Pfizer Q1 2025 slides: Revenue dips 6% while EPS grows 10% on cost-cutting success

Introduction & Market Context

Pfizer Inc (NYSE:PFE) reported its first quarter 2025 financial results on April 29, showing a mixed performance with declining revenue but growing earnings per share. The pharmaceutical giant continues to navigate a post-pandemic landscape while implementing significant cost-cutting measures to drive profitability.

The company’s shares were trading at $23.05 at the previous market close, with premarket activity showing a 1.04% increase to $23.29, suggesting a positive initial market reaction to the results.

Quarterly Performance Highlights

Pfizer reported Q1 2025 revenues of $13.7 billion, representing a 6% decline compared to $14.9 billion in Q1 2024. Despite the revenue drop, adjusted diluted earnings per share (EPS) increased by 10% to $0.92, up from $0.82 in the same period last year.

As shown in the following financial results summary:

The revenue decline was primarily attributed to lower Paxlovid sales, partially offset by growth from the Vyndaqel family, Comirnaty, and several other products across therapeutic categories. However, the company faced headwinds from higher manufacturer discounts resulting from the IRA Medicare Part D Redesign.

The detailed financial comparison reveals significant improvements in operational efficiency:

Notably, adjusted cost of sales as a percentage of revenues improved to 18.9%, down 1.5 percentage points from Q1 2024. This improvement was primarily driven by a favorable revision of estimated accrued royalties and favorable foreign exchange impacts.

Both selling, informational and administrative (SI&A) expenses and research and development (R&D) expenses decreased by 12% year-over-year, reflecting the company’s ongoing productivity improvements and pipeline optimization efforts.

Strategic Initiatives

Pfizer’s presentation emphasized four key strategic priorities that are guiding the company’s operations and investments:

The company is particularly focused on improving R&D productivity through rigorous portfolio prioritization and process simplification. Pfizer has strengthened its R&D organization under Chief Scientific Officer Chris Boshoff, with dedicated leadership across key therapeutic areas including Oncology, Vaccines, Internal Medicine, and Inflammation and Immunology.

A major component of Pfizer’s strategy involves delivering operating margin expansion through productivity gains. The company outlined its cost savings initiatives and their expected impact:

These initiatives include a Manufacturing Optimization Program targeting $1.5 billion in savings by 2027, a Cost Realignment Program expected to deliver $4.5 billion in 2025 and $5.7 billion by 2027, and an R&D Cost Realignment program aiming for $0.5 billion in savings by 2027. In total, Pfizer expects to achieve $7.2 billion in net cost savings by the end of 2027, while reinvesting $500 million to strengthen R&D productivity.

Pipeline and Product Portfolio

Pfizer highlighted 2025 as a strong year for pipeline catalysts, with multiple regulatory decisions, Phase 3 readouts, and pivotal program starts expected:

The company anticipates 4 regulatory decisions, including ABRYSVO in the EU for RSV infection and ADCETRIS in the U.S. for DLBCL. Additionally, 9 Phase 3 readouts are expected, including BRAFTOVI for colorectal cancer, Sasanlimab for bladder cancer, and Vepdegestrant for breast cancer.

Pfizer’s commercial strategy focuses on achieving excellence in key therapeutic categories with a refined commercial model for both U.S. and international regions:

The company’s portfolio spans four main categories: Oncology (featuring products like PADCEV and ELREXFIO), Vaccines (including ABRYSVO and Prevnar 20), Internal Medicine (with the Vyndaqel family and Nurtec ODT), and Inflammation and Immunology (featuring CIBINQO and Litfulo).

Forward-Looking Statements

Pfizer reaffirmed its full-year 2025 financial guidance, maintaining confidence in its outlook despite the Q1 revenue decline:

The company continues to project revenues between $61.0 and $64.0 billion for the full year, with adjusted diluted EPS expected to range from $2.80 to $3.00. Adjusted SI&A expenses are forecast between $13.3 and $14.3 billion, while adjusted R&D expenses are expected to be between $10.7 and $11.7 billion.

In terms of capital allocation, Pfizer returned $2.4 billion to shareholders through dividends in Q1 2025 and invested $2.2 billion in internal R&D. The company achieved its gross leverage target of less than 3.25x at the end of 2024 and expects a more balanced capital allocation between reinvestment and returning value to shareholders going forward.

Competitive Industry Position

Pfizer summarized its key takeaways and expectations, emphasizing its focus on execution, productivity gains, and operating margin expansion to drive long-term shareholder value:

The company remains committed to maximizing the commercial value of its product portfolio while driving value-creating innovation and strengthening its pipeline. Ongoing cost improvement programs are expected to continue driving productivity gains and operating margin expansion.

Additionally, Pfizer noted its continued focus on mitigation opportunities in response to potential future changes in trade and tariff policies, demonstrating awareness of external factors that could impact its business.

This Q1 2025 performance, while showing revenue challenges, demonstrates Pfizer’s ability to enhance profitability through operational efficiency and cost discipline as it continues to navigate the evolving pharmaceutical landscape.

Full presentation:

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