Kena Betancur | Corbis News | Getty Images
Pfizer had a “phenomenal” first quarter — and Wall Street took notice, CEO Albert Bourla told 1000’s of employees during a companywide town hall on May 2, in accordance with a recording heard by CNBC.
A day earlier, the pharmaceutical giant’s stock had closed 6% higher after its quarterly results topped analyst estimates and it hiked its full-year outlook.
It was a far cry from the yr prior, when Pfizer’s shares plunged greater than 40%, making it considered one of the worst-performing large pharmaceutical stocks of 2023. Its market cap of about $157 billion is now lower than half of its 2021 peak of nearly $350 billion.
Few firms benefited from the pandemic as much as Pfizer did. The drugmaker’s profits boomed, fueled by its Covid vaccine and antiviral pill Paxlovid. After Pfizer and German company BioNTech rapidly developed and deployed a lifesaving shot that helped the world emerge from the pandemic, Pfizer drew widespread praise.
Pfizer’s success contributed to its equally jarring fall from grace. When the virus receded in 2023, its Covid products revenue plummeted. The world, which hailed Pfizer as a pandemic hero a couple of years earlier, now not needed the corporate in the identical way.
Pfizer could also be on its way toward stabilizing its business and winning back Wall Street’s favor after the strong first quarter. But the corporate is struggling to balance that with the fears of its employees, a few of whom said they feel uncertain about their future and unmotivated after the sudden reversal of fortune.
In October Pfizer launched a multibillion-dollar cost-cutting program, slashing research and development spending and shedding a whole bunch of employees — including within the once-lauded Covid vaccine unit. In May the corporate said it’s on course to deliver $4 billion in savings by the tip of the yr.
Pfizer’s stock surged after it rolled out its Covid vaccine and antiviral treatment, then plunged when the corporate’s Covid revenue began to drop.
Now, as Pfizer appears poised to show a corner, the corporate is attempting to boost worker morale to match Wall Street’s optimism.
CNBC spoke with 11 current and former Pfizer employees — all of whom asked to stay anonymous for fear of retaliation — about Pfizer’s dizzying climb, rapid decline and turnaround strategy.
The corporate’s seesawing fortunes have fueled uncertainty inside Pfizer’s workforce. A lot of the current and former employees CNBC spoke with called Pfizer a superb place to work, and a few current employees said they feel optimistic in regards to the direction of the corporate after the primary quarter.
But other current employees are dissatisfied with where the strategy shift has left them. Some cited higher workloads after teams were stretched thin by budget cuts, a return-to-office policy they said has forced out some distant staff, and doubts about how the business will perform moving forward.
The corporate’s separate multiyear cost-cutting program announced in May can also be stoking fears in regards to the potential for brand spanking new U.S. layoffs, in accordance with some current staff. Some employees working in certain manufacturing and provide chain divisions, which they imagine are prone to be affected by the cuts, described having low morale and motivation to work.
Meanwhile, several former Pfizer employees, most of whom were laid off during the last six months or left voluntarily, said they’re unhappy with how the corporate handled cost cuts in 2023. Some alleged that Pfizer management provided little transparency across the layoffs and seemed more focused on the corporate’s stock performance than its staff throughout the method.
In the course of the latest town hall, Bourla told employees that layoffs within the U.S. have been accomplished but that more are occurring internationally.
He called the job cuts “very, very painful” and said it was “killing” him to let employees go.
But he also acknowledged that Wall Street likes the cuts.
“And, after all, I’m very concerned with everyone that may very well be affected and impacted by that, but it surely works,” Bourla said, in accordance with the recording. “And we saw it, how the Street will respond.”
A Pfizer spokesperson said reducing costs will “put us on strong footing towards margin expansion and improved financial returns moving forward.”
The spokesperson added that cutting expenses is considered one of Pfizer’s five priorities for the yr, together with maximizing the performance of latest products, innovating its drug pipeline, growing its oncology business with its acquisition of cancer drugmaker Seagen, and allocating capital to extend its dividend, reduce outstanding debt and reinvest within the business.
