Jobs at Pfizer’s Irish operations are under threat as the company considers how it will implement $3.5 billion (€3.3bn) in cuts worldwide as sales of Covid therapies slump.
The company dramatically lowered sales forecasts for both its Covid vaccine and its antiviral Paxlovid in recent days. Vaccine sales are now expected to be 15 per cent weaker than previously projected, while the company has marked expected antiviral sales down to just $1 billion from $8 billion, in large part due to stock being returned by the US government.
The group’s Irish plants are heavily involved in the production of both products. Pfizer employs approximately 5,000 people across five locations across Ireland.
The group said the shortfall in expectations for its Covid franchise of products was to blame for all of a $9 billion – or 13 per cent – downgrade in predicted groupwide revenues for 2023.
Pfizer had warned back in August that it would launch a cost-cutting programme if Covid sales continued to underperform in its third-quarter and that is what has happened. It said on Monday that the cost-cutting programme will include lay-offs, without providing details on how many jobs will be cut or from what areas. However, given the dramatic slide in demand for Covid products those operations seem most at risk.
A spokeswoman for the company said on Wednesday: “As we said during our August 1st second earnings remarks, we are prepared to launch an enterprise-wide cost-improvement programme aligned with the longer-term revenue projections for our business. Details of this programme will be shared over the coming months and as part of the full-year guidance for 2024.”
Speaking on an investor call on Monday, group chief financial officer David Denton said: “Given the new realities that [chief executive] Albert [Bourla] just mentioned we now know that we need to adjust our cost base accordingly. We expect our enterprise-wide programme to deliver annualised targeted savings of at least $3.5 billion by the end of 2024. This includes the $1 billion of targeted savings in 2023...and an additional $2.5 billion in targeted savings to be realised in 2024.”
The company is still working to get a better fix on long-term demand. Management had said as recently as last month that it expected 24 per cent of the US population to get Covid boosters, which was higher than the level of uptake with the last booster. On Monday it said just 17 per cent of Americans are now expected to get those shots.
Pfizer ramped up its Irish operations during the pandemic with the group’s Grange Castle complex becoming part of its Covid-19 global manufacturing network during the pandemic following a $40 million investment at the west Dublin site.
Its plants at Ringaskiddy, Co Cork, and Newbridge, Co Kildare, are key production locations in the manufacture of Paxlovid.
The company expects to give more details about its cost-cutting programme when it releases results for its third financial quarter on October 31st. However, details of country-specific cuts are not likely to emerge for some time after that.
Pfizer earned record revenue in 2021 and 2022, topping $100 billion last year, after developing its vaccine Comirnaty with German partner BioNTech and antiviral treatment Paxlovid on its own. Last year revenue from those two products exceeded $56 billion, just below what the lower end of the new $58 billion to $61 billion groupwide sales forecast for this year. – Additional reporting: Reuters/Bloomberg
