What’s going on here?

Drugmaking giant Pfizer reported dwindling sales on Tuesday – but the firm still managed to plow through analysts’ expectations.

What does this mean?

Covid-related products brought in more than half of Pfizer’s $100 billion in sales last year, so it’s fair to say the firm’s milking those offerings for all they’re worth. But that’s the thing about cash cows: sooner or later, they run dry – and then you wind up in poor Pfizer’s current predicament. See, demand for its pandemic-punching products took a nosedive last quarter, with sales plummeting around three-quarters from the same time last year. And sure, Pfizer’s Covid antiviral pills took off in China, and non-Covid offerings jumped 5%, but that couldn’t stop a 29% drop in overall sales. Thing is, no one was really expecting much of Pfizer anyway – so the firm managed to beat analysts’ ultra-low expectations.

Why should I care?

Zooming in: Pfizer’s plan B.

Investors are still feeling antsy about Pfizer’s future – and the Covid-shaped hole in its revenue has made Pfizer’s stock one of Big Pharma’s worst performers this year. But the company’s planning to ramp up product launches to fix that, pumping billions into both research and dealmaking. Its $43 billion purchase of Seagen – a cancer treatment firm – back in March seems like a step in the right direction, but there’s still a long road ahead.

The bigger picture: Sector-wide shakeup.

Pfizer isn’t the only pharma giant trying to find some new moneymakers. Last week a whole host of drugmakers, including AstraZeneca and Merck, said that expiring patents and growing competition were spurring them to spend on acquisitions and research. And smaller US biotech firms could be prime targets. After all, their valuations are well below their pandemic peaks – and with the upstarts’ top debt providers hitting the brakes on funding, the small fry might have little choice but to cozy up to the big fish.

What’s going on here?

JPMorgan (JPM) snapped up troubled lender First Republic (FR) this week – but that’s just a Band-Aid on a wounded economy.

What does this mean?

FR has been teetering on the edge of disaster ever since Silicon Valley Bank (SVB) collapsed back in March. And sure, help was at hand – like a $30 billion cash infusion – but even that couldn’t shore up customers’ confidence. See, first-quarter results revealed a near 50% drop in deposits, and that sent FR’s shares into a nose-dive – going into freefall till regulators cried “enough” and arranged for JPM to scoop up the lender’s assets. With that, FR claimed the dubious honor of the second-biggest bank failure in US history – dethroning SVB after just a month, and becoming the fourth small lender to crumble since early March.

Why should I care?

Zooming in: Bigger isn’t better.

Regulators picked JPM’s offer because it was the only firm ready to gobble FR up whole: all the others proposed messier breakups. But while the authorities solved one problem, they might’ve fueled another. See, regulators have tried to avoid making behemoths like JPM bigger in the past, worried about increasing their “too big to fail” status. And now JPM – already the biggest US bank, with over 10% of the country’s bank deposits to its name – has just got even bulkier. That could create a whole host of problems: for one, risky bets seem far less risky when you know the government will bail you out of any trouble.

The bigger picture: Lend me your ears.

Another bank biting the dust is sure to have repercussions, with investors warning that super-cautious lending conditions could worsen the slowdown. Take Europe: recent data shows eurozone business lending fell at the fastest rate since 2008. Combine that with stricter regulation – especially for smaller banks – and you’ve got a recipe for dampened demand and sluggish growth.