The activist investor Starboard Value has taken a stake in Pfizer, according to media reports, following the drugmaker’s months of lackluster results as it came out of the pandemic and sought the next phase of its strategy.
Exactly what Starboard wants wasn’t immediately clear, according to the Wall Street Journal, which first reported the news and said the investor had taken a roughly $1 billion stake. WSJ said Starboard had been talking with former Pfizer CEO Ian Read and former CFO Frank D’Amelio, but didn’t say what role, if any, they might play.
Pfizer has been struggling to get back into investors’ good graces as its stock $PFE has struggled, losing more than half its value from a pandemic peak. It has tried to reload its pipeline through M&A deals, repeatedly cut costs to shrink its pandemic-era footprint, revealed a major new focus on oncology, and announced changes among several top executives, including its head of R&D and commercial leaders.
The fact that it’s taken those actions and still drawn an activist will almost certainly raise questions about whether Starboard will push for something more dramatic.
“We do not see low-hanging fruit to boost shareholder value,” a Leerink analyst said in a note to clients after the news broke, citing the company’s prior moves.
A Pfizer spokesperson declined to comment.
Starboard has previously shown a willingness to take its fights with reluctant companies public, making the case to investors for why changes are needed, pushing for board seats or corporate actions like a sale or breakup.
Jeff SmithThe company’s M&A deals, meant to reload its pipeline, haven’t yet solved its needs. A huge bet on cancer through the $43 billion acquisition of Seagen will take years to pay off. And its 2022 acquisition of Global Blood Therapeutics has blown up in the company’s face after Pfizer had to pull the sickle cell drug at the heart of the $5.4 billion takeover from the market.
Starboard, run by investor Jeff Smith, has a history in healthcare. It’s taken previous stakes in Bristol Myers Squibb — in a failed attempt to stop its $74 billion deal with Celgene in 2019; it took a large stake in Parexel and pushed the company to sell itself in 2017; and it won board seats off of Perrigo after a lengthy back-and-forth.
The Perrigo episode also revealed a connection to Pfizer — one of the people Starboard placed on the drugmaker’s board was Jeff Kindler, Read’s predecessor at Pfizer.
Editor’s note: This story has been updated with the reported size of Starboard’s stake in Pfizer.