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PI

PFIZER INC (PFE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered adjusted EPS of $0.92, well above consensus, on revenues of $13.7B; management reaffirmed full-year guidance and said EPS is trending toward the upper end of the 2025 range .
  • Operational revenue decline (-6% op) was driven by Paxlovid (-$1.5B, -75% op), partly offset by strong growth in Vyndaqel (+33% op), Comirnaty (+62% op), Padcev (+25% op), Nurtec (+40% op), and Lorbrena (+39% op) .
  • Cost discipline drove margin expansion: adjusted cost of sales fell to 18.9% of revenue, adjusted SI&A down 13% op and adjusted R&D down 12% op; CFO cited ~81% adjusted gross margin, aided by favorable accrued royalties .
  • Guidance maintained: 2025 revenues $61–$64B and adjusted EPS $2.80–$3.00; company added $1.2B targeted net savings by 2027 (SI&A) and $500M R&D re-org savings by 2026, with initial manufacturing savings expected later in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Commercial execution across key brands: “strong contributions” from Vyndaqel, Comirnaty, Padcev, Nurtec, and Lorbrena supported the bottom line despite IRA headwinds .
  • Cost programs delivering: adjusted operating expenses fell 12% op; “we are currently trending towards the upper end of our 2025 Adjusted diluted EPS guidance range” (CFO) .
  • Pipeline and regulatory momentum: ACIP expanded RSV recommendations and EC extended Abrysvo indication to ages 18–59 at risk, strengthening the vaccines franchise .

What Went Wrong

  • COVID therapeutics normalization: Paxlovid revenues fell by $1.5B (−75% op) year over year, driven by the non‑recurrence of the 2024 adjustment, lower infections, and reduced international government purchases .
  • IRA Part D redesign headwind: dampened U.S. revenues by ~$650M in Q1; management expects lessening back half impact but it remains a constraint .
  • Discontinued obesity asset: Pfizer ended development of the oral GLP‑1 danuglipron following a potential drug-induced liver injury case in dose optimization, shifting focus to oral GIPR antagonist and other programs .

Financial Results

Headline financials vs prior year, prior quarter, and estimates

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Billions)$14.879 $17.763 $13.715
Adjusted Diluted EPS ($)$0.82 $0.63 $0.92
Reported Diluted EPS ($)$0.55 $0.07 $0.52
Revenue Consensus Mean ($USD Billions)*$13.923$17.264$14.051
Primary EPS Consensus Mean ($)*$0.512$0.459$0.674

*Values retrieved from S&P Global.

Q1 2025 performance vs estimates: Adjusted EPS beat by ~$0.25; revenue missed by ~$0.34B (consensus $14.05B vs actual $13.72B)* .
Q1 2025 vs prior quarter: sequential revenue down ($17.76B to $13.72B) as COVID seasonality and one‑time Q4 items rolled off; adjusted EPS up ($0.63 to $0.92) on mix and cost favorability .
Q1 2025 vs prior year: revenue down 8%, adjusted EPS up 12% on cost actions and mix .

Margins and expenses

MetricQ1 2024Q1 2025
Cost of Sales (% of Revenue)22.7% 20.7%
Adjusted Cost of Sales (% of Revenue)20.4% 18.9%
Adjusted SI&A ($USD Billions)$3.454 $3.010
Adjusted R&D ($USD Billions)$2.477 $2.173
Effective Tax Rate (Reported)8.6% (6.8%)
Effective Tax Rate (Adjusted)16.6% 7.8%

CFO commentary: adjusted gross margin expanded to ~81% in Q1 2025, primarily from favorable accrued royalties and cost management .

Segment breakdown

Segment ($USD Millions)Q1 2024Q1 2025% Change (Total)% Change (Operational)
Global Biopharma$14,604 $13,441 (8%) (6%)
Pfizer CentreOne (PC1)$258 $257 — 2%
Pfizer Ignite$17 $17 (3%) (3%)
Total Revenues$14,879 $13,715 (8%) (6%)

KPIs and product highlights (operational growth)

KPI / ProductQ1 2025 Operational Change
Vyndaqel family+33% op
Comirnaty+62% op
Padcev+25% op
Nurtec ODT/Vydura+40% op
Lorbrena+39% op
Paxlovid−$1.5B, −75% op
Eliquis−4% op
Dividend cash paid$2.4B ($0.43/share)
Patients treated with Paxlovid (Q1)>750,000 (U.S. volume trending with infections)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025$61.0–$64.0B $61.0–$64.0B Maintained
Adjusted SI&AFY 2025$13.3–$14.3B $13.3–$14.3B Maintained
Adjusted R&DFY 2025$10.7–$11.7B $10.7–$11.7B Maintained
Effective tax rate (Adjusted)FY 2025~15% ~15% Maintained
Adjusted Diluted EPSFY 2025$2.80–$3.00 $2.80–$3.00 (trending toward upper end per CFO) Maintained
Net cost savings (ongoing program)Through 2025~$4.5B ~$4.5B (unchanged), plus new $1.2B SI&A savings by 2027 Raised (2027 add)
R&D re-organization savingsBy 2026N/A~$500M, reinvested in pipeline New
Manufacturing Optimization Phase IThrough 2027~$1.5B by 2027 ~$1.5B by 2027; initial savings later 2025 Maintained (timing detail)

