The layoff announcement comes a month after Pfizer lowered its full-year earnings and revenue guidance. Global demand for its Covid-19 vaccines and other products have declined sharply, pressuring the stock. So far this year, PFE stock has decreased 43%, pushing the share price nearly 30% below where it was trading five years ago.
Pfizer Layoffs Next Phase of Cost-Cutting Campaign
Pfizer said that it plans to cut 500 positions at its pharmaceutical research facility located in Kent, England. This is part of a larger cost-cutting campaign aimed at reducing the company’s spending by $3.5 billion. Currently, around 940 people are employed at the facility in Kent, said the company.
Pfizer announced a global “cost realignment program” in mid-October, which comes as sales of the company’s Covid-19 medications drop rapidly. Earlier in November, Pfizer eliminated 100 jobs at its operations in Ireland. Now, the company is cutting hundreds more jobs in England, though the Kent site will remain open.
Covid-19 Medication Sales
The cost-cutting comes as Pfizer adjusts to a sharp decrease in sales of its various Covid-19 medications and treatments. In October, the company said it expects 2023 sales of its Covid-19 products to be between $58 billion and $61 billion. That’s down from previous guidance of $67 billion to $70 billion.
Pfizer added that revenue from its Covid-19 pill Paxlovid will be about $7 billion less than previously expected this year due to the return of unused doses by the U.S. government. Sales of its Covid-19 vaccine, Comirnaty, are expected to be $2 billion less that previously forecast due to declining vaccination rates worldwide.
Also, distribution of Pfizer’s latest Covid-19 booster shot has been hampered by supply and insurance coverage problems. It’s a sharp reversal from last year, when Pfizer reported record full-year revenue of $100 billion due to sales of its Covid-19 treatments. After peaking in December 2021, PFE stock has been cut in half as the company’s Covid-19 sales peaked and have steadily fallen.
More layoffs can be expected from Pfizer in the coming weeks and months as the pharmaceutical company scales back its operations amid ongoing belt-tightening. Clearly, the company needs a plan to replace the success it achieved with its Covid-19 vaccine. While there are media reports that Pfizer plans to develop its own weight loss drug, such a move could take years to execute. In the meantime, PFE stock continues to slump and investors should be careful.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.