COVID-19 drugs not selling well? Pfizer slashes full-year performance guidance, hinting at significant layoffs, with shares falling 10% in after-hours trading.

Pfizer, the American pharmaceutical giant, has slashed its full-year performance guidance significantly due to the lower-than-expected revenue from its oral COVID-19 drug, Paxlovid.

After the US stock market closed on Friday, October 13, Pfizer announced that it now expects its full-year revenue for this year to range from $58 billion to $61 billion, a substantial reduction of $9 billion from the previous guidance range of $67 billion to $70 billion, representing a decrease of approximately 12.9% to 13.4%.

Pfizer also adjusted its estimated earnings per share (EPS) for this year to be in the range of $1.45 to $1.65, a decrease of over 50% from the previous guidance range of $3.25 to $3.45.

While revising its overall performance guidance, Pfizer mainly attributed the significant decrease in projected revenue to the COVID-19 virus-related drugs and the associated increase in costs.

Pfizer stated that it has lowered its revenue expectations for Paxlovid by approximately $7 billion this year. This includes a reduction of $4.2 billion in non-cash revenue from the 7.9 million treatment courses authorized for emergency use by the US government, as well as a decrease in revenue resulting from the delay in commercialization until January next year.

Due to lower-than-expected vaccination rates, Pfizer has also lowered its full-year revenue expectations for its COVID-19 vaccine, Comirnaty, by approximately $2 billion.

Pfizer further mentioned that the utilization rate of COVID-19-related products was lower than expected, resulting in $5.5 billion in non-cash expenses recorded in the sales costs for the third quarter of this year. This was primarily due to inventory write-offs of $4.6 billion for Paxlovid and inventory write-offs and other expenses totaling $900 million for Comirnaty.

At the same time, Pfizer announced the initiation of a company-wide "cost adjustment plan" to realign costs based on long-term revenue expectations. It aims to achieve savings of at least $3.5 billion, with $1 billion targeted for this year and $2.5 billion for next year.

Pfizer hinted that a significant measure to save costs would be a large-scale workforce reduction. It stated that the implementation of the new cost plan is expected to generate one-time costs of approximately $3 billion, mainly including severance pay and related implementation costs.

Pfizer mentioned that it will continue to refine its goals for saving funds and related costs for the remaining time this year, and will incorporate these goals into the guidance for the full year of next year.

After announcing the significant reduction in performance guidance and hinting at large-scale layoffs, Pfizer's stock price fell by approximately 2.5% on Friday, temporarily dropping below $30, reaching its lowest level since December 2014. The post-market decline reached 10% at one point but narrowed to within 4% afterwards.