Pfizer’s profits will fall short of Wall Street estimates next year, as it faces weaker sales of COVID products and squeezed margins stemming from its deal with the U.S. government to lower prescription drug costs. 

The drugmaker does not expect to return to growth until 2029, facing looming generic competition on several older medicines set to lose patent protection in coming years.

Its pipeline has not produced a game-changing drug since it helped to develop COVID vaccine Comirnaty and produced COVID treatment Paxlovid. The company is working to save more than $7 billion annually through 2027 as it tries to control costs.

The drugmaker expects 2026 adjusted profit per share to be between $2.80 and $3, below analysts’ average estimate of $3.05 per share, according to data compiled by LSEG.

It expects revenue for next year in the range of $59.5 billion to $62.5 billion, compared with estimates of $61.59 billion.

The projection includes a drop in revenue from its COVID-19 products of about $1.5 billion from this year. The company also expects a revenue hit of about $1.5 billion due to certain products losing exclusivity in 2026.

The drugmaker said Tuesday it exceeded its expectations for cost reductions in 2025 and is on track to deliver most of the savings next year. It expects 4% operational revenue growth, which excludes COVID products and those that are set to lose patents.

Pfizer was the first major pharmaceutical company to sign a deal with the Trump administration to lower the price of its prescription drugs in the Medicaid program in exchange for three years of tariff relief.

The company said the Medicaid discounts would result in price and margin compression next year.

U.S. vaccines have been under pressure since vaccine-skeptic Robert F. Kennedy Jr. became health secretary and has worked to reduce the country’s reliance on the interventions. Chief Executive Albert Bourla called the government’s vaccine position “clearly an anomaly” and said it will continue investing in vaccines.

Pfizer revised its revenue forecast for 2025 to about $62 billion from the previous range of $61 to $64 billion. It maintained its adjusted profit outlook for the year.

The company expects full-year 2026 adjusted R&D expenses to be in the range of $10.5 billion to $11.5 billion – $500 million higher at either end than the 2025 estimate – due to development of an antibody in-licensed from 3SBio as well as multiple clinical programs from Metsera.

Pfizer last month closed its up to $10 billion acquisition of Metsera after winning shareholder approval, gaining a foothold in the fast-growing obesity market following a fierce bidding war with Novo Nordisk.