Pfizer faces challenges in regaining trust from Wall Street and its employees as it recovers from the decline caused by the Covid-19 pandemic.

• Pfizer is showing signs of recovering its business and regaining Wall Street's approval following the decline of its Covid-related operations.
• The company is facing challenges in balancing the needs of its workers with its own concerns and fears.
• 11 current and former Pfizer employees, all anonymous for fear of retaliation, spoke to CNBC about the company's dizzying climb, rapid decline, and turnaround strategy.

During a companywide town hall on May 2, CEO Albert Bourla announced that the company had a "phenomenal" first quarter, which caught Wall Street's attention, according to a recording heard by CNBC.

The pharmaceutical giant's stock had closed 6% higher the day before, after its quarterly results exceeded analyst expectations and it raised its full-year forecast.

In 2023, Pfizer's shares dropped more than 40%, making it one of the worst-performing large pharmaceutical stocks. Its market cap of $157 billion is now less than half of its 2021 peak of $350 billion.

Pfizer profited significantly from the pandemic, thanks to its successful Covid vaccine and antiviral pill Paxlovid. The company's profits surged, earning it widespread acclaim for its rapid development and deployment of a lifesaving shot that helped the world overcome the pandemic.

Pfizer's fall from grace was equally jarring as its success during the pandemic. In 2023, when the virus receded, Pfizer's revenue from Covid products plummeted. The world, which had hailed Pfizer as a pandemic hero a few years earlier, no longer needed the company in the same way.

While Pfizer is showing signs of stabilizing its business and regaining Wall Street's approval following a strong first quarter, some employees are expressing concerns about their future and lack of motivation due to the company's sudden financial turnaround.

Pfizer announced a multibillion-dollar cost-cutting program in October, which included reducing research and development spending and laying off hundreds of employees, including those in the Covid vaccine unit. The company stated in May that it is on track to achieve $4 billion in savings by the end of the year.

To match Wall Street's optimism, Pfizer is now attempting to improve employee morale.

11 current and former Pfizer employees, all requesting anonymity due to fear of retaliation, shared their insights with CNBC about the company's meteoric rise, sudden fall, and subsequent revival plan.

The fluctuating financial performance of the company has caused uncertainty among Pfizer's employees. While most current and former employees who spoke to CNBC described Pfizer as a good place to work, some current employees expressed optimism about the company's future direction following the first quarter.

The strategy shift has left some current employees dissatisfied, with higher workloads, remote worker displacement, and concerns about the business's future performance.

The company's multiyear cost-cutting program announced in May is causing concerns about potential U.S. layoffs among some current workers. Employees in certain manufacturing and supply chain divisions, who believe they will be affected by the cuts, have expressed low morale and motivation to work.

Numerous ex-Pfizer staff members, many of whom were let go or chose to leave in the past six months, expressed dissatisfaction with how the company handled cost-cutting measures in 2023. Several of these employees claimed that Pfizer management was not transparent about the layoffs and appeared more concerned with the company's stock performance than its employees' well-being throughout the process.

Bourla informed employees at the latest town hall that while layoffs in the U.S. have been finalized, there are still more happening overseas.

He described the job cuts as "extremely painful" and stated that it was "devastating" to dismiss employees.

But he also acknowledged that Wall Street likes the cuts.

"Bourla stated in the recording that he was concerned about everyone who could be affected and impacted by the situation, but it worked out. He also mentioned how the Street responded to it."

A Pfizer representative stated that cutting expenses would help us achieve a solid financial position and enhance our profitability in the future.

Pfizer's spokesperson stated that cutting expenses is one of the company's top priorities for the year, in addition to maximizing the performance of new products, innovating its drug pipeline, growing its oncology business through the acquisition of cancer drugmaker Seagen, and allocating capital to increase its dividend, reduce outstanding debt, and reinvest in the business.

The company is taking various measures to reduce costs, including cutting its drug portfolio and direct marketing spending, shrinking its real estate footprint, and reducing its investment in Covid, said the spokesperson.

The spokesperson stated that Pfizer does not view the layoffs lightly and is committed to supporting the affected employees with the necessary resources and empathy.

What went wrong in 2023

Pfizer entered 2023 on a high.

The company achieved a record-breaking $100 billion in sales in 2022, with over half of it coming from Covid vaccines and Paxlovid.

At Pfizer, employee morale was high due to the company's recent hiring spree and investment in various projects, according to current and former workers who spoke to CNBC.

The development of the Covid vaccine manufacturing process resulted in burnout for two former employees at the beginning of 2023.

