Activist investor takes $1bn stake in Pfizer

The US activist investor Starboard Value has built a stake of about $1 billion in Pfizer and has contacted former executives about turning around the struggling pharmaceuticals giant.
Pfizer became a household name in the UK during the Covid-19 pandemic as the New York-listed company and BioNTech, its German partner, swiftly produced a vaccine, propelling Pfizer to record sales, which exceeded $100 billion in 2022.
However, success has waned as Pfizer has struggled to replace dwindling sales of the Comirnaty vaccine and Paxlovid antiviral treatment with new blockbusters. It has also faced cut-price competition for older best-selling drugs.
Shares in Pfizer have halved since hitting a peak in late 2021 and are trading below the levels when Albert Bourla, 62, took charge as chief executive in January 2019.
The stock was trading up 2.3 per cent at $29.24 in pre-market dealings on Wall Street today following the report in The Wall Street Journal of Starboard’s stake.
Starboard is said to have approached two former Pfizer executives — Ian Read, Bourla’s Scottish-born predecessor, and Frank D’Amelio, chief financial officer between 2007 and 2021 — who have shown interest in supporting the activist’s intervention.
Bourla is striving to revive Pfizer having been overly optimistic about the enduring demand for Covid-19 products and with the company trailing Eli Lilly and Novo Nordisk in the booming weight-loss market.
Pfizer slumped to its first quarterly loss since 2019 towards the end of 2023. It was affected by a multibillion-dollar charge after agreeing that the US government could return millions of doses of Paxlovid, and by inventory write-offs for Comirnaty.
The New York-based company, however, raised annual forecasts for a second consecutive quarter in July, helped by cancer drug revenues from last year’s $43 billion acquisition of Seagen.
Seagen, the largest of a series of acquisitions from Pfizer’s pandemic cash pile, gave access to a new class of targeted cancer drugs called antibody-drug conjugates, or ADCs, which the company hopes will generate $10 billion in annual sales by the end of the decade.
Pfizer is also targeting growth from its respiratory syncytial virus (RSV) vaccine Abrysvo, which is competing with Arexvy, a rival product launched by GSK, one of Britain’s two big pharma companies.
Attempts to turn around Pfizer also include a significant restructuring, following the launch of a $3.5 billion cost-cutting exercise last year. The savings have included job cuts and facility closures in the UK at its Discovery Park campus in Sandwich, Kent.
And in May, Pfizer launched the first phase of a manufacturing “optimisation” programme to save about $1.5 billion by the end of 2027.
Starboard, a New York-based hedge fund run by Jeff Smith, who has been called “the most feared man in corporate America”, has previously targeted other companies in the life sciences sector, including Bristol Myers Squibb, Abcam, a smaller UK biotech company, and Acacia Research, the Nasdaq-listed investment company, where it remains the largest shareholder.
Starboard and Read were approached for comment. D’Amelio could not be reached.
A spokesman for Pfizer said: “We do not comment on market speculation or rumour.”
Analysts at Leerink Partners, the Boston-based investment bank, reflecting on Starboard’s intentions, said that it did “not see low-hanging fruit to boost shareholder value”. It cited Pfizer’s revenue growth constraints over the next five years, its existing, significant cost-cutting and the company’s “relatively high” debt levels, which “may only be partially reduced by monetising non-core holdings, such as its stake in Haleon”, the FTSE 100 consumer healthcare company.
Pfizer last week sold down of its stake in Haleon, raising almost £2.7 billion and cutting its holding to 15 per cent.
In an interview with The Times in 2020, during the height of the pandemic, Read said he was satisfied with his eight years in charge of Pfizer, in which he returned the company “to our roots as a pharmaceutical company”, revitalised its drugs pipeline, began the break-up of the group and tackled a culture that had lost its way, typified by memorable “Own It” coins handed to employees.