Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Pfizer needs to convince investors that Covid-19 treatments are not its only source of success. So far, it has failed. Despite splashing out nearly $55bn on two major acquisitions over the past two years, the pharmaceutical company is worth less than it was before the pandemic.
At its peak in 2021, Pfizer traded at $61 a share. The share price is now less than half that.
Demand for Covid shots has collapsed. Revenue for Pfizer’s Comirnaty vaccine and Paxlovid, an oral treatment, are expected to generate just $8bn in 2024. That compares with $57bn in 2022 and a forecast of $12.5bn for 2023.
Contributions from the company’s acquisitions — notably the $43bn purchase of cancer biotechnology company Seagen — have yet to move the needle. Although Seagen should generate $3.1bn in revenue in 2024, Pfizer said overall sales would be in the $58.5bn to $61.5bn range, only fractionally higher than this year’s estimates.
Despite the slowdown, revenues for 2024 are still expected to be 50 per cent higher than in 2019. Yet investors have doubts that growth can continue. Trading at around 9 times forward earnings, a fraction of peers Eli Lilly and Novo Nordisk.
The glaring valuation gap highlights what may be Pfizer’s biggest post-Covid problem: its lack of anti-obesity treatment in its portfolio. The booming weight loss drug market — which is expected to be worth $100bn by the end of the decade — is dominated by those two rivals.
Pfizer’s efforts to develop an obesity pill have suffered setbacks. It has abandoned plans for two treatments already. It is working on developing a once-a-day version of its own obesity pill danuglipron after dropping plans for a twice-daily pill.
That alone will not be enough to bulk up market value. Consider how Roche spent its cash. It acquired obesity drug developer Carmot Therapeutics for $2.7bn. If Pfizer had followed this route to market for anti-obesity drugs, rather than its own development efforts, its post-Covid plans would be more secure.
Our popular newsletter for premium subscribers is published twice weekly. On Wednesday we analyse a hot topic from a world financial centre. On Friday we dissect the week’s big themes. Please sign up here.