To chop costs, aside from layoffs the corporate is trimming its drug portfolio and direct marketing spending, shrinking its real estate footprint and reducing its investment in Covid, amongst other efforts, said the spokesperson.
The spokesperson said Pfizer doesn’t take the layoffs “evenly” and that the corporate is “focused on providing our impacted colleagues with the resources and compassion they deserve.”
What went flawed in 2023
Pfizer entered 2023 on a high.
The corporate had just capped a record-breaking 2022 with $100 billion in sales, greater than half of which got here from its Covid vaccines and Paxlovid.
Worker morale at Pfizer was relatively high on the time, some current and former staff told CNBC. The corporate had gone on a hiring spree and piled money into different projects, they said.
The success got here with trade-offs. Two former employees involved in developing the Covid vaccine manufacturing process said they were experiencing burnout firstly of 2023.
In January 2023, Pfizer forecast a steep drop in annual revenue, to between $67 billion and $71 billion. That outlook included $13.5 billion and $8 billion in sales of Covid vaccines and Paxlovid, respectively.
Nevertheless it couldn’t predict on the time just how much revenue would dry up.
Pfizer’s Covid vaccine Comirnaty, seen at a CVS Pharmacy in Eagle Rock, California, Sept. 14, 2023.
Irfan Khan | Los Angeles Times | Getty Images
During an earnings call that very same month, Pfizer executives said they expected roughly 24% of the U.S. population to get an annual Covid booster in 2023. But by December, only around 17% of U.S. adults had received the brand new Covid shots from Pfizer and Moderna, in accordance with data from the Centers for Disease Control and Prevention.
Many Americans who got previous Covid shots felt they didn’t need more protection because the specter of the virus had diminished, in accordance with recent surveys.
Meanwhile, use of Paxlovid within the U.S. was dented by reductions in Covid testing and infection rates, and by doctors’ concerns about interactions with common medications, amongst other aspects.
As demand plummeted, the federal government returned tens of millions of the antiviral treatment courses to Pfizer. In January this yr, nevertheless, Pfizer said fewer courses were returned by the tip of 2023 than it had expected.
The corporate soon acknowledged the challenges its Covid business faced towards the tip of 2023. In October, Pfizer said it slashed each ends of its 2023 sales guidance by around $9 billion “solely attributable to its Covid products.”
At the identical time, Pfizer began to cut costs. The corporate still hasn’t said what number of employees it laid off, though it reduced staff around the globe.
Pfizer’s 2023 revenue ultimately got here in at $58.5 billion, including $11.22 billion from its Covid vaccine and $1.28 billion from Paxlovid.
The top of the yr brought other challenges for Pfizer: The corporate scrapped the twice-daily version of its experimental weight reduction drug, danuglipron, and saw slower uptake for a newly launched RSV vaccine within the U.S. than competitor GSK saw with its own version.
After the string of difficulties, investors showed relief when Pfizer announced the price cuts. But for a lot of employees, the shift in post-pandemic strategy was a nightmare, they told CNBC.
During a conference in January, Bourla acknowledged that 2023 was a rough yr for the corporate and its stock price. But he said Pfizer took steps to start out 2024 with a “clean slate.”
Those included renegotiating multibillion-dollar Covid contracts with the EU and other governments, transitioning its Covid products to the industrial market in several countries and writing off unused stock of its vaccine and Paxlovid.
“So it isn’t easy, how many individuals will use the vaccine. There have been quite a lot of things we needed to remove” he said.
Bourla also touted Pfizer’s portfolio of latest products that it said will boost sales, including nine latest product approvals within the U.S. last yr and a pipeline of medication that might usher in more future revenue.
Pfizer has also repeatedly said that the Seagen deal brings a proven antibody-drug conjugate platform that enhances its industrial structure and will help the corporate grow to be a “world-class oncology leader.” Pfizer has said Seagen could contribute greater than $10 billion in risk-adjusted sales by 2030 with its targeted cancer therapies.
Those revenue streams would help Pfizer prepare for upcoming patent expirations for blockbuster drugs, including its breast cancer treatment Ibrance, and Eliquis, a blood thinner it shares with Bristol Myers Squibb.
