Dave Denton
Chief Financial Officer and Executive Vice President at Pfizer
Thank you, Albert, and good morning to everyone. As we close out the first half of this year, I'm very pleased by our second quarter results. We continue our relentless focus on execution, demonstrating our ability to both protect and grow our core brands while also continuing to advance our science-led transformation by investing in key TAs to build durable franchises.
Our initiatives to rightsize opex and to reduce cost of goods will result in a more efficient organization, setting the stage for strong capital returns and long-term improved shareholder value, enabling our commitment to both maintain and to grow our dividend. This morning, I will briefly review our second quarter results, including some onetime items, touch on our capital allocation priorities and wrap up with an update on our '24 financial guidance, our key priorities and expectations for the remainder of this year.
Turning first to Q2 performance versus the same period of last year, let's walk down the P&L. Total company revenues for the quarter were $13.3 billion, reflecting operational growth of 3%. Our revenue and cash flow continue to be impacted by the post-pandemic COVID environment on a global basis, but to a much lesser extent than prior quarters.
Looking at our business excluding our COVID products, we've demonstrated strong commercial execution across the enterprise, resulting in 14% operational revenue growth in the quarter. Performance was positively impacted by our continued focus on key products and geographies, refined allocation of commercial field resources globally and further optimization of our marketing resources into key priority areas.
Contributing to this performance was our acquired products from Seagen as well as Nurtec alongside in-line products, Vyndaqel, Eliquis and Xtandi. As expected, dampening our growth in the quarter were Xeljanz and Ibrance.
Adjusted gross margin for the quarter was 79% compared to 76% last year and was primarily the result of favorable sales mix from our non-COVID products as well as continued strong cost management across our manufacturing network. Improvements in our gross margin rate will continue to be a focus for the company over the next few years as we execute on our recently announced Manufacturing Optimization Program. This new program, and together with our cost realignment program, is focused on returning the company to pre-pandemic operating margins on a mixed-adjusted basis, excluding Comirnaty.
Phase I of the Manufacturing Optimization Program, which focuses on operational efficiencies, is well underway now. The first phase is expected to deliver approximately $1.5 billion in savings by the end of 2027, some of which is anticipated to be realized beginning in 2025. Total adjusted operating expenses increased 5% operationally to $6.3 billion and includes spending from our legacy Seagen business. Looking at the components, adjusted SI&A expenses increased 8% driven primarily by marketing and promotional expenses for recently launched as well as acquired products.
Adjusted R&D expenses increased 2% operationally, driven primarily by increased spending related to the acquisition of Seagen, partially offset by lower spending primarily the result of our cost realignment program. Q2 reported diluted earnings per share was $0.01, and our adjusted diluted earnings per share was $0.60. Unique onetime items included in our GAAP results and excluded from our adjusted results this quarter include a $1.3 billion charge related to our Manufacturing Optimization Program primarily for severance and a $230 million charge for IPR&D asset impairment and other related costs associated with the discontinuation of our DMD program.
Additionally, we expect to record a charge of approximately $400 million in the third quarter of '24 after a decision was made in July to sell one of our facilities as a result of the discontinuation of the DMD effort.
Now let me quickly touch upon our capital allocation strategy, which is designed to enhance long-term shareholder value. Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business at an appropriate level of financial return, and finally, making value-enhancing share repurchases after delevering our balance sheet.
In the first half of '24, we returned $4.8 billion to shareholders via our dividend, invested $5.2 billion in internal R&D and as expected, the completed business development activity was minimal. Our commitment to delevering our capital structure to a gross leverage target of 3.25 times remains a key priority.
In support of that goal, year-to-date, we have paid down approximately $2.25 billion in maturing debt, including $1 billion in May of outstanding notes. And though we did not monetize any Haleon shares in Q2, we expect to resume monetization of our 23% Haleon stake in the future. I would also note that once our Haleon ownership is less than 20%, our accounting will transition from recording equity income and will no longer be included in our adjusted results. This change is factored into our long-term financial planning as well as our guidance.
As we've previously stated, we expect operating cash flow to be significantly below typical levels this year and particularly during the first half of '24 due to the timing of certain payments and onetime expenses. We expect heavily weighting of revenues to the fourth quarter as our businesses become more seasonal in nature with the potential that a high level of cash collections may carry over into Q1 of '25. Despite this near-term pressure, clearly, our objective remains to return to a more balanced capital allocation strategy over time.
Now let me spend just a few minutes on our outlook for the remainder of the year. We entered 2024 focused on delivering on our financial commitments as well as commercial performance. With a successful first half now complete, we believe it is appropriate to update our full year earnings outlook to reflect our strong business performance. I'll remind you that our revised guidance assumes the seasonal cadence of our product portfolio and that we expect Paxlovid results to trend with infection rates.
With that said, we are raising our full year revenue range by $1 billion and our adjusted diluted earnings per share by $0.30. We now expect revenues in the range of $59.5 billion to $62.5 billion. And operational revenue growth, excluding COVID project -- products, is now projected to be 9% to 11%. COVID product revenues are now expected to be $8.5 billion for the year, $5 billion for Comirnaty and $3.5 billion for Paxlovid.
Our guidance for adjusted SI&A and adjusted R&D remains unchanged, while our effective tax rate on adjusted income is now expected to be approximately 13%. And lastly, we expect adjusted diluted earnings per share of $2.45 to $2.65, primarily reflecting the increase to the top line and the revised tax rate among other items. As a reminder, our EPS guidance includes an anticipated $0.40 of earnings dilution from the Seagen acquisition largely due to a financing cost.
In closing, we remain on track to deliver at least $4 billion of net savings from our cost realignment program by the end of this year. This improvement in our cost base, alongside our new initiatives focused on manufacturing, is expected to put us on strong footing towards margin expansion and improved financial returns. Additionally, our continued focus on execution and our recent investments have positioned the company for continued success moving forward. This quarter's results are a testament to the performance of our commercial business and our prudent approach to improving our cost base.
Though we've had a strong first half, we do not take lightly the continued focus needed to deliver in the second half, considering the seasonality of our respiratory products. We are clearly striving to bring about improved performance on both top and bottom lines through focused execution and delivering on our near-term commercial and financial goals.
2024 is clearly a foundation year for Pfizer. Our achievements to date set the stage for generating compelling shareholder value. Through our science-led transformation, we will methodically build off this space and with breakthroughs and innovation driving growth in the back half of this decade.
And with that, I'd now like to turn it back over to Albert to start our Q&A.
