Pfizer Inc. slashed its revenue and earnings forecasts for the year after agreeing to take Paxlovid doses back from the US government amid waning demand.
The shares fell about 2.9% in trading after US markets closed. They lost about 37% this year through Friday’s close.
The drugmaker has been struggling to manage the rapid declines of its Covid business and government inventory was preventing the company from making more off its Covid pill by selling it through the private US health-care system. Pfizer said the government will return around 7.9 million courses of Paxlovid at the end of 2023 in return for a credit for future courses of the drug. The move allows Pfizer to begin selling Paxlovid to private buyers at a price that analysts expect will be higher than the government paid.
For the full year, Pfizer now sees 2023 revenue of $58 billion to $61 billion, down from a previous estimate of $67 billion to $70 billion. The drugmaker said adjusted earnings are expected to be between $1.45 a share and $1.65 a share. The company had forecast earnings of $3.25 a share to $3.45 a share.
Read More: All About Paxlovid and Other Covid-19 Treatments
The company also initiated a $3.5 billion cost-cutting program.
Hailed as a life-saver when it was first authorized, Paxlovid remains the first and most effective choice for treatment of Covid. The drug could fetch up to $700 in the retail market, according to Morningstar analyst Damien Conover. Pfizer charged the government $530 per course of the drug.
When the US Covid health emergency ended in May, the government stopped buying most drugs and vaccines for the public, although it continued getting some supplies for people who meet certain qualifications. Pfizer’s Covid boosters have a list price of about $120 on the private market, four times as much as it charged the government.
Chief Executive Officer Albert Bourla said late last month that there was uncertainty about when Pfizer would be able to sell into the traditional private health-care system in the US, and said he was discussing the issue with government officials.
Read More: Pfizer Cuts Sales View as Covid Pill, Other Key Drugs Slump
“The burn down of inventory will be necessary before we launch in the marketplace globally,” Pfizer’s Chief Financial officer Dave Denton said last month. “That has the effect of essentially dampening 2023 revenue performance.”
The company recorded no US revenue for the drug in the second quarter. The company said Friday that it had recorded a $5.5 billion non-cash charge in the third quarter, primarily for Covid inventory write-offs due to lower demand.
Paxlovid is mainly used in older and high-risk individuals and must be given soon after a positive test. It’s far outsold Lagevrio from rival Merck & Co. Other choices like antibody therapies have lost effectiveness as new, resistant forms of the virus have evolved.
The US said it restructured its deal with Pfizer to ensure that its supply, which will be free to Medicare and Medicaid beneficiaries and the uninsured through 2024, is the latest formulation and not expired.
In addition, the US said it’s creating a stockpile for preparedness in the face of future Covid surges.
(Updates starting starting in second paragraph.)