Executive Summary
Pfizer reported $62.6 billion in revenues for 2025, down 2%, as COVID-19 product sales collapsed 59% for Paxlovid and 20% for Comirnaty. Adjusted diluted EPS rose 4% to $3.22 despite the revenue decline, driven by $5.7 billion in cost savings from restructuring initiatives. The company faces a significant patent cliff from 2026-2030 and increasing pricing pressure from the IRA Medicare drug price negotiation program.
What happened
Pfizer reported full-year 2025 revenues of $62.6 billion, down $1.0 billion or 2% from 2024, reflecting an operational decline of 2% partially offset by favorable foreign exchange of $247 million. The decline was primarily driven by sharp contractions in COVID-19 product revenues: Paxlovid fell 59% operationally to $2.4 billion due to lower infection rates and the non-recurrence of a $771 million favorable adjustment from 2024, while Comirnaty declined 20% operationally to $4.4 billion driven by lower vaccination rates following narrower CDC recommendations and reduced international contractual deliveries. These declines were partially offset by strong performance from key growth products including the Vyndaqel family (up 16% to $6.4 billion), Eliquis (up 7% to $8.0 billion, representing 13% of total revenues), Padcev (up 22% to $1.9 billion), and Lorbrena (up 40% to $1.0 billion). The company reported net income attributable to common shareholders of $7.8 billion, down from $8.0 billion in 2024, and reported diluted EPS of $1.36, down 3%. However, adjusted diluted EPS increased 4% to $3.22, driven primarily by cost reductions. Operating cash flow declined 8% to $11.7 billion, while the company generated $1.35 billion in charges related to in-licensing agreements with 3SBio and YaoPharma. Cost of sales as a percentage of revenues improved to 25.7% from 28.1%, driven by favorable sales mix away from COVID products and lower inventory step-up amortization. The company recorded $1.6 billion in higher intangible asset impairment charges and took a loss on equity securities in 2025 versus gains in 2024. Selling, informational and administrative expenses decreased $936 million, while research and development expenses decreased $385 million, both reflecting focused investments and productivity improvements from the cost realignment program.
Why it matters for investors
The results demonstrate Pfizer's ability to stabilize earnings through aggressive cost management despite facing structural revenue headwinds from the COVID product normalization and looming patent expirations. The 4% increase in adjusted diluted EPS despite a 2% revenue decline signals meaningful operational leverage from the cost realignment program, which delivered $5.1 billion in savings through 2025 with an additional $600 million targeted by end of 2026, alongside manufacturing optimization that achieved $600 million of the $1.5 billion goal. However, the business faces a significant patent cliff, with the company explicitly stating it anticipates a significant reduction of revenue from patent-based or regulatory exclusivity expiries in 2026 through 2030, with the rate of reduction expected to significantly accelerate over the next few years. The $1.5 billion revenue impact from patent expirations expected in 2026 represents just the beginning of this headwind. Additionally, the IRA Medicare drug price negotiation program presents material pricing pressure, with Eliquis (13% of total revenues) already subject to negotiated pricing effective January 2026, and Ibrance, Xtandi, and Xeljanz selected for subsequent years. The IRA Medicare Part D Redesign negatively impacted 2025 revenues by approximately $1 billion, with no material incremental impact expected in 2026 versus the 2025 baseline. The company's capital allocation framework prioritizes maintaining and growing dividends, reinvesting in the business, and potential share repurchases after de-levering the balance sheet, with $3.3 billion remaining in share repurchase authorization but no repurchases executed in 2025. The voluntary withdrawal of Oxbryta in September 2024 based on unfavorable benefit-risk profile and the partial clinical hold on osivelotor highlight execution risks in the pipeline. The acquisition of Metsera for obesity assets and integration of Seagen represent significant strategic bets in highly competitive therapeutic areas.
Bullish points
Cost realignment program delivered $5.1 billion in net cost savings through 2025 with an additional $600 million expected by end of 2026, while manufacturing optimization achieved $600 million of $1.5 billion targeted savings, demonstrating strong operational leverage as adjusted diluted EPS increased 4% despite revenue decline.
