Pfizer struggles to claw back faith with Wall Street and its employees as it recovers from the Covid decline

Pfizer had a “phenomenal” first quarter — and Wall Street took notice, CEO Albert Bourla told thousands of employees during a companywide town hall on May 2, according to 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 year prior, when Pfizer’s shares plunged more than 40%, making it one of the worst-performing large pharmaceutical stocks of 2023. Its market cap of about $157 billion is now less than half of its 2021 peak of nearly $350 billion.  

Few companies 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 few years earlier, no longer needed the company in the same way.

Pfizer may be on its way toward stabilizing its business and winning back Wall Street’s favor after the strong first quarter. But the company is struggling to balance that with the fears of its employees, some 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 laying off hundreds of employees — including in the once-lauded Covid vaccine unit. In May the company said it’s on track to deliver $4 billion in savings by the end of the year.

Pfizer’s stock surged after it rolled out its Covid vaccine and antiviral treatment, then plunged when the company’s Covid revenue started to drop.

Now, as Pfizer appears poised to turn a corner, the company is trying to boost employee morale to match Wall Street’s optimism. 

CNBC spoke with 11 current and former Pfizer employees — all of whom asked to remain anonymous for fear of retaliation — about Pfizer’s dizzying climb, rapid decline and turnaround strategy.

The company’s seesawing fortunes have fueled uncertainty within Pfizer’s workforce. Most of the current and former employees CNBC spoke with called Pfizer a good place to work, and some current employees said they feel optimistic about the direction of the company after the first 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 remote workers, and doubts about how the business will perform moving forward.

The company’s separate multiyear cost-cutting program announced in May is also stoking fears about the potential for new U.S. layoffs, according to some current workers. Some employees working in certain manufacturing and supply chain divisions, which they believe are likely 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 over the last six months or left voluntarily, said they’re unhappy with how the company handled cost cuts in 2023. Some alleged that Pfizer management provided little transparency around the layoffs and seemed more focused on the company’s stock performance than its staff throughout the process.

During the latest town hall, Bourla told employees that layoffs in the U.S. have been completed 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, of course, I’m very concerned with everyone that could be affected and impacted by that, but it works,” Bourla said, according to 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 one of Pfizer’s five priorities for the year, along with maximizing the performance of new products, innovating its drug pipeline, growing its oncology business with its acquisition of cancer drugmaker Seagen, and allocating capital to increase its dividend, reduce outstanding debt and reinvest in the business.

To cut costs, apart from layoffs the company is trimming its drug portfolio and direct marketing spending, shrinking its real estate footprint and reducing its investment in Covid, among other efforts, said the spokesperson.

The spokesperson said Pfizer does not take the layoffs “lightly” and that the company is “focused on providing our impacted colleagues with the resources and compassion they deserve.”

What went wrong in 2023

Pfizer entered 2023 on a high. 

The company had just capped a record-breaking 2022 with $100 billion in sales, more than half of which came from its Covid vaccines and Paxlovid.

Employee morale at Pfizer was relatively high at the time, some current and former workers told CNBC. The company had gone on a hiring spree and piled money into different projects, they said.

The success came with trade-offs. Two former employees involved in developing the Covid vaccine manufacturing process said they were experiencing burnout at the start 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.

But it could not predict at the time just how much revenue would dry up. 

During an earnings call that 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 new Covid shots from Pfizer and Moderna, according to data from the Centers for Disease Control and Prevention.

Many Americans who got previous Covid shots felt they did not need more protection because the threat of the virus had diminished, according to recent surveys.

Meanwhile, use of Paxlovid in the U.S. was dented by reductions in Covid testing and infection rates, and by doctors’ concerns about interactions with common medications, among other factors.

As demand plummeted, the federal government returned millions of the antiviral treatment courses to Pfizer. In January this year, however, Pfizer said fewer courses were returned by the end of 2023 than it had expected.

The company soon acknowledged the challenges its Covid business faced towards the end of 2023. In October, Pfizer said it slashed both ends of its 2023 sales guidance by around $9 billion “solely due to its Covid products.”

At the same time, Pfizer started to cut costs. The company still hasn’t said how many employees it laid off, though it reduced staff around the world. 

