Activist investor Starboard Value has built a $1bn stake in Pfizer to seek a turnaround in the drugmaker’s tumbling share price, according to sources familiar with the matter.
US hedge fund Starboard has approached former Pfizer CEO Ian Read and recent CFO Frank D'Amelio to help forge a post-pandemic route to profit, as per Wall Street Journal, which originally reported the news.
Despite the success of its Covid-19 mRNA vaccine which drove Pfizer’s 2022 revenue to record profits, Pfizer shares have steadily fallen as demand for Covid-19-related products weans. Shares in the company are trading nearly 54% down at the most recent market close compared to its all-time high closing price in December 2021, during the Covid-19 pandemic. Pfizer has a market cap of $162bn.
While details of Starboard’s roadmap at Pfizer are unknown, the $1bn stake means the activist investor now holds 0.6% of Pfizer’s value. When reached for comment by Pharmaceutical Technology, a Pfizer spokesperson did not confirm the investment and stated the company does not comment on market speculation or rumours.
Activist investors are typically specialist hedge funds that buy a large stake in a publicly traded company to influence how it's run, with a view to increase the target company’s share price and improve its performance.
While Pfizer tackles weaker revenue for Covid-19 vaccines and drugs, along with an underwhelming launch of its respiratory syncytial virus (RSV) vaccine Abrysvo, Moderna and GSK have also struggled with their respective RSV vaccine revenues.
Pfizer’s attempts to join the lucrative weight loss market have also hit difficulties. The company reworked a twice-daily version of its candidate danuglipron into a once-a-day pill following high rates of side effects in a mid-stage trial. The company had already dropped another daily weight-loss drug, called lotiglipron, due to safety concerns as it raised levels of liver enzymes in some patients. The company also terminated its late-stage Duchenne muscular dystrophy (DMD) drug after a lack of benefit in a Phase III trial and a patient death in Phase II study.
Pfizer’s CEO Albert Bourla, who was key in securing the Covid-19 vaccine partnership with BioNTech , admitted in an investor call in January that Pfizer had endured a difficult 2023. Pfizer’s revenue was still ultimately down 41% in 2023, with Bourla taking a 35% reduction in pay during the year. The CEO missed out on a bonus as Pfizer’s 2023 financial performance was “below pre-established targets,” as per the company’s annual report.
Bourla stated that the company entered 2024 with a “solid foundation” and that its commitment to the “next wave of pipeline innovation will fuel Pfizer’s growth”. Following Q1 net income declines of 44%, Pfizer announced a cost reduction programme in May this year, expected to save around $1.5bn by 2027.
Despite a turbulent financial performance, Pfizer has been active in the M&A market over the past year, with several high-profile deals wrapped up to solidify product lines. The biggest by far was the company’s $43bn takeover of cancer drugmaker Seagen to stake a claim in the burgeoning antibody-drug conjugate market.
Pfizer’s acquisition of biotech Global Blood Therapeutics (GBT) was in the spotlight recently, after lead sickle cell disease drug Oxbryta (voxelotor), which was bought as part of the deal, had to be pulled off the market with clinical studies also discontinued due to adverse side effects.
