Why Is Pfizer Stock Performing So Poorly? Key Drivers, Risks, and What to Watch

Just a few years ago, Pfizer was a household hero. Its COVID-19 vaccine felt like a global lifeline, and the company made tens of billions of dollars in the process. So, why is Pfizer stock performing so poorly? If you only looked at its recent performance, you might assume the company was in serious trouble, creating a confusing picture for anyone who remembers its recent success.

The answer reveals a surprising but crucial truth about the stock market: a stock’s price isn’t a reward for past glory, but a bet on future growth. The vaccine was a once-in-a-generation blockbuster, but investors are now asking, “What’s the next big hit?” With those record sales now fading, the fact that the Pfizer stock is underperforming the market simply reflects new, more normal expectations for its future.

This isn’t a story of complex financial charts or Wall Street jargon. It’s a breakdown of the simple, real-world reasons behind the performance of PFE stock—from the inevitable “COVID hangover” to the challenges facing its other drugs. You’ll soon understand exactly why a perfectly healthy company can sometimes have a struggling stock price.

The “COVID Hangover”: Why Peak Success Became a Problem

Pfizer’s stock troubles begin with its incredible, once-in-a-century success. Driven by its COVID-19 vaccine and Paxlovid treatment, the company’s revenue skyrocketed. In 2022 alone, these two products brought in more than $56 billion—a figure so massive it’s hard to comprehend. The company wasn’t just doing well; it was posting the kind of numbers that most corporations can only dream of.

The problem is, that level of success was never going to last. Think of it like a Hollywood studio releasing the biggest blockbuster movie of all time. The next year, it might release several profitable, well-regarded films, but they won’t match that historic blockbuster. For Pfizer, the intense demand for COVID products is fading, and sales are projected to fall by tens of billions. The company is still profitable, but it’s coming down from an unsustainable peak.

This creates a paradox where Pfizer has become a victim of its own success. During the pandemic, investors rushed to buy the stock, driving the price up in anticipation of those record-breaking profits. The good news of massive vaccine sales was already “priced in.” Now, the market is doing the opposite: it’s “pricing in” the return to normal.

For investors, a company going from astronomical sales back to merely great sales looks like a step backward. The stock’s decline doesn’t mean Pfizer is a failing company. Instead, it reflects the painful, but predictable, hangover that follows a once-in-a-lifetime party.

A Hard Lesson: Stock Prices Are Bets on the Future, Not Trophies for the Past

This brings us to the most confusing part of the whole situation—and perhaps the single most important lesson about the stock market. A stock’s price isn’t a reward for what a company has already accomplished. It’s a collective bet on how much money that company is going to make in the future. The billions of dollars Pfizer earned in 2022 are in the past; they are old news to Wall Street.

Think of it this way: buying a stock isn’t like paying for a delicious meal you just finished eating. It’s like placing a bet on how popular that restaurant will be next year. During the pandemic, investors were betting that Pfizer’s restaurant would have a line around the block for years to come. That bet sent the stock price soaring.

Now, investors are looking ahead and placing new bets. They see the “COVID hangover” and know the massive crowds are gone. They are looking past the pandemic success to ask a tougher question: what’s the next big thing that will bring customers in? The stock price is falling to reflect this new, more uncertain future. It’s not a judgment on the past; it’s a forecast for what comes next.

What Is a “Patent Cliff,” and Why Is It Spooking Investors?

As if the COVID sales decline weren’t enough, Pfizer is also dealing with another major challenge known as the “patent cliff.” Imagine an author who writes a bestselling novel. For a set number of years, a patent gives a drug company the exclusive right to make and sell a new medicine it invented, just like a copyright protects that author’s book.

The patent cliff is the moment that exclusive protection ends. Suddenly, other companies are allowed to produce and sell a cheaper, “generic” version of the same drug. For the original company, this is like sales falling off a cliff because revenue from that once-exclusive product can plummet almost overnight as customers switch to the lower-priced alternative.