Pfizer’s 2023 revenue ultimately came in at $58.5 billion, including $11.22 billion from its Covid vaccine and $1.28 billion from Paxlovid.

The end of the year brought other challenges for Pfizer: The company scrapped the twice-daily version of its experimental weight loss drug, danuglipron, and saw slower uptake for a newly launched RSV vaccine in the U.S. than competitor GSK saw with its own version.

After the string of difficulties, investors showed relief when Pfizer announced the cost cuts. But for many 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 year for the company and its stock price. But he said Pfizer took steps to start 2024 with a “clean slate.”

Those included renegotiating multibillion-dollar Covid contracts with the EU and other governments, transitioning its Covid products to the commercial market in several countries and writing off unused stock of its vaccine and Paxlovid.

“So it’s not simple, how many people will use the vaccine. There were a lot of things we had to remove” he said.

Bourla also touted Pfizer’s portfolio of new products that it said will boost sales, including nine new product approvals in the U.S. last year and a pipeline of drugs that could bring in more future revenue. 

Pfizer has also repeatedly said that the Seagen deal brings a proven antibody-drug conjugate platform that enhances its commercial structure and could help the company become a “world-class oncology leader.” Pfizer has said Seagen could contribute more 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 in 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 people and later laying many employees off — a cycle seen at many other large companies. 

Pfizer wasn’t the only Covid-boom company whose business declined. 

Biotech company Moderna‘s revenue from its Covid shot also plunged in 2023. Companies outside the pharmaceutical industry that flourished in 2020, including fitness firm Peloton and digital meeting platform Zoom, also struggled to adjust as people returned to their pre-pandemic lives.

Other drugmakers big and small are still downsizing and restructuring their workforces. Big pharmaceutical companies, such as Bristol Myers Squibb, are trying to conserve cash as they could lose revenue from upcoming drug patent expirations and Medicare drug price negotiations, among other threats.

Biotech companies are also working to stay afloat after a rough 2023 marked by rising interest rates, a poor deal market and a lack of fundraising.

At Pfizer, there were other warnings of trouble ahead, according to current and former employees: a small round of layoffs during the first quarter of 2023 and budget restrictions that limited travel, team lunch outings and purchases of new lab and manufacturing equipment. 

Pfizer’s announcement in March 2023 that it would acquire Seagen for a whopping $43 billion was another sign, according to some current and former employees. While most of the 11 workers acknowledged that the deal made sense for Pfizer’s growth, they said the hefty price tag at a time when Covid sales had already started to decline left them uneasy.

Still, a few former employees said they felt blindsided by the company’s decision to let go of staff, saying they were relatively optimistic about the business before the October cost-cut announcement. 

One former employee who worked at a site focused on gene therapies in Durham, North Carolina, said they were repeatedly told their job would be safe — even as Pfizer divested much of its early stage portfolio for those treatments at the start of 2023. The company confirmed with news outlets in October that it would close that site and lay off an undisclosed number of staff.

Notably, Pfizer’s layoffs also affected some workers involved in the research, development and manufacturing of the company’s Covid vaccine, according to some current and former employees. They said those workers, whom Pfizer celebrated as pandemic heroes just a year earlier, felt especially betrayed by the cuts.

“It felt like we were tossed out the door when they no longer needed us,” said one former employee who worked on the vaccine.

All the current and former employees who spoke with CNBC said they believed the company handled the layoffs and the months leading up to them poorly.

Some workers said they were disappointed with what they called higher management’s lack of transparency around the layoffs. Some also questioned why Pfizer did not set more realistic expectations for its Covid business earlier, especially as cases and public concern about the virus diminished in the U.S.

On Oct. 17, just a few days after Pfizer publicly announced its cost-cutting program to investors, executives held a companywide town hall with Pfizer’s more than 80,000-person workforce that one worker described as “disastrous” and another called a “slap in the face.” 

On the town hall, Bourla and Pfizer Chief Human Experience Officer Payal Sahni Becher acknowledged the company’s Covid business was struggling but said it was positioning for growth with the cost cuts, according to some current and former employees.

