Activist Starboard Value Takes $1 Billion Stake in Pfizer

(Bloomberg) — Activist investor Starboard Value has taken a stake of about $1 billion in Pfizer Inc. and is seeking to spur a turnaround of the struggling pharmaceuticals 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 aid in its efforts, and they have expressed interest in helping, the person said, asking not to be identified discussing private information. It’s unclear in what capacity they would be involved. Read was Pfizer’s chief executive officer from 2010 to 2018 and chose 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 aren’t clear at this time. The activist has found that investors and research analysts are frustrated by the company’s sustained post-pandemic struggles, the person said.

Pfizer declined to comment. Starboard couldn’t immediately be reached for comment outside normal business hours.

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

Unconvinced

Wall Street has yet to be convinced Pfizer will be able to replace its pandemic riches. The company has seen its stock price decline more than 50% from its high in December 2021. The shares are down less than 1% this year, compared with a 21% rise for the S&P 500 Index.

“It is not overly surprising to see a firm such as Starboard make an attempt to change the trajectory of the company,” Mizuho health-care specialist Jared Holz said in a note Sunday night. “The entire concept of PFE’s aggressive business development strategy and lack of return (so far) is likely one of the major reasons behind the Starboard stake.”

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

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That drug came through Pfizer’s 2022 acquisition of Global Blood Therapeutics for $5.4 billion, one of a string of purchases that Starboard considers to have delivered poor results, the person said. Other recent buys include Biohaven for $11.6 billion and Arena Pharmaceuticals for $6.7 billion.

In May, Pfizer embarked on a cost-cutting plan meant to save $1.5 billion by the end of 2027. Still, the person said, Starboard contrasts Pfizer’s current woes with the more positive trajectory it was on under its previous leadership team.

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

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

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