Activist Starboard Value takes $1 billion stake in Pfizer

(Bloomberg) — Activist investor Starboard Value has taken a roughly $1 billion stake in Pfizer Inc . and is trying to spur a turnaround at the struggling pharmaceutical giant, according to a person familiar with the matter.

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Starboard has approached former Pfizer executives Ian Read and Frank D’Amelio to help with its efforts, and they have expressed interest in helping, the person said, asking not to be identified discussing private information. It is not clear in what capacity they would be involved. Read was Pfizer’s chief executive from 2010 to 2018 and tapped current CEO Albert Bourla as his successor. D’Amelio was the New York-based company’s chief financial officer from 2007 to 2021.

Starboard’s exact plans and engagement with the company are unclear at this time. The activist found investors and research analysts frustrated by the company’s sustained post-pandemic struggles, the person said.

Pfizer declined to comment. Starboard could not immediately be reached for comment outside normal business hours.

Pfizer struggled to find its next big hit. The company’s COVID-19 vaccine and treatment doubled its revenue to $100 billion in 2022 from $42 billion in 2020, but demand for its Covid products has fallen dramatically since then.

unsatisfied

Wall Street is still not convinced that Pfizer will be able to replace its pandemic fortunes. The company has seen its stock price fall more than 50% from its high since December 2021. Shares are down less than 1% this year, compared with a 21% gain in the S&P 500.

“It’s not too surprising to see a firm like Starboard trying to change the company’s trajectory,” Mizuho analyst Jared Holz said in a note late Sunday. “The whole concept of PFE’s aggressive business development strategy and lack of profitability (to date) is probably one of the major reasons behind Starboard’s stake.”

The drugmaker set its sights on cancer, acquiring a promising stable of cancer drugs in its $43 billion purchase of Seagen Inc. last year. But the company has also had setbacks in its bid to develop an obesity pill, and earlier this year an experimental gene therapy for Duchenne muscular dystrophy failed in a large trial. Most recently, Pfizer announced the worldwide recall of a drug for sickle cell disease.

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That drug came via Pfizer’s 2022 acquisition of Global Blood Therapeutics for $5.4 billion, one of a string of acquisitions that Starboard believes have underperformed, the person said. Other recent acquisitions include Biohaven for $11.6 billion and Arena Pharmaceuticals for $6.7 billion.

In May, Pfizer embarked on a cost-cutting plan aimed at saving $1.5 billion by the end of 2027. Still, the person said, Starboard contrasted Pfizer’s current woes with the more positive trajectory it has been on- o under its previous management team.

The Wall Street Journal reported earlier on Sunday about Pfizer’s efforts at Starboard.

(Updates with analyst commentary in seventh paragraph, additional background starting in eighth paragraph.)

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