Management clarified FY25 guidance excludes potential future tariffs; current year includes ~$150M known tariffs .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Cost realignment, margin focusTarget ≥$4B 2024 savings; mid‑70s gross margin aim Expanded target: ~$4.5B by end 2025; manufacturing savings by 2027 Added $1.2B SI&A via digital/AI by 2027; ~$500M R&D simplification by 2026 Increasing savings scope
Tariffs / national securityNot central on Q3 callNot central in Q4 8-KDetailed 232 investigation discussion; contingency planning; inventory, U.S. production Rising macro focus
IRA Part D redesignBaseline commentary on 2025 modeling IRA noted in 8-K risks ~$650M Q1 U.S. revenue dampener; expected to lessen later in 2025 Active headwind now
COVID business (durability)2024 pattern normalized; seasonality Q4 2024 COVID seasonal effects; one‑time items Stable waves; Paxlovid utilization correlated with infections; commercial transition Stabilizing endemic profile
Oncology pipeline (ADC, ELREXFIO, PADCEV)Multiple ADCs advancing; ELREXFIO growth; PADCEV first‑line Legacy Seagen integration, Phase III starts Multiple ADCs to pivotal; ELREXFIO Phase III earlier lines; PADCEV broader addressable pops Building momentum
Vaccines (Abrysvo, PCV)ACIP adult expansion; PCV 4th/5th gen pipeline Prevnar 20 adult/peds leadership; pipeline EC extended Abrysvo indication; ACIP expanded RSV recommendations; PCV plans Positive evolution
Obesity (oral)Danuglipron dose optimization planned, GIPR progressing Oral programs and timelines referenced in 8-K risks Discontinued danuglipron; focus on oral GIPR antagonist Phase II Portfolio refocus

Management Commentary

  • CEO: “We continued to execute with focus and discipline…strengthening our R&D organization and driving improved productivity…we believe we can be agile in navigating an uncertain and volatile external environment.”
  • CFO: “Adjusted diluted earnings per share of $0.92, ahead of our expectations, due to overall strong gross margin and cost management performance…we are currently trending toward the upper end of our adjusted diluted EPS guidance range.”
  • CFO on margins: “Adjusted gross margin for the quarter expanded to approximately 81%, primarily a result of favorability in accrued royalties partially offset by unfavorable product mix.”
  • CEO on pipeline re‑prioritization: “Our danuglipron announcement…demonstrates our commitment…we are committed to building our cardiometabolic pipeline…advancing internal programs such as our GIPR antagonist and pursuing external opportunities.”

Q&A Highlights

  • Dividend neutrality and commitment: Management reiterated maintaining and growing the dividend despite macro uncertainty and LOEs, supported by margin improvement programs .
  • Tariff exposure and mitigation: Detailed engagement on Section 232 process; contingency plans include inventory strategies and leveraging U.S. manufacturing; current FY25 guidance excludes future tariff impacts .
  • IRA impact quantified: $650M Q1 U.S. headwind with expected attenuation later in the year; CFO provided explicit modeling guidance around current tariffs ($150M FY25) .
  • COVID outlook: Paxlovid utilization closely tracks infection waves; commercial transition progressing in 49 international markets; COVID business viewed as durable .
  • Vyndaqel dynamics: Strong new patient starts and international reimbursement expansion offset expected competitive pressure through the year .

Estimates Context

  • Q1 2025 outcomes vs consensus: EPS beat (actual $0.92 vs $0.67 est.), revenue miss (actual $13.72B vs $14.05B est.)*.
  • Recent beats: Q4 2024 revenue and EPS beats; Q1 2024 beat on both revenue and EPS*.
  • Implications: Street models likely need to reflect stronger cost discipline and margin trajectory, while calibrating COVID and Paxlovid seasonality and IRA dampeners*.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Cost actions are driving material margin expansion; management now sees FY25 EPS trending toward the upper end of guidance, even with IRA/tariff uncertainty .
  • Mix shift toward oncology and durable non‑COVID brands is supporting EPS resiliency as Paxlovid normalizes; watch PADCEV, ELREXFIO, Lorbrena contributions .
  • Vaccine franchise strengthening: ACIP and EC actions around RSV plus PCV pipeline catalysts offer medium‑term tailwinds .
  • Obesity strategy pivots: danuglipron discontinued; focus turns to oral GIPR antagonist and BD—monitor Phase II readouts and external opportunities .
  • Near-term trading catalysts: continued cost program updates, tariff process developments, Q2/Q3 vaccination waves, and oncology/vaccine readouts could drive sentiment .
  • Model sensitivities: incorporate IRA headwinds, tariff baseline ($150M FY25), seasonality in COVID, and ongoing savings timing (manufacturing later 2025) .
  • Capital allocation balanced: delevering aided by Haleon exit; dividend supported; share repurchases not planned in FY25, authorization remains $3.3B .