A ‘slap within the face’
Some current and former employees said they knew early in 2023 that wide-scale layoffs were possible. Those people alleged that Pfizer has long had a culture of hiring too many individuals and later laying many employees off — a cycle seen at many other large firms.
Pfizer wasn’t the one Covid-boom company whose business declined.
Biotech company Moderna‘s revenue from its Covid shot also plunged in 2023. Corporations outside the pharmaceutical industry that flourished in 2020, including fitness firm Peloton and digital meeting platform Zoom, also struggled to regulate as people returned to their pre-pandemic lives.
Other drugmakers big and small are still downsizing and restructuring their workforces. Big pharmaceutical firms, equivalent to Bristol Myers Squibb, try to conserve money as they might lose revenue from upcoming drug patent expirations and Medicare drug price negotiations, amongst other threats.
Biotech firms are also working to remain afloat after a rough 2023 marked by rising rates of interest, a poor deal market and an absence of fundraising.
At Pfizer, there have been other warnings of trouble ahead, in accordance with current and former employees: a small round of layoffs in the course of the first quarter of 2023 and budget restrictions that limited travel, team lunch outings and purchases of latest lab and manufacturing equipment.
Pfizer’s announcement in March 2023 that it will acquire Seagen for a whopping $43 billion was one other sign, in accordance with some current and former employees. While many of the 11 staff acknowledged that the deal made sense for Pfizer’s growth, they said the hefty price tag at a time when Covid sales had already began to say no left them uneasy.
Still, a couple of former employees said they felt blindsided by the corporate’s decision to let go of staff, saying they were relatively optimistic in regards to the business before the October cost-cut announcement.
One former worker who worked at a site focused on gene therapies in Durham, North Carolina, said they were repeatedly told their job could be protected — at the same time as Pfizer divested much of its early stage portfolio for those treatments firstly of 2023. The corporate confirmed with news outlets in October that it will close that site and lay off an undisclosed variety of staff.
Notably, Pfizer’s layoffs also affected some staff involved within the research, development and manufacturing of the corporate’s Covid vaccine, in accordance with some current and former employees. They said those staff, whom Pfizer celebrated as pandemic heroes only a yr earlier, felt especially betrayed by the cuts.
“It felt like we were tossed out the door once they now not needed us,” said one former worker who worked on the vaccine.
Pfizer CEO Albert Bourla speaks during a press conference after a visit to oversee the production of the Pfizer-BioNtech Covid-19 vaccine on the Pfizer factory in Puurs, Belgium, April 23, 2021.
John Thys | Reuters
All the present and former employees who spoke with CNBC said they believed the corporate handled the layoffs and the months leading as much as them poorly.
Some staff said they were upset with what they called higher management’s lack of transparency across the layoffs. Some also questioned why Pfizer didn’t set more realistic expectations for its Covid business earlier, especially as cases and public concern in regards to the virus diminished within the U.S.
On Oct. 17, just a couple of days after Pfizer publicly announced its cost-cutting program to investors, executives held a companywide town hall with Pfizer’s greater than 80,000-person workforce that one employee described as “disastrous” and one other called a “slap within the face.”
In town hall, Bourla and Pfizer Chief Human Experience Officer Payal Sahni Becher acknowledged the corporate’s Covid business was struggling but said it was positioning for growth with the price cuts, in accordance with some current and former employees.
Those people said the executives addressed the looming layoffs in the course of the town hall but provided scant details on what number of staff, teams or sites they’d affect, once they would occur or how the corporate decided who would lose their jobs.
Many staff also alleged that Bourla and Becher were too casual in the course of the town hall, cracking light jokes and chuckling at a few of the questions asked by staff, equivalent to one about worker bonuses.
Return-to-office policies
On top of layoffs, return-to-office policies launched in 2023 forced out some staff in fully distant roles, some current and former employees said.
Those people said some fully distant employees had their virtual work status revoked and were asked to start out working in person at their site starting on a certain date under the brand new mandates. While some staff were asked to are available only two or three days per week, even that was not possible for workers members who lived too removed from their sites, in accordance with the workers.
