Pfizer's gross margin dropped sharply in 2023 primarily due to the significant decline in revenues from its COVID-19 related products, the Comirnaty vaccine, and Paxlovid12.
- Impact of COVID-19 Product Sales: The reduction in sales of Comirnaty and Paxlovid contributed to the overall decline in gross margin. Comirnaty sales dropped by approximately 70%, while Paxlovid sales declined by about 95% compared to the previous year34. This decrease in sales was due to lower demand as the pandemic waned and vaccination rates stabilized3.
- Revenue Guidance Reduction: Pfizer slashed its full-year revenue outlook by $9 billion, reflecting the lower-than-anticipated sales of its COVID-19 vaccine and treatment4. This reduction in revenue guidance had a direct impact on gross margin, as the company's projections for total revenue decreased significantly4.
- Cost and Expense Increases: Despite the decline in sales, Pfizer's gross margin was affected by increased expenses. The company reported a 20% rise in adjusted selling, informational, and administrative (SI&A) expenses, which reached $3.42 billion5. Additionally, Pfizer anticipated cost savings of at least $3.5 billion by 2024, indicating that operational adjustments were being made to address the challenges6.
In summary, Pfizer's gross margin drop in 2023 was primarily driven by the steep decline in sales of its COVID-19 products, necessitated reductions in revenue guidance, and increased costs and expenses. These factors combined to significantly impact the company's gross margin.
3/30/2025 03:39am
