Activist investor Starboard Value has taken a significant stake in pharmaceutical giant Pfizer, acquiring approximately $1 billion in shares, according to sources familiar with the matter. The move signals Starboard’s intent to push for a turnaround at Pfizer, a company that has seen its stock price decline by nearly 30% since 2019, despite massive revenue surges during the COVID-19 pandemic.
While specific details of Starboard’s strategy remain unclear, the activist investor is reportedly enlisting the help of former Pfizer executives, including former CEO Ian Read and ex-Chief Financial Officer Frank D’Amelio. Both executives, according to sources, have expressed interest in aiding Starboard’s efforts to steer Pfizer back on course. Read, who led Pfizer from 2010 to 2019, is credited with stabilizing the company during his tenure, during which Pfizer’s stock price more than doubled. His cost-conscious, core-focused approach is something Starboard believes Pfizer has since strayed from under current CEO Albert Bourla.
Starboard’s primary concern revolves around what it sees as a departure from disciplined cost management and strategic investments in innovative drugs. Pfizer, under Bourla, experienced an extraordinary revenue boost during the COVID-19 pandemic, largely due to its development of a fast-tracked vaccine. However, the company’s stock performance has lagged, which some attribute to its aggressive acquisition strategy. Since 2020, Pfizer has spent nearly $70 billion on mergers and acquisitions (M&A), raising questions among analysts regarding the returns on these investments.
One acquisition, in particular, has drawn scrutiny. Pfizer’s $5 billion purchase of Global Blood Therapeutics in 2022 was meant to bolster its portfolio with Oxbryta, a drug for sickle cell disease. However, Pfizer pulled the drug from the market just two years later, after it generated only $300 million in revenue in 2022. This acquisition, along with others, has fueled concerns about Pfizer’s spending and long-term value creation.
Despite initiating a $4 billion cost-cutting program, and later announcing further cost reductions, Pfizer has seen over $100 billion in shareholder value erode as the pandemic’s economic impact waned. Starboard is now positioning itself to challenge Pfizer’s current leadership and push for a more disciplined approach to costs and innovation, potentially leading to a broader restructuring of the company.
Starboard Value, led by Jeff Smith, has a track record of targeting underperforming companies, primarily in the technology sector. Its involvement with Pfizer marks a notable shift, though the firm has recently mounted campaigns at companies such as News Corp, Salesforce, Autodesk, and Match Group.
A Pfizer spokesperson declined to comment on the developments, dismissing the reports as “speculation and rumor.”
