Pfizer PFE is likely to encounter several headwinds in the next couple of years that can hurt its sales and profits, the first being its upcoming loss of exclusivity ("LOE") cliff.
Though Pfizer expects a moderate negative impact on revenues from the LOE in 2025, the impact is expected to be significant in the 2026-2030 period as several of its key products, including Eliquis, Vyndaqel, Ibrance, Xeljanz and Xtandi, will face patent expirations.
In addition, Pfizer expects an unfavorable impact of approximately $1 billion from the Medicare Part D redesign under the IRA, which took effect in the first quarter of 2025 and hurt Pfizer's revenues in the first half. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are most affected by the IRA.
The third key headwind is the uncertainty in sales of its COVID products, Comirnaty and Paxlovid. Though sales of Paxlovid and Comirnaty have stabilized in 2025 after declining significantly in the past two years, their sales are usually weighted toward the second half of the year and are difficult to estimate as they depend on infection rates. There is an element of uncertainty related to COVID sales, and they may decline further in future years.
Lastly, uncertainty around tariffs and trade production measures has muted economic growth. President Trump has once again threatened to impose heavy tariffs, as high as 250%, on pharmaceutical imports. Trump's repeated threats to impose tariffs on pharmaceutical imports are aimed at pushing American pharma companies to shift pharmaceutical production back to the United States, primarily from European and Asian countries. Trump has said that drugmakers have about one to one and a half years to bring production back to the United States before the new tariffs are imposed.
However, despite all the headwinds, we believe Pfizer's key drugs like Vyndaqel, Padcev and Eliquis and new and newly acquired products should continue to drive top-line growth. Pfizer's significant cost reduction and efforts to improve R&D productivity measures should drive profits. Though Pfizer does not expect strong top-line growth over the next three years due to the LOEs, it expects EPS growth.
In 2022, in the United States, Congress passed the IRA, which made significant changes to how drugs are covered and paid for under Medicare, including penalties for significant increases in the prices of drugs.
Among other measures, the IRA requires the U.S. Department of Health and Human Services to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D.