Starboard Value reportedly has taken a roughly $1 billion stake in Pfizer, as the activist investor seeks to turn the struggling drugmaker around.
Activist investor Starboard Value has reportedly taken a significant stake of around $1 billion in Pfizer (PFE), with plans to help rejuvenate the struggling pharmaceutical giant. According to The Wall Street Journal, Starboard has enlisted the support of Ian Read, Pfizer’s former Chief Executive, and ex-Chief Financial Officer Frank D’Amelio, to assist in its turnaround efforts.
Pfizer shares rose about 3% in premarket trading Monday following the news, which comes at a critical time for the drugmaker. Pfizer’s stock has nearly halved since its peak in 2021, when demand for its COVID-19 vaccines was at its highest. The company’s shares have remained largely flat in 2024, contrasting with a 21% surge in the S&P 500 over the same period.
Starboard’s push comes as Pfizer struggles under current CEO Albert Bourla, who took over from Read in 2019. The hedge fund reportedly sees Bourla’s tenure as lacking the same M&A (mergers and acquisitions) discipline of his predecessor. Since Bourla assumed leadership, Pfizer has spent billions of dollars on acquisitions, notably its $43 billion purchase of biotech company Seagen last year, which focuses on cancer drugs.
Despite these high-profile acquisitions, Pfizer’s financial performance has faltered in recent years. After dominating the market with its COVID-19 vaccines, demand has slumped, leading to declining revenue and stock value. Most recently, the company faced setbacks after recalling all lots of its sickle cell disease medicine worldwide due to concerns about potential severe side effects, including pain and the risk of death.
With Starboard Value stepping in and teaming up with former executives, there’s hope among investors that Pfizer can regain its momentum through improved strategic management and renewed focus on acquisitions that drive growth. Pfizer’s premarket trading boost on Monday suggests that investors are optimistic about the potential for a turnaround.