Some distant staff who didn’t comply over time were let go, the present and former employees said. A Pfizer spokesperson didn’t confirm or provide any details about its recent return-to-office policies.
“The return to office has been possibly the worst managed consider all of this,” one current worker said.
People pass by the Pfizer headquarters constructing in Recent York City, Jan. 29, 2023.
Kena Betancur | View Press | Corbis News | Getty Images
Those policies also applied to staff who were relocated from recently closed facilities, in accordance with some employees.
For instance, Pfizer in October said it will shut down its office in Peapack, Recent Jersey in 2024, which affected nearly 800 staff. The corporate first announced those plans in 2021. Pfizer told news outlets that nearly all of employees could be relocated to its headquarters in Recent York City.
For one worker, a 15-minute commute to work became closer to an hour-and-a-half trip.
During one other town hall, on Oct. 26, Pfizer Chief Global Supply Officer Mike McDermott said the choice to shut the Peapack site “wasn’t made evenly.” But he said having Peapack employees work in person at the corporate’s headquarters was “right for Pfizer’s culture,” in accordance with a recording heard by CNBC.
He said the corporate is not taking away distant work as an option. Pfizer leadership has been vocal about asking employees to work in person again.
“Teleconferencing is solely no substitute for the non-public interaction that makes it possible to share ideas, construct connection, and even conform to disagree,” Bourla said in the course of the APEC CEO Summit in November.
Pfizer is just considered one of several firms across different industries to push for in-person work again after the pandemic. Tech giants equivalent to Google similarly reversed course on distant work in 2023 after offering flexibility to employees throughout Covid, reportedly frustrating staff.
Worker morale
Worker morale plummeted within the months after the October layoff announcement, in accordance with current and former employees.
A few of those people said they were unmotivated to work with their job security in query, while one employee described “walking on eggshells” for weeks out of fear that they’d lose their job.
Other employees said they were stretched thin attributable to understaffing and an absence of other resources. Just a few staff said they struggled to maintain up with abrupt internal changes, equivalent to being assigned to latest managers or being moved onto different teams.
Some current employees said Pfizer has held several so-called transparency meetings, which permit staff to anonymously ask questions and supply feedback to senior leadership.
Faith in executive leadership also plunged amongst some staff, in accordance with many of the current and former employees who spoke with CNBC.
Some employees acknowledged that executives have an obligation to care about their company’s stock price but said that Bourla and other officials seemed to be hyper-focused on Pfizer shares at the same time as people lost their jobs.
Some current staff said that hasn’t appeared to alter after the town hall on May 2. Others said Bourla’s remarks were encouraging and sounded much more real.
People pass by the Pfizer headquarters constructing on January 29, 2023 in Recent York City.
Kena Betacur | Corbis News | Getty Images
Some employees also said they feel uncertain about how the corporate’s business will perform moving forward.
One current employee called it “reassuring” to see Pfizer report positive first-quarter results but noted that it doesn’t “guarantee smooth sailing” ahead for the business and employees.
Pfizer’s rebound partly hinges on how its once-daily version of danuglipron performs in an early clinical trial this yr. It would also heavily rely on the industrial success of Seagen’s pipeline of cancer drugs, though it can likely take several years before Pfizer sees big returns from those products.
In the course of the May 2 town hall, Bourla said he could tell that morale was down toward the tip of 2023.
“I could feel that folks were affected,” he said, in accordance with the recording heard by CNBC. “Because we were at the highest of the pyramid, we were at the highest of our all-time fame, of our all-time recognition from the world. And suddenly inside six months, we began feeling that folks are questioning that. That just isn’t something that we like, and it isn’t something that we be ok with.”
But Bourla congratulated employees for delivering a powerful first quarter. He cautioned that the corporate is not “out of the woods yet” but said it’s beginning to head in a positive direction.
“There might be hiccups, ups and downs in our way. However the direction I’m very confident goes to be upwards. I’m sure that sooner somewhat than later, we are going to all feel the pride that we were feeling in years ’20, ’21, ’22 and ’23, the primary six months,” Bourla said.