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Activist investor Starboard Value has built a $1 billion position in Pfizer, according to two people familiar with the matter, as the drugmaker behind the best-selling Covid-19 shot struggles to reversed its stock price falling below pre-pandemic levels.
starboard According to two people, Pfizer is looking for change. It has come under threat as investors question the New York-based drugmaker’s post-pandemic path after its Covid-19 vaccine delivered a surge in revenue during the pandemic. short period of time and decreased faster than expected.
PfizerIts market value stood at $161 billion as of Friday, after falling 52% from the pandemic peak. Its shares have traded steady this year, while the S&P 500 is up about 20%.
Starboard’s exact plans remain unclear, including whether it might push for changes in management or board representation. The three people said the hedge fund approached former Pfizer chief executive and chairman Ian Read and former chief financial officer Frank D’Amelio about supporting their efforts at Pfizer.
D’Amelio and Read have not been briefed on Starboard’s specific plans and it is unclear what their roles will be. But the two former executives agreed with Starboard’s argument that Pfizer had underperformed, according to a person with direct knowledge of the matter.
Starboard, whose stake represents at least 0.6% of Pfizer’s value, has not yet presented to the company’s full board of directors, according to another person with knowledge of the matter. The council is expected to convene its regular meeting this week.
“We do not comment on market speculation or rumors,” Pfizer said of Starboard’s stake, which was first reported by The Wall Street Journal.
The share buildup is likely to put pressure on Pfizer chief executive Albert Bourla. Read appointed Bourla in 2018 and served as his executive chairman for two years.
Bourla played a key role in winning the partnership with BioNTech that led to the best-selling Covid vaccine, but he admitted at an investor conference in January that Pfizer had struggled in 2023 as the pandemic recedes and said 2024 will be a “clean year” for the company.
Pfizer spent most of its $92 billion Covid product on a $70 billion acquisition that failed to inspire investors. Chief among those deals is Pfizer 43 billion USD acquisition of cancer treatment drug manufacturer Seagenaims to give it a foothold in the growing field of cancer drugs known as antibody-drug conjugates. Investors have questioned whether Seagen’s price premium of 22 times sales is worth it.
Last week, Pfizer withdrew from the market a lead sickle cell drug acquired as part of its $5.4 billion acquisition of biotech Global Blood Therapeutics, citing safety concerns.
Pfizer addressed its poor performance with an announcement this year to cut costs by another $1.5 billion by 2027, adding to The program saves $4 billion in costs implemented after the pandemic.
David Risinger, an analyst at Leerink Partners, said in a note that he “does not see easy results to increase shareholder value” because the company has undertaken a major cost-cutting effort and faces growth constraints due to patent expiration. and have a large pile of debt.
Starboard has targeted healthcare companies in the past. In 2019, the hedge fund urged biopharmaceutical giant Bristol Myers Squibb to abandon its takeover of Celgene, in a campaign that was ultimately unsuccessful.
More recently, this activist has focuses its efforts on media conglomerate News Corp and software company Autodesk.
Additional reporting by Andrew Edgecliffe-Johnson in New York