Pfizer predicted a significant decline in annual revenue for 2023, ranging from $67 billion to $71 billion. This forecast included projected sales of $13.5 billion for Covid vaccines and $8 billion for Paxlovid.

It was not possible to predict the exact amount of revenue that would decrease at the time.

In an earnings call that same month, Pfizer executives predicted that approximately 24% of the U.S. population would receive an annual Covid booster in 2023. However, by December, only about 17% of U.S. adults had received the new Covid shots from Pfizer and Moderna, according to data from the Centers for Disease Control and Prevention.

Recent surveys indicate that many Americans who have already received Covid vaccinations believe they do not require additional protection because the perceived threat of the virus has decreased.

The use of Paxlovid in the U.S. was affected by decreases in Covid testing and infection rates, as well as doctors' concerns about potential interactions with common medications.

Despite the federal government returning millions of antiviral treatment courses to Pfizer in response to decreased demand, Pfizer announced in January 2023 that fewer courses were returned than expected by the end of the year.

Pfizer announced in October 2023 that it had reduced its 2023 sales guidance by approximately $9 billion due to the challenges faced by its Covid business.

Despite not disclosing the number of employees laid off, Pfizer reduced staff worldwide while also cutting costs.

Pfizer's revenue in 2023 was $58.5 billion, with $11.22 billion from its Covid vaccine and $1.28 billion from Paxlovid.

Pfizer faced other challenges at the end of the year, including abandoning the twice-daily version of its experimental weight loss drug, danuglipron, and experiencing slower uptake for its newly launched RSV vaccine in the U.S. compared to its competitor.

When Pfizer announced cost cuts, investors breathed a sigh of relief after a string of difficulties. However, for many employees, the post-pandemic strategy shift was a nightmare, as they shared with CNBC.

In January, Bourla admitted that 2023 was a challenging year for the company and its stock price. However, he stated that Pfizer took measures to begin 2024 with a fresh start.

The company is renegotiating multibillion-dollar Covid contracts with the EU and other governments, transitioning its Covid products to the commercial market in several countries, and writing off unused stock of its vaccine and Paxlovid.

He stated that determining the number of people who will use the vaccine is not straightforward. There were numerous factors that had to be taken into account.

Pfizer's portfolio of new products, including nine new approvals in the U.S. last year and a pipeline of drugs, will boost sales and bring in more future revenue, as touted by Bourla.

Pfizer has stated that the Seagen acquisition will provide a proven antibody-drug conjugate platform that will strengthen its commercial structure and enable it to become a "world-class oncology leader." Additionally, Pfizer has predicted that Seagen's targeted cancer therapies could generate more than $10 billion in risk-adjusted sales by 2030.

To prepare for upcoming patent expirations for blockbuster drugs such as Ibrance and Eliquis, Pfizer could utilize those revenue streams.

A 'slap in the face'

According to some current and former employees, it was known in early 2023 that widespread layoffs were possible at Pfizer. These individuals claimed that the company has a history of hiring excessively and later letting go of many employees, a practice that is common among large corporations.

Pfizer wasn't the only Covid-boom company whose business declined.

In 2023, the revenue of the biotech company from its Covid shot decreased. Similarly, companies outside the pharmaceutical industry that experienced growth in 2020, such as the fitness firm and digital meeting platform, faced challenges in adapting to the return to pre-pandemic lifestyles.

Pharmaceutical companies of all sizes are cutting their workforce as they face financial challenges such as drug patent expirations and Medicare drug price negotiations.

Biotech companies are facing challenges in 2023, including rising interest rates, a poor deal market, and limited fundraising, which are making it difficult for them to stay afloat.

According to current and former employees at Pfizer, there were indications of future challenges, including a round of layoffs in the first quarter of 2023 and budget constraints that restricted travel, team lunches, and purchases of new lab and manufacturing equipment.

In March 2023, Pfizer announced its acquisition of Seagen for $43 billion, which some current and former employees saw as another indication of the company's growth plans. However, they expressed concern about the high price tag, given that Covid sales were already declining.

A few former employees claimed they were caught off guard by the company's decision to lay off staff, despite having been optimistic about the business prior to the October cost-cut announcement.

A former employee who worked at a gene therapies site in Durham, North Carolina, stated that they were repeatedly assured their job was secure, despite Pfizer divesting much of its early stage portfolio for those treatments at the beginning of 2023. The company later confirmed in October that it would shut down the site and lay off an undisclosed number of employees.

Pfizer's layoffs impacted some employees involved in the research, development, and manufacturing of the company's Covid vaccine, according to current and former workers. These employees, who were previously celebrated as pandemic heroes, felt particularly betrayed by the cuts.

One former employee who worked on the vaccine said, "We felt like we were thrown out the door when they no longer needed us."

