On Wednesday, Pfizer announced the start of a new, multi-year cost-cutting initiative as it attempts to recover from the sharp fall in its Covid business. (Photo : by Mario Tama/Getty Images)
Pfizer has launched a new multi-year cost-cutting initiative focused on operational savings, aiming to save around $1.5 billion by the end of 2027.
The first phase includes $1.7 billion in one-time expenses, primarily due to severance pay for layoffs, with most costs expected to be recorded this year.
The initiative will also involve changes to Pfizer's supply chain, production processes, and product portfolio enhancements, with a multi-phased approach due to the complexity of manufacturing and longer lead times.
On Wednesday, Pfizer announced the start of a new, multi-year cost-cutting initiative as it attempts to recover from the sharp fall in its Covid business.
The news follows another $4 billion cost-cutting initiative made by Pfizer last year after sales of its oral medication Paxlovid and Covid vaccination fell down.
The pharmaceutical behemoth stated in a securities filing that the first stage of its new initiative is centered on operational savings and is anticipated to save the business around $1.5 billion by the end of 2027.
An estimated $1.7 billion in one-time expenses are associated with the first round of layoffs, which includes severance pay for an undisclosed number of laid-off workers. The bulk of such costs are anticipated to be recorded by the corporation this year.
Pfizer anticipates that the program will also entail modifications to the company's supply chain and production processes, as well as "product portfolio enhancements."
"This program will be a multi-phased effort," Pfizer continued in the filing, "given the complexity in manufacturing and longer lead times required to make changes."
Pfizer's Strategy to Rebuild Investor Confidence After a Challenging Year
Pfizer is attempting to improve investor confidence following an almost 50% decline in its shares in 2023, which rendered it the underperforming pharmaceutical company in the previous year. Pfizer's market worth was wiped by almost $100 billion as a result of that share decrease.
In addition to disappointing Wall Street with the lackluster introduction of a new RSV vaccine, a twice-daily weight loss pill that failed clinical testing, and an early 2024 estimate that fell short of expectations, Pfizer also caused a decline in demand for Covid products last year.
However, Pfizer gave investors reason to celebrate earlier this month when it revealed first-quarter revenue and adjusted profit that above forecasts and raised its guidance for full-year profitability. The massive pharmaceutical company claimed that its revised profit projections reflect its "confidence" in its industry and its capacity for cost reduction.
Despite the immediate financial impact of layoffs, the long-term strategy reflects Pfizer's commitment to efficiency and profitability. By improving its financial outlook and demonstrating resilience, Pfizer is positioning itself to bounce back and drive future growth.
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