For Pfizer, this isn’t a distant threat. Several of its major non-COVID drugs, which reliably earned billions of dollars, are at or near this point. This creates a kind of “double whammy” for investors. They see the temporary COVID revenue disappearing while, at the same time, the income from other key drugs is also threatened.

Ultimately, this cycle of invention and competition is a constant treadmill for every major pharmaceutical company. They all face patent cliffs eventually. This reality forces investors to look past today’s bestsellers and ask the most important question of all: what’s coming next?

The “What’s Next?” Problem: Why Pfizer’s Drug Pipeline Is Under a Microscope

That “what’s next?” question brings us to the single most important factor for a drug company’s future: its pipeline. Think of a pharmaceutical company like a movie studio. Its pipeline is the slate of upcoming films currently in production—the source of all future revenue. This portfolio of drugs in development, the result of its Research & Development (R&D), is what investors scrutinize to predict future success.

For a company like Pfizer, this pipeline is now under a microscope. After the once-in-a-generation success of its COVID-19 vaccine—a film that broke every box office record—investors are looking at the upcoming releases and feeling underwhelmed. The pipeline doesn’t just have to replace older drugs losing patent protection; it must also fill the enormous hole left by fading pandemic sales.

Investors, in particular, are searching for the next blockbuster. In the pharma world, a blockbuster is a drug that generates over a billion dollars in annual sales. Because developing new medicines is incredibly expensive and risky, with many failing along the way, companies rely on a few massive hits to pay for all the misses and drive real growth.

The current concern on Wall Street is that Pfizer’s drug pipeline outlook lacks that next guaranteed hit. With profits from its biggest-ever product fading, the company is under immense pressure to prove it can invent or acquire the next big thing. This explains why Pfizer decided to make a massive, multi-billion-dollar bet to solve this exact problem.

How a $43 Billion Gamble Aims to Find the Next Blockbuster

Facing a pipeline that looked a bit bare, Pfizer decided it couldn’t afford to simply wait for its own labs to produce the next smash hit. Instead of developing a blockbuster from scratch, which can take over a decade, it chose to buy one. This strategy led to its massive $43 billion purchase of a company called Seagen. It’s the corporate equivalent of a movie studio, worried about its upcoming slate, going out and acquiring a smaller, award-winning studio known for producing critically-acclaimed films.

So, what did Pfizer get for all that money? It acquired a leader in a highly advanced and promising area of cancer treatment. Seagen specializes in creating what are essentially “smart bombs” for cancer—therapies designed to hunt down and destroy tumor cells while leaving healthy cells largely unharmed. This move didn’t just add a few potential drugs to the pipeline; it instantly made Pfizer a major player in one of the most important and fastest-growing fields in medicine.

However, a price tag that big comes with enormous risk. Pfizer has placed a huge bet that Seagen’s drugs will become the billion-dollar blockbusters it so desperately needs to justify the cost and reignite growth. For now, investors are in a “wait-and-see” mode. They recognize the move was bold and necessary, but the gamble is so large that its eventual success—or failure—will shape Pfizer’s story for years to come.

Putting It All Together: Why Pfizer’s Stock Is a Story of Readjustment, Not Collapse

The story behind Pfizer’s stock isn’t about a company suddenly failing. It’s the story of a return to Earth after a once-in-a-century trip to the moon. With the pandemic’s urgency fading, the stock price is simply recalibrating from its unprecedented highs back to a more normal reality, driven by the market’s relentless focus on what’s next, not what just happened.

Before, a headline like this might have been confusing. Now, you can see the forces behind the price. You understand that a company’s past success and the market’s future bets are two different things. This shift from looking at the past to questioning the future is the most powerful tool for making sense of financial news, moving you beyond the surface-level question of “Why is Pfizer stock performing so poorly?”

So the next time you see a famous company’s stock fall, you’ll know to ask the most important question: what does the market expect to happen next? The debate over whether the stock will ever recover is really a debate about the company’s next big idea. You no longer just see a price; you see a story about expectation, and you now know how to read it.