Starboard Value, an activist investment firm, has taken a significant $1 billion stake in Pfizer, signaling its intent to push for a transformation at the pharmaceutical company. Although specific details of Starboard’s strategy remain undisclosed, sources reveal that the firm has already reached out to former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio, who are reportedly interested in helping with the turnaround effort.
Starboard’s main concern is that Pfizer under its current CEO, Albert Bourla, has moved away from the disciplined cost structure and focus on innovative drug development that once defined the company.
The activist investor has criticized Pfizer’s shift under Bourla’s leadership, suggesting that the company has become less focused on maintaining its historically efficient financial practices. Starboard points to Pfizer’s large and expensive acquisition strategy, which has raised concerns among analysts.
While Pfizer’s revenues surged during the COVID-19 pandemic, largely due to its successful vaccine, the company’s stock has since fallen around 30% from its 2019 levels. Starboard sees this decline as evidence that Pfizer’s current path, including its approach to mergers and acquisitions, is not yielding the desired results.
Starboard Value Takes $1 Billion Stake in Pfizer, Signals Intent for Strategic Overhaul
One acquisition in particular has drawn criticism from Starboard and others: Pfizer’s $5 billion purchase of Global Blood Therapeutics, which was made to acquire a drug for sickle cell disease. However, just two years after the acquisition, Pfizer pulled the drug, Oxbryta, citing disappointing performance.
The drug brought in only about $300 million in revenue, far below expectations, raising questions about the financial prudence of the deal. This move exemplifies the concerns over Pfizer’s recent acquisition strategy, which some view as misaligned with the company’s long-term interests.
Ian Read, who served as Pfizer’s CEO from 2010 to 2019, is often credited with stabilizing the company during his tenure. Under his leadership, Pfizer’s stock more than doubled, driven by a focus on core operations and cost control.
However, many believe that Pfizer has since veered away from this strategy under Bourla, leading to a significant decline in shareholder value. Despite Pfizer’s efforts to rein in costs, such as initiating a $4 billion cost-cutting initiative, the company has seen over $100 billion in value lost since the pandemic subsided.
Starboard Value, led by Jeff Smith, is known for its aggressive activism, particularly in the tech sector. In recent months, it has challenged News Corp’s dual class share structure and launched campaigns targeting companies like Autodesk, Salesforce, and Match Group.
While Pfizer has declined to comment on Starboard’s stake or the speculation about the company’s future, the significant investment and the firm’s history of activism suggest that Starboard is prepared to push hard for changes at Pfizer, which has struggled to maintain its momentum following the pandemic-related surge in vaccine revenue.
