Starboard Value Takes $1 Billion Stake in Pfizer, Aims for Significant Turnaround

Activist investor Starboard Value LP has made a significant move by taking a $1 billion stake in Pfizer Inc., as the biopharmaceutical giant struggles to regain its pre-pandemic performance. This investment comes at a time when Pfizer’s shares have dropped by half since their peak in 2021, largely due to the slowing demand for COVID-19 vaccines.

Starboard Value, led by Chief Executive Officer Jeffrey Smith, has criticized Pfizer for its failure to deliver on a pipeline of new potential blockbusters and for the significant value destruction at the company. Smith highlighted that there has been at least $20 billion in value destruction at Pfizer, describing the share price drop since the COVID pandemic as ‘crazy’.

Pfizer, under the leadership of CEO Albert Bourla, has been working to improve its performance since 2019. However, despite ongoing efforts, the company’s stock is currently trading 30% lower than it was pre-pandemic. This decline is partly attributed to Pfizer’s expensive acquisition strategy, which has included spending $70 billion on mergers and acquisitions since 2020, including the $5 billion acquisition of Global Blood Therapeutics.

Starboard Value is expected to push for changes at Pfizer to boost its revenue and improve shareholder value. Initially, there were rumors that Starboard might involve former Pfizer CEO Ian Read and former CFO Frank D’Amelio in their efforts, but both executives have since issued a statement supporting Bourla and the current management, and have withdrawn their involvement.

In response to the financial challenges, Pfizer has initiated cost-cutting measures, aiming to reduce costs by $1.5 billion by 2027. Despite these efforts, the company has lost over $100 billion in shareholder value since the pandemic. Starboard’s involvement is seen as a critical step in refocusing Pfizer’s strategic initiatives and enhancing its financial performance.