Key growth drivers showed strong momentum: Vyndaqel family revenues increased 16% operationally to $6.4 billion driven by continuing uptake in patient diagnosis and improved affordability; Padcev grew 22% operationally to $1.9 billion with increased market share in first-line urothelial cancer; Lorbrena grew 40% operationally to $1.0 billion; and Eliquis grew 7% operationally to $8.0 billion on higher demand globally despite generic entry in certain international markets.
The company completed the sale of its remaining Haleon investment for $6.3 billion in the first quarter of 2025 and announced an agreement to sell its ViiV investment for $1.9 billion in January 2026, providing significant capital to support allocation priorities including dividend sustainability, reinvestment, and potential share repurchases.
Seagen acquisition is on track to generate approximately $1 billion of annual cost synergies by end of 2026, with approximately $800 million already achieved by year-end 2025, while the Metsera acquisition targets approximately $600 million of annual cost synergies by end of 2026, both supporting margin expansion.
Strong pipeline progress with multiple late-stage programs across oncology, immunology, cardiovascular, and vaccines, including disitamab vedotin, sigvotatug vedotin, and osivelotor for sickle cell disease (subject to partial clinical hold restrictions), as well as combination respiratory vaccines and next-generation pneumococcal conjugate vaccine candidates.
Bearish points
The company faces a significant patent cliff, explicitly stating it anticipates a significant reduction of revenue from patent-based or regulatory exclusivity expiries in 2026 through 2030, with the rate of reduction expected to significantly accelerate over the next few years. Patent expirations are expected to reduce revenue by $1.5 billion in 2026 alone.
IRA Medicare drug price negotiation creates material pricing pressure, with Eliquis (13% of total revenues) subject to negotiated pricing effective January 2026, and Ibrance, Xtandi, and Xeljanz selected for maximum fair pricing effective 2027-2028. The IRA Medicare Part D Redesign negatively impacted 2025 revenues by approximately $1 billion, with impacts particularly acute on higher-priced medicines.
COVID-19 product revenues continue to collapse, with Paxlovid declining 59% operationally to $2.4 billion and Comirnaty declining 20% operationally to $4.4 billion, with management expecting continuous decline in vaccination rates due to additional changes in vaccination recommendations and revenues fluctuating based on timing, duration, and severity of COVID-19 cases.
Operating cash flow declined 8% to $11.7 billion in 2025 from $12.7 billion in 2024, driven by timing of receipts and payments in ordinary course of business and lower net income, alongside a $1.35 billion cash outflow for the in-license arrangement with 3SBio.
Pipeline execution risks evident in voluntary withdrawal of Oxbryta in September 2024 based on unfavorable benefit-risk profile and partial clinical hold on osivelotor prohibiting enrollment in certain geographies, while withdrawal of sasanlimab filing for high-risk non-muscle invasive bladder cancer in U.S. and EU to allow additional data collection indicates regulatory challenges.
Ibrance revenues declined 6% operationally to $4.1 billion, driven by lower net price in the U.S. largely due to higher manufacturer discounts from IRA Medicare Part D Redesign and generic entry in certain international markets, demonstrating vulnerability of major products to both policy and competitive pressures.
Key highlights
Pfizer's 2025 performance demonstrated the tension between structural revenue headwinds and operational improvement initiatives. Total revenues of $62.6 billion declined 2% year-over-year, driven primarily by a 59% operational decline in Paxlovid to $2.4 billion and a 20% operational decline in Comirnaty to $4.4 billion as COVID-19 products normalized from pandemic levels. Excluding COVID products, revenues increased 6% operationally, supported by strong performance from Vyndaqel family (up 16% to $6.4 billion), Eliquis (up 7% to $8.0 billion, representing 13% of total revenues), Padcev (up 22% to $1.9 billion), and Lorbrena (up 40% to $1.0 billion). Despite the revenue decline, adjusted diluted EPS increased 4% to $3.22, demonstrating significant operational leverage from the cost realignment program that delivered $5.1 billion in net cost savings through 2025 with an additional $600 million targeted by end of 2026. Manufacturing optimization achieved $600 million of the $1.5 billion savings goal targeted by end of 2027. Cost of sales as a percentage of revenues improved to 25.7% from 28.1%, while selling, informational and administrative expenses decreased $936 million and research and development expenses decreased $385 million. The company faces significant forward-looking challenges, with management explicitly stating it anticipates a significant reduction of revenue from patent-based or regulatory exclusivity expiries in 2026 through 2030, with the rate of reduction expected to significantly accelerate over the next few years. Patent expirations are expected to reduce revenue by $1.5 billion in 2026. Additionally, the IRA Medicare drug price negotiation program creates material pricing pressure, with Eliquis subject to negotiated pricing effective January 2026, and Ibrance, Xtandi, and Xeljanz selected for maximum fair pricing effective 2027-2028. The IRA Medicare Part D Redesign negatively impacted 2025 revenues by approximately $1 billion. The company completed strategic portfolio actions including the sale of remaining Haleon shares for $6.3 billion in first quarter 2025 and announced an agreement to sell ViiV investment for $1.9 billion, providing capital to support dividend sustainability, reinvestment, and potential share repurchases, with $3.3 billion remaining in authorization but no repurchases executed in 2025. Operating cash flow declined 8% to $11.7 billion.