The employees who spoke with CNBC expressed their belief that the company mishandled the layoffs and the months leading up to them.

Some employees expressed dissatisfaction with the perceived lack of transparency from higher management regarding the layoffs. Additionally, some workers questioned why Pfizer did not establish more realistic expectations for its Covid business earlier, particularly as the number of cases and public concern about the virus decreased in the U.S.

A few days after Pfizer announced its cost-cutting program to investors, executives held a companywide town hall with its more than 80,000-person workforce, which one worker described as "disastrous" and another called a "slap in the face."

According to some current and former employees, Payal Sahni Becher, Chief Human Experience Officer at Pfizer, acknowledged that the company's Covid business was struggling but stated that it was preparing for growth through cost cuts.

The executives discussed the impending layoffs during the town hall, but they were vague about the number of employees, teams, or locations that would be affected, the timing of the layoffs, and the criteria used to determine who would be let go.

Bourla and Becher were accused of being too relaxed during the town hall, making light jokes and laughing at some of the employees' questions, including one about bonuses.

Return-to-office policies

Some current and former employees said that in addition to layoffs, the return-to-office policies implemented in 2023 forced out workers in fully remote roles.

Some employees claimed that their virtual work status was revoked and they were required to return to their office on a specific date, despite being fully remote workers. While some workers were allowed to work from home two or three days a week, those who lived far from their office were unable to comply with the new mandates.

Remote workers who did not comply were let go, according to current and former employees. Pfizer has not confirmed or provided details about its recent return-to-office policies, a spokesperson said.

One current employee stated that the return to office has been the worst managed aspect of the situation.

Some employees claimed that those policies also applied to workers who were relocated from recently closed facilities.

In October, Pfizer announced that it would close its office in Peapack, New Jersey in 2024, affecting nearly 800 workers. The company had previously announced these plans in 2021. Pfizer stated that the majority of employees would be relocated to its headquarters in New York City.

An hour-and-a-half commute to work became closer for one employee.

In a town hall meeting on Oct. 26, Pfizer Chief Global Supply Officer Mike McDermott stated that the decision to shut down the Peapack site was not made lightly. However, he added that having Peapack employees work in person at Pfizer's headquarters aligned with the company's culture, as heard in a CNBC recording.

Pfizer leadership has been vocal about requiring employees to work in person again.

During the APEC CEO Summit in November, Bourla stated that teleconferencing cannot replace the personal interaction that allows for idea sharing, building connections, and even disagreement resolution.

Several companies, including Pfizer and tech giants such as Google, have reversed course on remote work after the pandemic, reportedly frustrating workers.

Employee morale

According to current and former employees, employee morale decreased significantly in the months following the October layoff announcement.

Some workers expressed their lack of motivation to work with their job security uncertain, while one employee described feeling like they were "walking on eggshells" for weeks due to the fear of losing their job.

Several employees reported feeling overwhelmed due to understaffing and a shortage of resources, while some workers admitted to struggling with sudden internal changes, such as being assigned new managers or being transferred to different teams.

Several transparency meetings have been held by Pfizer, where employees can anonymously ask questions and give feedback to senior leadership, according to some current employees.

Some workers' faith in executive leadership decreased, according to current and former employees who spoke with CNBC.

While some employees recognized the responsibility of executives to consider their company's stock price, they claimed that Bourla and other officials seemed to be solely focused on Pfizer's shares, despite the layoffs that were taking place.

After the town hall on May 2, some workers said that Bourla's remarks appeared to change, while others said they sounded encouraging and more genuine.

Some employees expressed uncertainty about the company's future business performance.

One employee found it comforting to see Pfizer's positive first-quarter results but acknowledged that it does not ensure a smooth future for the company and its staff.

The success of Pfizer's rebound will depend on the performance of its once-daily version of danuglipron in an early clinical trial this year, as well as the commercial success of Seagen's pipeline of cancer drugs, which may take several years before Pfizer sees significant returns from those products.

In the May 2 town hall, Bourla stated that he could sense a decline in morale towards the end of 2023.

"According to the recording heard by CNBC, he stated, "I could sense that people were impacted because we were at the pinnacle of our reputation and recognition globally. However, within six months, we began to feel that our standing was being questioned. This was not something we enjoyed or felt good about.""

Bourla commended staff for a successful first quarter, but warned that the company is not yet out of danger. However, he expressed optimism that the company is moving in a positive direction.

Bourla stated that there will be challenges and fluctuations in our journey, but he is confident that our direction will be upward. He believes that we will soon experience the same pride we felt in the years 2020, 2021, 2022, and 2023, during the first six months.