NEW YORK – Amid questions over the financial impact of tariffs and Medicare Part D reform, Pfizer did not meet the consensus Wall Street revenue expectations in the first quarter of 2025 but saw continued sales growth within its oncology segment.
As the company navigates an uncertain trade landscape, it will also face generic competition for several drugs in its pipeline. To mitigate revenue losses, Pfizer plans to invest heavily in its pipeline in 2025, which includes several precision oncology drugs in Phase III trials.
"Our business is actually evolving such that, particularly in the oncology space, where we're leaning into that business, those products actually yield a very high gross margin and operating margin performance," said Pfizer CFO David Denton in a call to discuss the firm's first quarter financial performance.
For the three months ending March 31, Pfizer reported $13.72 billion in revenue, an 8 percent drop from $14.88 billion in Q1 2024, missing the Wall Street consensus estimate of $14.09 billion.
Pfizer's oncology business unit saw slower growth than in Q1 2024 but still brought in $3.76 billion in Q1 2025, a 6 percent increase from $3.55 billion in the year-ago quarter. In Q1 2024, the oncology segment grew 18 percent year over year.
Pfizer said it was looking to strengthen its pipeline, investing $2.2 billion in R&D in the first quarter. The company expects to make further investments in its pipeline through the end of 2025 and recognize savings from multiple cost-cutting efforts it launched in 2024, which the company said could total $7.2 billion by 2027.
"As we advance our pipeline with sharpened focus, we are intensifying our rigorous commercial assessment and portfolio prioritization from early clinical development," Pfizer CEO Albert Bourla told investors on a call Tuesday morning. "This means we will be disciplined in managing our portfolio, directing investment and attention to potential blockbusters or mega blockbusters, and scrutinizing the total number of assets under development."
Among Pfizer's precision oncology products, revenues for Ibrance (palbociclib), a CDK4/6 inhibitor used to treat hormone receptor (HR)-positive and HER2-negative breast cancer that is Pfizer's top-selling oncology drug, were down 7 percent in Q1 2025 to $977 million, compared to $1.05 billion in Q1 2024. Pfizer said that decline was due in part to the Medicare Part D redesign, which set a $2,000 out-of-pocket cap for drug spending, after which manufacturers are required to provide a 20 percent discount on branded drugs. Denton said the redesign "dampened" US revenues by $650 million in Q1 2025.
Ibrance was also selected by the US Centers for Medicare and Medicaid Services for the next round of price negotiations under the Inflation Reduction Act (IRA), which are not mandatory, but drugmakers risk their drugs being pulled off the Medicare market if they refuse to negotiate. New prices are slated to go into effect in 2027.
"The IRA was a significant setback for us that took down a lot of funding of the private sector towards biotech," Bourla said, adding that threat of potential pharmaceutical import tariffs have also reduced investment in the US biotech sector, placing the industry at risk of being overtaken by Chinese companies. He said everyone "should be concerned, not only from a commercial but also from [a] national security point of view."
On the other hand, many of Pfizer's precision oncology drugs showed strong performances in Q1. Revenue for Lorbrena (lorlatinib), which treats ALK-positive NSCLC, increased 36 percent year over year to $222 million, from $164 million in Q1 2024. Over the same period, the BRAF-MEK inhibitor combo Braftovi (encorafenib) and Mektovi (binimetinib) brought in $136 million, a 17 percent increase from $116 million in Q1 2024. Revenue from Talzenna (talazoparib), a PARP inhibitor for certain types of breast and prostate cancers, soared 74 percent to $40 million, versus $23 million in Q1 2024.
Adcetris (brentuximab vedotin), a CD30-directed treatment for some types of classical Hodgkin lymphoma, B-cell lymphoma, and T-cell lymphoma that Pfizer acquired when it bought ADC-focused Seagen in late 2023, brought in $218 million, 15 percent lower than the $257 million generated in Q1 2024.
Pfizer said it will present results from a Phase III study evaluating vepdegestrant, a PROTAC degrader codeveloped with Arvinas for the treatment of ER-positive, HER2-negative breast cancer, as a late-breaking presentation at the American Society of Clinical Oncology's annual meeting in Chicago in May.
Tariff impact
During the call, Pfizer executives acknowledged the potential impact of US President Donald Trump's proposed 25 percent tariffs on pharmaceuticals but stopped short of adjusting year-end forecasts to account for tariff costs. Other drug manufacturers have been more explicit about the hit they might take from tariffs, with Merck expecting tariff costs to total $200 million in 2025.
"The pharmaceutical industry is currently navigating a complex global landscape shaped by rapidly evolving trade and tariff policies," Denton said, adding that the company has established a team to come up with mitigation strategies should the Trump administration follow through with tariffs, including managing inventory and leveraging domestic manufacturing.
Pfizer's adjusted net income for Q1 2025 was $5.24 billion, or $.92 per share, compared to $4.67 billion, or $.82 per share, in Q1 2024. Despite Pfizer missing analysts' average revenue expectations, Pfizer's Q1 2025 EPS exceeded consensus Wall Street estimates of $.68 by 35.77 percent.
For full-year 2025, Pfizer reaffirmed its financial outlook, expecting to report EPS between $2.80 and $3.00. The firm expects revenues to fall between $61 billion and $64 billion for the full year.