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Pfizer to Face Several Headwinds: Can It Successfully Navigate Them?
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Key Takeaways
PFE expects steady 2025 COVID sales but anticipates major LOE losses and IRA headwinds in the future.
Medicare Part D changes may cut into sales of key PFE drugs like Vyndaqel, Ibrance, Xtandi and Xeljanz.
PFE trades at 7.82x forward earnings, below industry average, with EPS estimates rising for 2025 and 2026.
Pfizer (PFE - Free Report) is likely to encounter several headwinds in the next couple of years that can hurt its sales and profits, the first being declining sales of COVID products, Comirnaty and Paxlovid. In 2025, Pfizer’s revenues from Paxlovid and Comirnaty are expected to be similar to 2024. COVID revenues may decline further in future years, depending on infection rates.
Though Pfizer expects a moderate negative impact on revenues from the loss of exclusivity (“LOE”) in 2025, the impact is expected to be significant in the 2026-2030 period as several of its key products, including Eliquis, Vyndaqel, Ibrance, Xeljanz and Xtandi, will face patent expirations.
In addition, Pfizer expects an unfavorable impact of approximately $1 billion from the Medicare Part D redesign under the Inflation Reduction Act (IRA), which takes effect in 2025. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are expected to be most affected by IRA.
Moreover, stocks of vaccine makers like Pfizer have been under pressure with the appointment of Robert F. Kennedy Jr., a well-known vaccine skeptic, as the Secretary of Health and Human Services. In addition to all this, uncertainties around tariffs and a volatile macro environment, coupled with escalating geopolitical tensions in various parts of the world, have muted economic growth.
However, despite all the headwinds, we believe Pfizer’s key drugs like Vyndaqel, Padcev and Eliquis and new and newly acquired products should continue to drive top-line growth. Pfizer’s significant cost-reduction and efforts to improve R&D productivity measures should drive profit growth. Though Pfizer does not expect strong top-line growth over the next three years due to the LOEs, it expects EPS growth.
Medicare Part D Changes to Hurt Other Drugmakers’ Sales
In 2022, in the United States, Congress passed the IRA, which made significant changes to how drugs are covered and paid for under Medicare, including penalties for significant increases in the prices of drugs.
Among other measures, the IRA requires the U.S. Department of Health and Human Services to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D.
Similar to Pfizer, some other drugmakers like J&J (JNJ - Free Report) , Amgen, Merck (MRK - Free Report) and Eli Lilly (LLY - Free Report) also expect an unfavorable impact of the Medicare Part D redesign on their top line. J&J expects Medicare Part D redesign to hurt sales of drugs like Stelara, Tremfya, Erleada and pulmonary arterial hypertension drugs. Merck and Lilly expect the government price setting to hurt sales of their diabetes drugs, Januvia/Janumet and Jardiance, respectively, in 2026. Amgen’s Enbrel and Otezla have been selected for Medicare price setting beginning in 2026 and 2027, respectively.
PFE’s Price Performance, Valuation and Estimates
Pfizer’s stock has declined 6.2% so far this year compared with a decrease of 1.3% for the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company’s shares currently trade at 7.82 forward earnings, lower than 14.81 for the industry and the stock’s 5-year mean of 10.89.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has risen from $2.99 per share to $3.06 per share, while that for 2026 has gone up from $3.02 to $3.09 per share over the past 60 days.
Image: Bigstock
Pfizer to Face Several Headwinds: Can It Successfully Navigate Them?
Key Takeaways
Pfizer (PFE - Free Report) is likely to encounter several headwinds in the next couple of years that can hurt its sales and profits, the first being declining sales of COVID products, Comirnaty and Paxlovid. In 2025, Pfizer’s revenues from Paxlovid and Comirnaty are expected to be similar to 2024. COVID revenues may decline further in future years, depending on infection rates.
Though Pfizer expects a moderate negative impact on revenues from the loss of exclusivity (“LOE”) in 2025, the impact is expected to be significant in the 2026-2030 period as several of its key products, including Eliquis, Vyndaqel, Ibrance, Xeljanz and Xtandi, will face patent expirations.
In addition, Pfizer expects an unfavorable impact of approximately $1 billion from the Medicare Part D redesign under the Inflation Reduction Act (IRA), which takes effect in 2025. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are expected to be most affected by IRA.
Moreover, stocks of vaccine makers like Pfizer have been under pressure with the appointment of Robert F. Kennedy Jr., a well-known vaccine skeptic, as the Secretary of Health and Human Services. In addition to all this, uncertainties around tariffs and a volatile macro environment, coupled with escalating geopolitical tensions in various parts of the world, have muted economic growth.
However, despite all the headwinds, we believe Pfizer’s key drugs like Vyndaqel, Padcev and Eliquis and new and newly acquired products should continue to drive top-line growth. Pfizer’s significant cost-reduction and efforts to improve R&D productivity measures should drive profit growth. Though Pfizer does not expect strong top-line growth over the next three years due to the LOEs, it expects EPS growth.
Medicare Part D Changes to Hurt Other Drugmakers’ Sales
In 2022, in the United States, Congress passed the IRA, which made significant changes to how drugs are covered and paid for under Medicare, including penalties for significant increases in the prices of drugs.
Among other measures, the IRA requires the U.S. Department of Health and Human Services to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D.
Similar to Pfizer, some other drugmakers like J&J (JNJ - Free Report) , Amgen, Merck (MRK - Free Report) and Eli Lilly (LLY - Free Report) also expect an unfavorable impact of the Medicare Part D redesign on their top line. J&J expects Medicare Part D redesign to hurt sales of drugs like Stelara, Tremfya, Erleada and pulmonary arterial hypertension drugs. Merck and Lilly expect the government price setting to hurt sales of their diabetes drugs, Januvia/Janumet and Jardiance, respectively, in 2026. Amgen’s Enbrel and Otezla have been selected for Medicare price setting beginning in 2026 and 2027, respectively.
PFE’s Price Performance, Valuation and Estimates
Pfizer’s stock has declined 6.2% so far this year compared with a decrease of 1.3% for the industry.
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company’s shares currently trade at 7.82 forward earnings, lower than 14.81 for the industry and the stock’s 5-year mean of 10.89.
The Zacks Consensus Estimate for 2025 earnings has risen from $2.99 per share to $3.06 per share, while that for 2026 has gone up from $3.02 to $3.09 per share over the past 60 days.
Pfizer has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.