Pfizer (PFE): A look at the headwinds and tailwinds this pharma giant faces in the near term

Shares of Pfizer Inc. (NYSE: PFE) were down on Monday. The stock has dropped 15% year-to-date and there is a mixed sentiment surrounding the company’s growth prospects. Pfizer has benefited significantly from its COVID-19 products. While there are concerns over the longevity of these COVID-related gains and the performance of its non-COVID portfolio, there is also a general sense of optimism that the company will be just fine given its profits and pipeline. Here’s a look at the headwinds and tailwinds this pharma giant faces:

Tailwinds

Pfizer has seen strong performances from its COVID-19 products and they made up the majority of its revenues in its most recent quarter. Comirnaty, its COVID-19 vaccine, generated $8.8 billion in sales for the second quarter of 2022, reflecting a year-over-year growth of 20%, while Paxlovid, its oral COVID-19 treatment, generated $8.1 billion in sales. The contributions from these products helped drive a 47% YoY growth in total revenue to $27.7 billion.

The threat of COVID is anticipated to continue in the near term as infections rise and new variants emerge. In this situation, there will be a demand for booster vaccines which in turn could boost Pfizer’s revenue. For FY2022, Pfizer expects Comirnaty to generate revenues of approx. $32 billion and Paxlovid to yield revenues of approx. $22 billion.

Although its COVID-19 products form a large part of its revenue, Pfizer is not entirely dependent on them. The company has a large portfolio of products that help drive meaningful revenues outside the COVID-19 space. During the second quarter, Pfizer witnessed double-digit growth in products like the Prevnar family, Eliquis and Vyndaqel/Vyndamax.

The company also has a robust pipeline of products in development for various indications including multiple myeloma and ulcerative colitis. Once approved, these will generate additional revenue and drive further growth.

Pfizer is also expanding its portfolio through acquisitions. In May, the company announced the acquisition of Biohaven Pharmaceuticals, which will bring Biohaven’s migraine treatments under the Pfizer umbrella. Pfizer has also announced plans to acquire Global Blood Therapeutics, which will expand its presence in rare hematology and give it access to the latter’s portfolio and pipeline in sickle cell disease, which has the potential to generate worldwide peak sales of more than $3 billion.

Headwinds  

The fact that a significant portion of Pfizer’s revenue came from its COVID-19 products has raised concerns over the company’s top line growth once the pandemic subsides and demand for this particular category dips. Pfizer’s revenue, excluding Comirnaty and Paxlovid, increased only 1% in Q2. The company has also seen double-digit sales declines for some of its products like Xeljanz and Sutent due to price declines and loss of exclusivity. These factors have raised concerns over the company’s growth prospects over the long term.

Click here to read the full transcript of Pfizer’s Q2 2022 earnings conference call