Pfizer's Earnings Beat Shows How Cancer Drugs Are Reshaping Its Post-Covid Recovery

PfizerPFE has spent the past few years trying to rebuild its business after the pandemic, when demand for its Covid vaccine and antiviral treatment sent revenue soaring. Those sales have since fallen sharply, while several of its biggest drugs are approaching patent expirations. Its latest earnings suggest the company is making progress, although the harder part of its turnaround is still ahead.

New drugs are doing the heavy lifting

Pfizer's recently launched and acquired products generated nearly $4B in third-quarter revenue, growing 32% from a year earlier. That was enough to offset weaker sales from several established products, according to Citi analysts.

Cancer treatments have become particularly important. Bladder cancer drug Padcev grew 55% to $720M, while lung cancer treatment Lorbrena brought in $387M. Eliquis, Pfizer's widely prescribed blood thinner, also delivered strong results, with sales climbing 25% to $2.5B.

Meanwhile, Paxlovid revenue fell 63%, Covid vaccine Comirnaty declined 29%, and sales of the Prevnar vaccine franchise slipped 10%.

The contrast shows how Pfizer's business is changing. Older products are losing momentum, but newer treatments are beginning to make up the difference.

The Covid hangover is fading

Pfizer reported third-quarter revenue of $16.58B, roughly unchanged from a year earlier. However, excluding Covid products, sales increased 7%.

Adjusted earnings reached 87 cents per share, comfortably ahead of analysts' expectations of 73 cents. Both Comirnaty and Paxlovid also exceeded forecasts despite their steep annual declines.

Chief executive Albert Bourla told Barron's that the company's dependence on Covid revenue had weighed on its stock, but those products now have little influence on its overall performance.

That matters for investors who have spent years wondering whether Pfizer could generate meaningful growth without another pandemic.

Cost cuts are giving earnings a lift

Pfizer raised its full-year revenue guidance to $62B to $64B and increased its adjusted earnings forecast to $2.95 to $3.05 per share.

Newer products are helping, but spending reductions have also played a significant role.

The company is targeting $9.7B in savings by 2029 and has reduced its workforce by roughly 13K employees since acquiring cancer specialist Seagen for $43B in 2023.

Pfizer also appointed Cecile Guegan as chief financial officer, effective Nov. 1, following several months in the interim role. BMO Capital analyst Evan Seigerman believes the appointment provides greater stability as the company prepares its 2027 outlook.

Still, cost savings can only support earnings for so long. Pfizer ultimately needs enough revenue from new medicines to replace what it stands to lose from older ones.

The next challenge arrives in 2028

Pfizer faces another major hurdle as several blockbuster medicines approach the end of their US patent protection.

Eliquis is expected to face broad generic competition beginning in 2028, while breast cancer treatment Ibrance is also nearing the end of its exclusivity.

Lower-priced alternatives could take a meaningful bite out of sales, leaving Pfizer increasingly dependent on recently acquired treatments and its development pipeline.

One of its biggest bets is the roughly $10B acquisition of obesity drug developer Metsera in late 2025.

After abandoning its own oral obesity treatment over a potential liver safety concern, Pfizer is concentrating on berobenatide, a weekly injection it hopes to launch in 2028. A monthly version could follow, potentially giving Pfizer an advantage over treatments requiring more frequent injections.

The company is also studying another obesity candidate, MET-233i, both independently and alongside berobenatide.

Morningstar believes a monthly treatment could help Pfizer stand out, provided patients tolerate it well. However, the firm still expects Pfizer's revenue to decline in 2028 and 2029 before returning to modest growth in the early 2030s.

What investors should watch

Pfizer's latest results offer some reassurance that its post-Covid recovery is progressing. New cancer treatments are selling well, costs are coming down, and management has become more confident about near-term earnings.

The longer-term outlook is less certain.

Bernstein analyst Courtney Breen has cautioned that sustained growth still depends heavily on experimental treatments delivering successful results.

Investors have two important developments to watch. Late-stage trial results for prostate cancer candidate mevrometostat are expected in the first quarter of 2027, while early findings from Metsera's obesity pipeline could provide another indication of Pfizer's future prospects.

For now, Pfizer has shown it can manage declining Covid sales. Whether it can overcome the next wave of patent expirations will depend on how quickly its newer medicines become major revenue generators.