On Tuesday, Pfizer (PFE.US) reported its fourth-quarter earnings, with both revenue and profit surpassing market expectations despite a continued decline in demand for COVID-19-related products. The company also reaffirmed its moderate 2026 guidance, which had previously sparked investor concerns when announced last December. Additionally, Pfizer released preliminary data for its novel weight-loss therapy, although the disclosed information was limited.
Financial results showed Pfizer's Q4 revenue reached $17.56 billion, a slight decrease of approximately 1% year-over-year. The revenue decline was primarily driven by lower demand for its COVID-19 vaccine and the oral antiviral drug Paxlovid: COVID-19 vaccine sales were $2.3 billion, surpassing the $2 billion expectation but falling by one-third compared to the prior year; Paxlovid sales were a mere $218 million, significantly missing the $589 million forecast and plunging by over two-thirds annually. However, the total revenue figure exceeded the market consensus of $16.95 billion, as the overall performance of Pfizer's multiple blockbuster drugs met expectations: despite facing competition from Merck's (MRK.US) new product, its star pneumonia vaccine Prevnar achieved sales of $1.7 billion, slightly above the $1.6 billion expectation; the anticoagulant Eliquis generated $2 billion in sales, and the heart disease medication Vyndaqel brought in $1.7 billion, both aligning with market forecasts.
For the quarter, the company recorded a net loss of $1.65 billion, or a loss of $0.29 per share; this contrasts with a net profit of $410 million, or earnings of $0.07 per share, in the same period last year. Excluding one-time items such as restructuring charges and intangible asset-related costs, Pfizer's adjusted earnings per share for Q4 were $0.66, beating the market expectation of $0.57.
Looking ahead, Pfizer maintained its unchanged 2026 performance guidance: adjusted EPS is projected to be between $2.80 and $3.00, with revenue forecasted at $59.5 billion to $62.5 billion, indicating revenue levels largely flat compared to 2025. The company had previously stated that the subdued revenue outlook for 2026 is partly due to ongoing sales declines for its COVID-19 vaccine and Paxlovid, which are expected to reduce full-year revenue by approximately $1.5 billion year-over-year to $5 billion. Beyond COVID-19 products, the loss of market exclusivity for several drugs is projected to contribute an additional $1.5 billion reduction in annual revenue. Multiple drugs, including Prevnar, are facing increasingly intense market competition.
Pfizer's Chief Financial Officer, Dave Denton, informed investors last December that the 2026 guidance already fully incorporates the impacts of price compression and narrowing profit margins. As part of a landmark drug pricing agreement reached with U.S. President Trump, Pfizer plans to offer steeper discounts in its Medicaid business. Under this agreement, Pfizer committed to supplying existing medications to Medicaid patients at the lowest prices charged in other developed nations; it also pledged to provide equivalent "most-favored-nation" drug pricing for Medicare, Medicaid, and commercial insurers. In exchange, Pfizer will receive a three-year tariff exemption.
In January, Pfizer's rheumatoid arthritis treatments Xeljanz and Xeljanz XR were included in the third round of the Medicare drug price negotiation list, with the newly negotiated prices set to take effect in 2028.
Whether the novel weight-loss drug can fill the revenue gap remains uncertain. To counterbalance the sales decline of COVID-19 products and the revenue contraction of established drugs, the pharmaceutical giant is turning its focus to long-term investments in its pipeline, including the $10 billion acquisition of the obesity biotech company Metsera. Concurrently with this earnings release, Pfizer disclosed Phase II clinical data for a Metsera-developed obesity injection, which allows for once-monthly dosing and delivers significant weight loss for patients, highlighting the potential value of the acquisition. However, following the earnings report, Pfizer's stock fell over 5% in pre-market trading.
Because the disclosed details from this clinical trial were extremely limited, investors have grown skeptical about whether the high-priced acquisition of Metsera can adequately compensate for the performance gap left by declining revenues from the COVID-19 vaccine and oral drug businesses. Clinical data indicated that after 28 weeks of treatment, subjects experienced a maximum weight reduction of 12.3% compared to the placebo group. Analysts pointed out that more detailed information is still required to accurately assess the drug's positioning within the rapidly evolving market, which is currently dominated by Novo Nordisk (NVO.US) and Eli Lilly (LLY.US).
Mizuho healthcare sector expert Jared Holz stated, "The market is currently firmly controlled by two well-established companies." He believes that Pfizer needs a product demonstrating significantly superior efficacy or safety to establish a foothold in this competitive arena.