TLDR:
- Activist investor Starboard Value has taken a $1 billion stake in Pfizer
- Pfizer’s stock has fallen about 50% from its 2021 peak
- Former Pfizer executives Ian Read and Frank D’Amelio may assist Starboard
- Pfizer is struggling with declining COVID-19 product sales
- The company is betting on cancer drugs for future growth
Activist investor Starboard Value has taken a step into the pharmaceutical industry by acquiring a $1 billion stake in Pfizer Inc., one of the world’s largest drugmakers.
This move comes at a time when Pfizer is facing challenges in maintaining its growth trajectory following the decline in demand for its COVID-19 products.
Pfizer, which saw its revenue more than double to $100 billion in 2022 from $42 billion in 2020 due to its COVID-19 vaccine and treatment, is now struggling to find its next big success.
The company’s stock price has fallen by more than half since its peak in December 2021, reflecting investor concerns about its ability to replace the revenue generated by its pandemic-related products.
Starboard Value, known for its activist approach in various sectors, has reportedly approached former Pfizer executives Ian Read and Frank D’Amelio to assist in its efforts.
Read, who served as Pfizer’s CEO from 2010 to 2018, was responsible for choosing the current CEO, Albert Bourla. D’Amelio held the position of chief financial officer from 2007 to 2021.
Their potential involvement suggests that Starboard may be looking to leverage their experience and knowledge of the company to drive changes.
The exact plans and level of engagement between Starboard and Pfizer are not yet clear. However, sources indicate that Starboard has found investors and research analysts frustrated with Pfizer’s post-pandemic performance. This sentiment likely contributed to Starboard’s decision to take a stake in the company.
Pfizer’s current challenges extend beyond the declining demand for its COVID-19 products. The company has faced setbacks in developing new drugs, including a recent failure in a large trial for an experimental gene therapy for Duchenne muscular dystrophy.
Pfizer announced the worldwide withdrawal of a drug for sickle cell anemia, which it acquired through its $5.4 billion purchase of Global Blood Therapeutics in 2022.
In response to these challenges, Pfizer has been actively pursuing growth through acquisitions and research. The company made a significant move in the cancer treatment space with its $43 billion acquisition of Seagen Inc. in 2023. Pfizer expects Seagen’s drugs, particularly its antibody-drug conjugates (ADCs), to generate $10 billion in annual sales by 2030.
To address its financial concerns, Pfizer embarked on a cost-cutting plan in May 2024, aiming to save $1.5 billion by the end of 2027. This follows a previous $3.5 billion cost-cutting initiative announced at the end of 2023.
Despite these efforts, Wall Street remains skeptical about Pfizer’s ability to replace its pandemic-era revenue. The company’s stock performance has lagged behind the broader market, with Pfizer shares showing minimal growth in 2024 compared to a 21% increase in the S&P 500 index.
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