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Pfizer's (PFE) New Products May Drive Long-Term Sales Growth

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Pfizer’s (PFE - Free Report) top line has been declining in 2023 due to a steep drop in revenues from its COVID-19 products, the Comirnaty vaccine and Paxlovid oral pill, on lower demand due to the end of the pandemic.

Pfizer records direct sales and alliance revenues from its partner, BioNTech (BNTX - Free Report) , for Comirnaty and product revenues from Paxlovid.

On Oct 13, Pfizer slashed its revenue guidance for 2023 due to lower-than-expected demand for Comirnaty and Paxlovid. The revenue guidance was lowered from $67.0 to $70.0 billion to $58.0 to $61.0 billion. Pfizer maintained this guidance along with the earnings release. The updated guidance indicates a year-over-year decline in the range of 39%-42% and an operational decline in the range of 38%-41%.

The guidance cut included a $7 billion drop in Paxlovid revenues and a $2 billion reduction in Comirnaty revenues. The earlier revenue guidance included approximately $13.5 billion in sales from Comirnaty and Paxlovid sales of approximately $8 billion. Full-year 2023 combined revenues of Paxlovid and Comirnaty are now expected to be approximately $12.5 billion compared with $21.5 billion expected previously. Comirnaty revenues are expected to be approximately $11.5 billion in 2023, down 70% from the 2022 level, while Paxlovid sales are expected to be about $1 billion, down 95% from the 2022 level.

Pfizer reduced its 2023 outlook for Paxlovid due to the $4.2 billion non-cash revenue reversal for the return of an estimated 7.9 million of U.S.-government EUA-labeled treatment courses of Paxlovid at the end of 2023. The Comirnaty guidance was lowered due to lower-than-expected vaccination rates.

Pfizer expects to launch both Comirnaty and Paxlovid in traditional commercial markets in the United States as government demand for the products declines. While the U.S. market for Comirnaty transitioned to commercially available products in September 2023, the commercial transition for Paxlovid is expected in November 2023.

Concerns remain about PFE's long-term growth drivers beyond its COVID-related products due to competitive pressure.

Year to date, the stock has decreased 41% against the industry’s 3.7% rise.

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Nonetheless, excluding COVID-19 products, Pfizer expects its revenues to rise 6% to 8% on an operational basis in 2023 as sales from non-COVID drugs remain strong. Sales of some key non-COVID products like Vyndaqel/Vyndamax and Prevnar, newly acquired products like Nurtec ODT/Vydura and Oxbryta and new product launches are providing top-line support.

Pfizer expects better non-COVID operational revenue growth in the future quarters, driven by its in-line products, new launches like RSV vaccine Abrysvo, oral pill Velsipity for ulcerative colitis, pentavalent meningococcal vaccine Penbraya, Zavzpret nasal spray for migraine as well as newly acquired products like Nurtec and Oxbryta. Nurtec ODT/Vydura was added to Pfizer’s portfolio with the acquisition of most of Biohaven in 2022. Oxbryta was added with the October 2022 acquisition of Global Blood Therapeutics.

Pfizer is close to its goal of launching 19 new products or indications in 18 months (all non-COVID indications), which are expected to generate around $20 billion in sales by 2030. It has already launched 13 of the 19 products, with four other products approved. Two-thirds of these products have blockbuster potential, according to Pfizer.

Its new products/late-stage pipeline candidates, coupled with business development activities, including the proposed acquisition of Seagen , position Pfizer strongly for operational growth in 2025 and beyond. Pfizer expects 2025 to 2030 revenue CAGR to be approximately 6%.

The company offered to buy cancer drugmaker Seagen for a total enterprise value of approximately $43 billion in March. Seagen’s acquisition is expected to strengthen Pfizer’s portfolio of cancer drugs by adding a class of antibody-drug conjugates. Seagen currently markets four cancer drugs — Adcetris, Padcev, Tukysa and Tivdak. The Pfizer/Seagen transaction is expected to be closed in late 2023 or early 2024, subject to customary closing conditions, including clearance by the U.S. Federal Trade Commission.

The huge profits that Pfizer generated from its COVID products in 2021 and 2022 also strengthened its cash position, which is being used to make acquisitions, increase dividends, buy back shares and reduce debt. The cash enabled it to acquire Arena, ReViral, Biohaven and Global Blood Therapeutics in 2022. It also allowed Pfizer to increase investments in research and marketing investments to support its expected new product launches. Overall, the profits and cash from COVID-19 products allowed Pfizer to support its growth plans for the second half of this decade.

Zacks Rank & Stock to Consider

Currently, Pfizer has a Zacks Rank #3 (Hold).

Pfizer Inc. Price and Consensus

Pfizer Inc. Price and Consensus

Pfizer Inc. price-consensus-chart | Pfizer Inc. Quote

A better-ranked large drugmaker is Novo Nordisk (NVO - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Novo Nordisk’s 2023 earnings per share have increased from $2.51 to $2.62 over the past 30 days. Estimates for 2024 have jumped from $2.95 per share to $3.07 over the same timeframe.

NVO’s stock has surged 42.5% year to date. Earnings of Novo Nordisk beat estimates in two of the past four quarters while missing in one and meeting in one, the average surprise being 0.58%.

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