Pfizer Inc. (NYSE:PFE) has launched a multi-year cost-cutting initiative aimed at saving approximately $1.5 billion by the end of 2027.
What Happened: The new program builds on a $4 billion cost reduction plan announced last year, Reuters reported on Thursday. This move comes as the company faces declining investor interest and diminishing sales from its COVID-19 vaccine and treatments.
Pfizer's shares rose 2.6% to $29.30 in afternoon trading but remain down about 24% over the past year and nearly half of their peak value from December 2021. The company disclosed the new program in a filing with the Securities and Exchange Commission.
The program will incur one-time charges of $1.7 billion, mainly for severance and implementation costs, with most charges expected this year. Actual cash outlays are anticipated in 2025 and 2026.
Pfizer aims to enhance operational efficiencies, restructure its network, and improve its product portfolio. No job cuts have been announced yet, but further details will be shared in future earnings calls and investor events.
Earlier this month, Pfizer raised its annual earnings forecast and reported a better-than-expected first-quarter profit, partly due to cost reductions. Chief Financial Officer David Denton highlighted the strong cost control across their manufacturing platform.
Why It Matters: Pfizer's cost-cutting measures come at a crucial time for the pharmaceutical giant. Earlier this year, the company surprised analysts with a profit, largely driven by its efforts to revolutionize cancer treatment. Pfizer's focus on innovative cancer therapies could be its best chance to regain investor confidence.
However, Pfizer has been grappling with reduced revenue from its COVID-19 treatments. The company acknowledged the financial headwinds it faces due to declining sales of its COVID-19 products. This has put additional pressure on Pfizer to find new revenue streams and cut costs effectively.
Price Action: On Thursday, Pfizer closed 3.64% higher at $29.60 while it was trading 0.17% lower at $29.55 on Friday's pre-market, according to Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari