Pfizer, the pharmaceutical giant, is facing growing pressure from activist investor Starboard Value to revitalize its struggling share price and refine its strategic focus. Starboard, having built a $1 billion stake in Pfizer, equivalent to about 0.6% of the company’s $165 billion market value, is pushing for significant change.
The pressure on Pfizer’s leadership intensified when Starboard’s significant investment was revealed. CEO Albert Bourla and at least one other director are scheduled to meet with Starboard next week to discuss the activist investor’s turnaround plans. Starboard, led by CEO Jeff Smith, has prepared a detailed strategy outlining its vision for Pfizer’s future.
This move comes as Pfizer’s stock has fallen over 30% in the past two years, dropping below pre-pandemic levels. Critics argue that Pfizer mismanaged its $92 billion COVID-19 windfall, particularly pointing to a costly $70 billion acquisition spree that has failed to boost the company’s valuation.
Adding to the pressure, two former Pfizer executives, ex-CEO Ian Read and former CFO Frank D’Amelio, are reportedly collaborating with Starboard. The duo has reached out to several Pfizer directors, urging them to consider working with the activist investor.
Analysts and investors are speculating about potential management changes, with some receptive to the idea. However, others caution that simply changing leadership might not be enough to address Pfizer’s challenges, emphasizing the importance of a robust drug pipeline for long-term success in the pharmaceutical industry.
Starboard is expected to push for a more focused development strategy and deeper cost cuts beyond the $5.5 billion reduction already announced by Pfizer through 2027. Critics argue that Pfizer’s recent acquisitions, spanning neuroscience, blood disorders, and cancer, lack a clear, cohesive focus.
Despite acknowledging missed earnings expectations and weak commercial performance, Bourla maintains that investors haven’t fully appreciated the potential value of recent acquisitions, such as the $43 billion Seagen deal.
In response to the mounting pressure, Bourla has shown signs of attentiveness to Wall Street critics. Earlier this year, he hired Andrew Baum, a former Pfizer critic at Citi, as chief strategy and innovation officer, in a move reminiscent of Novartis’ hiring of outspoken analyst Ronny Gal.
To streamline its operations, Pfizer recently divested a $3.3 billion stake in Haleon, reducing its shareholding from 22.6% to 15%. Despite these efforts, the company remains under pressure to deliver better financial returns and strategic clarity.
Pfizer’s stock closed on Tuesday at $29.18, down 0.068% during regular trading hours. However, in after-hours trading, the stock gained 0.31%. Year to date, Pfizer’s stock has fallen by 1.85%. The upcoming meeting between Pfizer and Starboard is expected to be closely watched by investors and analysts alike, as it could shape the future of the pharmaceutical giant.