Those people said the executives addressed the looming layoffs during the town hall but provided scant details on how many workers, teams or sites they would affect, when they would occur or how the company decided who would lose their jobs. 

Many workers also alleged that Bourla and Becher were too casual during the town hall, cracking light jokes and chuckling at some of the questions asked by staff, such as one about employee bonuses.

Return-to-office policies

On top of layoffs, return-to-office policies launched in 2023 forced out some workers in fully remote roles, some current and former employees said.

Those people said some fully remote employees had their virtual work status revoked and were asked to start working in person at their site starting on a certain date under the new mandates. While some workers were asked to come in only two or three days a week, even that was impossible for staff members who lived too far from their sites, according to the employees.

Some remote workers who did not comply over time were let go, the current and former employees said. A Pfizer spokesperson did not confirm or provide any details about its recent return-to-office policies.

“The return to office has been possibly the worst managed factor in all of this,” one current employee said.

Those policies also applied to workers who were relocated from recently closed facilities, according to some employees. 

For example, Pfizer in October said it would shut down its office in Peapack, New Jersey in 2024, which affected nearly 800 workers. The company first announced those plans in 2021. Pfizer told news outlets that the majority of employees would be relocated to its headquarters in New York City. 

For one employee, a 15-minute commute to work became closer to an hour-and-a-half trip.

During another town hall, on Oct. 26, Pfizer Chief Global Supply Officer Mike McDermott said the decision to close the Peapack site “wasn’t made lightly.” But he said having Peapack employees work in person at the company’s headquarters was “right for Pfizer’s culture,” according to a recording heard by CNBC. 

He said the company isn’t taking away remote work as an option. Pfizer leadership has been vocal about asking employees to work in person again. 

“Teleconferencing is simply no substitute for the personal interaction that makes it possible to share ideas, build connection, or even agree to disagree,” Bourla said during the APEC CEO Summit in November. 

Pfizer is just one of several companies across different industries to push for in-person work again after the pandemic. Tech giants such as Google similarly reversed course on remote work in 2023 after offering flexibility to employees throughout Covid, reportedly frustrating workers.

Employee morale

Employee morale plummeted in the months after the October layoff announcement, according to current and former employees. 

Some of those people said they were unmotivated to work with their job security in question, while one worker described “walking on eggshells” for weeks out of fear that they would lose their job.

Other employees said they were stretched thin due to understaffing and a lack of other resources. A few workers said they struggled to keep up with abrupt internal changes, such as being assigned to new managers or being moved onto different teams.

Some current employees said Pfizer has held several so-called transparency meetings, which allow workers to anonymously ask questions and provide feedback to senior leadership.

Faith in executive leadership also plunged among some workers, according to most of the current and former employees who spoke with CNBC.

Some employees acknowledged that executives have a duty to care about their company’s stock price but said that Bourla and other officials appeared to be hyper-focused on Pfizer shares even as people lost their jobs.

Some current workers said that hasn’t appeared to change after the town hall on May 2. Others said Bourla’s remarks were encouraging and sounded far more genuine.

Some employees also said they feel uncertain about how the company’s business will perform moving forward.

One current worker called it “reassuring” to see Pfizer report positive first-quarter results but noted that it does not “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 year. It will also heavily depend on the commercial success of Seagen’s pipeline of cancer drugs, though it will likely take several years before Pfizer sees big returns from those products.

During the May 2 town hall, Bourla said he could tell that morale was down toward the end of 2023. 

“I could feel that people were affected,” he said, according to the recording heard by CNBC. “Because we were at the top of the pyramid, we were at the top of our all-time reputation, of our all-time recognition from the world. And suddenly within six months, we started feeling that people are questioning that. That is not something that we like, and it’s not something that we feel good about.”

But Bourla congratulated employees for delivering a strong first quarter. He cautioned that the company isn’t “out of the woods yet” but said it is starting to head in a positive direction. 

“There will be hiccups, ups and downs in our way. But the direction I’m very confident is going to be upwards. I’m sure that sooner rather than later, we will all feel the pride that we were feeling in years ’20, ’21, ’22 and ’23, the first six months,” Bourla said. 

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