiped out more than $100 billion from Pfizer's market value.
As demand for its Covid products declined last year, Pfizer also disappointed Wall Street with the underwhelming launch of its new RSV shot, a twice-daily weight loss pill that failed in clinical trials and an initial forecast for 2024 that missed expectations.
But Pfizer pleased investors earlier this month after it reported first-quarter revenue and adjusted earnings that beat expectations and raised its full-year earnings forecast. The pharmaceutical giant said the new earnings guidance explains its “confidence” in its business and ability to cut costs.
“We are cautiously optimistic about the year,” Pfizer CEO Albert Bourla said during a May 1 earnings call.
The company's shares closed up 6% that day. Pfizer stock has risen nearly 14% since then.
