Pfizer growth set to stall with Covid-19 product sales outlook unchanged

Pfizer kept its outlook for annual sales of its Covid-19 vaccine and treatment, disappointing investors who looked for the products to continue driving growth.

Through mid-April, Pfizer said it has clinched $32 billion in 2022 contracts for the shot, Comirnaty, and $22 billion for its Covid pill, Paxlovid, the same figures it released three months ago. Wall Street analysts had estimated about $34 billion in annual sales from Comirnaty, which the company makes in partnership with BioNTech SE, and $27 billion in Paxlovid sales.

The shares fluctuated early Tuesday and were little changed at 9:35 a.m. in New York. Through Monday’s close, they had plummeted 18% since the start of the year, underperforming the broader sector. American depository receipts of BioNTech, which splits Comirnaty profit with Pfizer, rose 1.2%. Rival vaccine-maker Moderna Inc. fell 0.3%. 

The New York-based drugmaker also left untouched its forecast for overall full-year revenue of $98 billion to $102 billion. Though investors are hoping that the market for Covid-fighting products will continue to expand, Pfizer’s shot and pill already account for more than half that forecast, as well as more than half its quarterly revenue. 

Pfizer generated $25.7 billion in first-quarter sales, $13.2 billion of which came from Comirnaty, beating Wall Street’s $10.6 billion estimate. More than 80% of the shot’s sales came from outside the U.S. 

While Pfizer has dominated the global market for coronavirus vaccines, concern remains that demand is tapering off due to excess supply. Last month, Johnson & Johnson suspended its own Covid vaccine forecast, citing a global surplus in shots. 

Paxlovid sold $1.5 billion in the quarter, missing analysts’ $2.4 billion estimate, with the vast majority of revenue coming from the U.S. Pfizer said it has produced 8 million courses of Paxlovid to date and shipped all of the supply of the treatment.

Growth prospects

Management will likely face questions on the conference call about its unchanged guidance for sales of the Covid products, which investors have been expecting to spur additional growth. The forecast could “signal a slowing of any sort of Covid-19 benefit,” leaving investors feeling “cautious,” BMO Capital Markets analyst Evan David Seigerman said in a note.

Pfizer leadership will aim to address those anxieties during the investor call, noting that they’re seeking to further expand the market for Comirnaty and Paxlovid in certain populations. Pfizer said it plans to launch a new study of the drug in patients with compromised immune systems in the second half of 2022. These patients have a more difficult time clearing infections, and the study will look to optimize treatment duration. 

The drugmaker also said it expects to submit data to U.S. regulators from a study of its Covid vaccine in children 6 months through 4 years old by late May or early June. The trial has faced significant delays as Pfizer decided to evaluate a three-dose regimen instead of the typical two-dose regimen after the omicron variant impacted its potency. 

Pfizer said it anticipates advisory committees from the Food and Drug Administration and the Centers for Disease Control and Prevention to meet soon after it submits the data to consider the application. 

“Overall, we expect the recent trends to expand access, as well as inquiries received from governments as the virus mutates and causes spikes in infections around the world, to result in increased orders in the coming months,” Chief Executive Officer Albert Bourla said in prepared remarks.

Pfizer still sees durable Covid-19 revenues propelling growth from 2025 to 2030, according to slides released in advance of the first-quarter earnings call. 

Accounting shift

Excluding Covid-fighting products, Pfizer’s first-quarter pharmaceutical revenues grew 2% from a year ago to about $11 billion. 

First-quarter profit was $1.62 a share, beating analysts’ average expectation of $1.55. At the request of U.S. Securities and Exchange Commission, Pfizer has changed its accounting for adjusted income. The company now includes in the figure expenses related to milestone payments on partnerships and in-license agreements. Based on the same accounting change, Pfizer lowered its forecast range for adjusted 2022 earnings by 10 cents to $6.25 to $6.45 a share.