People pass by the Pfizer headquarters building in New York City on January 29, 2023.
Kaine Betancourt | View News | Corbis News | Getty Images
Activist investor Starboard Value holds about $1 billion stake in pharmaceutical giant Pfizer The company is seeking to turn around the troubled company, people familiar with the matter said.
The activist’s exact plans are unclear, but Starboard has approached former Pfizer CEO Ian Read and former finance chief Frank D’Amelio, both of whom have Expressed interest in supporting Starboard’s turnaround.
Starboard believes that Pfizer’s current leadership, led by CEO Albert Bourla, has abandoned its historically strict cost structure and investment in new drugs.
Pfizer’s revenue and free cash flow have surged during the Covid-19 pandemic, thanks to the company’s rapidly developing vaccine. However, its stock price performed poorly, falling approximately 30% compared with 2019.
An example of particular interest to Starboard is Pfizer’s acquisition of Global Blood Therapeutics. Pfizer has withdrawn a drug to treat sickle cell disease it acquired two years ago in a roughly $5 billion acquisition. The company in September downplayed the financial impact and said the Oxbryta drug brought in more than $300 million in revenue last year. People familiar with the matter said it was a deal like this that Starboard was concerned about.
Reed served as Pfizer CEO from 2010 to 2019, inheriting a company in disarray. But during his tenure, shares more than doubled as senior executives built a cost- and core-focused culture that Starboard now believes the company has abandoned.
To be sure, the company has taken steps to reduce costs. It embarked on a $4 billion cost-cutting plan and then announced a second round of further cost cuts. Still, more than $100 billion in shareholder value has evaporated since the Covid-19 pandemic has largely disappeared into the rearview mirror.
Starboard is run by Jeff Smith and has historically focused on the technology sector. It is currently challenging News Corp’s dual-class share structure and has launched campaigns against Autodesk, Salesforce and Match Group in recent months.
The Wall Street Journal earlier reported the news of Starboard’s investment.
A Pfizer spokesman declined to comment on “speculation and rumors.”
—CNBC’s Angelica Peebles contributed to this report.
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