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By Bhanvi Satija and Michael Erman
(Reuters) -Pfizer said on Tuesday it would generate $1.7 billion more in savings from cost cuts to its manufacturing and research operations, highlighting its operational efficiency even as it reported lower first-quarter revenue due to declining sales of its COVID-19 treatment Paxlovid.
Chief Executive Albert Bourla, speaking on a conference call with investors, said the drugmaker's story over the next three years would not be one of strong revenue growth, given looming patent expirations on top products, but rather one of earnings growth.
The company reaffirmed its full-year forecast, and shares were up nearly 4%.
Pfizer also said it had measures in place to mitigate the impact of potential tariffs on pharmaceuticals by the Trump administration, including possibly shifting some production to existing facilities in the United States.
"We have huge manufacturing capacity right now in the U.S., particularly for everything that is injectable," Bourla said. "If there is a need, it's clearly there, and without the need to build new facilities."
Pfizer has 10 manufacturing sites and two distribution centers in the United States, employing nearly 10,000 people.
While the rates and timing of tariffs on the pharma sector are unclear, analysts expect that companies will have to absorb any near-term costs if they are imposed. Washington has launched an investigation into the industry, laying the groundwork for possible levies.
Bourla in an interview said the industry is hoping the Trump administration will focus more on medicines like those the World Health Organization has designated as essential, which tend to be off-patent and produced mostly in China and India.
"I think that's where the problem is. It's not if an obesity drug is made in Ireland," he said.
LEANING ON COST SAVINGS
The company said it now expects about $7.7 billion in savings by the end of 2027 from its cost-cutting programs.
That includes an additional $500 million in R&D savings, which at least two investors said could reflect Pfizer's recent decision to stop development of its experimental weight-loss pill danuglipron.
"The cost savings are real, it does help drive better bottom line performance," said Brian Mulberry, portfolio manager at Zacks Investment Management, which owned 2.44 million Pfizer shares at the end of 2024. "We just want to know where that top-line growth is going to come from."
Not from COVID antiviral Paxlovid, apparently. Sales of the two-drug treatment were $491 million, well short of analysts' already diminished expectations of $794.3 million, according to LSEG data. Analysts significantly cut their Paxlovid sales expectations in recent weeks due to a relatively small winter wave of COVID-19 in the U.S.