Washington (Business Emerge) October 7: Activist investor Starboard Value has taken a significant position in pharmaceutical giant Pfizer, investing approximately $1 billion. The investor is seeking to implement a turnaround plan for the company, which has struggled in recent years, according to sources familiar with the matter.
While Starboard’s detailed strategy remains undisclosed, sources indicate that the firm has engaged former Pfizer CEO Ian Read and ex-CFO Frank D’Amelio. Both executives have shown interest in supporting the proposed transformation.
Starboard believes that under current CEO Albert Bourla, Pfizer has deviated from its historically disciplined approach to cost management and investment in innovative drugs. During the pandemic, Pfizer’s revenue and free cash flow surged, primarily due to the rapid development of its Covid-19 vaccine. Despite this, the company’s stock price has declined roughly 30% from 2019 levels, partly because of its costly acquisition strategy—nearly $70 billion in mergers and acquisitions since 2020—whose returns have raised concerns among analysts.
One acquisition of particular concern was Pfizer’s purchase of Global Blood Therapeutics, for around $5 billion. Pfizer recently withdrew a sickle cell disease treatment acquired through that deal just two years ago. Although the financial impact was downplayed by the company, the drug Oxbryta generated just over $300 million last year.
Ian Read, who led Pfizer from 2010 to 2019, took over a company in turmoil but managed to more than double its stock price by focusing on cost-cutting and core investments. This disciplined culture now seems to be lacking under current management.
To address these issues, Pfizer has taken some measures, including initiating a $4 billion cost-cutting program and announcing further cost reductions. Nevertheless, the company has seen over $100 billion in shareholder value evaporate since the peak of the pandemic.
Starboard, led by Jeff Smith, typically focuses on technology investments and is currently challenging News Corp’s dual-class share structure. In recent months, Starboard has also launched campaigns targeting Autodesk, Salesforce, and Match Group.
Pfizer declined to comment on what it described as “speculation and rumor,” and the Wall Street Journal initially reported on Starboard’s stake in the company.