Management commentary
Management stated that 2026 key priorities are: (1) maximize value of key transactions, (2) deliver on critical R&D milestones, (3) invest to maximize post-2028 growth, and (4) scale AI across the business. The company believes digital enablement, including expanding automation, data-driven decision making, and enterprise AI solutions will strengthen productivity and accelerate innovation. Regarding the cost realignment program, management noted it aims to realign costs with longer-term revenue expectations, with the program expanded in 2025 after identifying additional productivity opportunities to further reduce costs primarily in selling, informational and administrative expenses, driven in large part by enhanced digital enablement, including automation and AI, and simplification of business processes. On the COVID-19 products, management stated for Comirnaty in 2026, they expect market share in commercial markets and revenue phasing similar to 2025, primarily concentrated in the second-half of the year, but could see continuous decline in vaccination rates due to additional changes in vaccination recommendations. For Paxlovid, management expects a higher proportion of revenues to be delivered in the second-half of the year and revenues to fluctuate based on the timing, duration and severity of COVID-19 cases. Management emphasized they believe they have a strong pipeline and are well-positioned for future growth, with R&D at the heart of fulfilling the purpose to deliver breakthroughs that change patients' lives. Management stated they continue to evaluate the impact of the IRA on business, operations and financial condition and results as the full effect of the IRA on the business and the pharmaceutical industry remains uncertain. Regarding capital allocation, management stated the framework is designed to enhance long-term shareholder value and is based on three core pillars: maintaining and, over the long term, growing the dividend, reinvesting in the business and the potential to make share repurchases after de-levering the balance sheet, with expectation to continue to de-lever in a prudent manner to maintain a balanced capital allocation strategy.
What to watch next
Investors should monitor:
Impact of patent-based or regulatory exclusivity expiries expected to reduce revenue by $1.5 billion in 2026, with management explicitly stating the rate of reduction is expected to significantly accelerate over the next few years as several major in-line products face expirations from 2026 through 2030.
Implementation and revenue impact of IRA Medicare drug price negotiation, with Eliquis maximum fair price effective January 1, 2026, Ibrance and Xtandi maximum fair pricing effective January 1, 2027, and Xeljanz maximum fair pricing effective January 1, 2028, as well as potential selection of additional products in future years.
Trajectory of COVID-19 product revenues, particularly whether vaccination rates continue to decline following changes in CDC recommendations and whether Paxlovid revenues fluctuate materially based on timing, duration and severity of COVID-19 infections, with majority of global Comirnaty revenues concentrated in second-half of year.
Execution of cost realignment program to achieve remaining targeted $600 million in net cost savings by end of 2026 and manufacturing optimization program to achieve remaining $900 million of $1.5 billion targeted savings by end of 2027, as well as integration synergies from Metsera and Seagen acquisitions.
Late-stage pipeline execution and regulatory progress, particularly for disitamab vedotin in first-line HER2+ metastatic urothelial cancer, sigvotatug vedotin in NSCLC, osivelotor for sickle cell disease (subject to partial clinical hold restrictions), and MET-097i for chronic weight management, as well as outcome of FDA engagement regarding Oxbryta withdrawal and ongoing regulatory processes.
This summary is based solely on excerpts from the company's Form 10-K filing.