The news that Pfizer has an activist isn’t a surprise. For the last few months at Endpoints News, we’ve been asking which drugmaker might find an investor in its stock agitating for change.
Pfizer became the hottest pharma company in the world during the pandemic, only to see its shares drop by more than half as it struggled to find its post-pandemic footing, including a handful of pipeline setbacks and at least one major deal gone bad.
And as an activist, Starboard Value fits the role, too. The investor has gone after big healthcare targets before, including Bristol Myers Squibb, Cerner and Perrigo. Outside of healthcare, it’s taken activist positions in companies like News Corp and Starbucks.
But every time we’ve talked about Pfizer and an activist, one thing keeps coming up: The drugmaker has already made many of the moves an investor might push.
For example, Pfizer announced $3.5 billion in cost cuts in October of 2023, then added another $500 million in December, and tacked on a new round of $1.5 billion in May of this year. It has also sold a $3.3 billion chunk of its stake in Haleon, the joint consumer venture spun off with GSK, raising billions of dollars in cash. Its commercial leader, Angela Hwang, left the company. R&D leader Mikael Dolsten is departing, likely to be replaced by an outsider. And CEO Albert Bourla has repeatedly acknowledged that the stock price $PFE and the company’s performance aren’t where he wants them to be.
If Pfizer has pulled many of the small- and medium-sized levers at its disposal, what’s left?
It’s not hard to imagine that Bourla’s job, or at least a voice on the board, is what Starboard could be after. (Another option could be his board chairmanship.) In the Wall Street Journal story that broke the news of Starboard’s $1 billion stake, there were few details, but one stood out: The activist has been talking to Pfizer’s former CEO Ian Read and former CFO Frank D’Amelio, and the former executives have “expressed interest in helping.”
Mentions like that don’t happen by accident, and it’s hard not to read as a warning to current management.
So, what comes next? Part of that depends on what Starboard wants — bigger changes at the company, seats on the board or a shift in management. But it’s a warning to every healthcare company that when it comes to success, memories are short.
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