Ex-Pfizer leaders side with firm against activist investor

Two former Pfizer executives drawn into a campaign by activist investor Starboard Value to shake up the company have withdrawn their support for the plan.

Pfizer's ex-chair and chief executive Ian Read and Frank D'Amelio – previously the drugmaker's finance chief – have issued a brief statement saying they are "fully supportive of Pfizer chairman and CEO Albert Bourla, senior management and the board, and we are confident that over time they will deliver shareholder value."

It emerged a few days ago that Starboard Value had built up a $1 billion stake in Pfizer and was seeking a change in strategy at the company, which is currently dealing with a fall in sales, profits, and share price precipitated by the end of the pandemic and a steep decline in turnover of its COVID-19 vaccines and drugs.

In a somewhat unusual move, the hedge fund also reached out to Read and D'Amelio to seek their support for a turnaround plan. In most actions of this type, investors tend to seek the support of other shareholders to build pressure on management.

Since then, there have been reports – including in the Financial Times – that the former leaders had pitched Starboard Value's proposals to Pfizer's board, including Bourla, who was groomed for the top job at Pfizer by Read before he stepped down in 2019.

There is still no public statement from Starboard Value on the changes it is hoping to make at Pfizer, but there has been speculation that it could involve the replacement of Bourla. Investors have been unhappy with a series of pipeline-boosting deals the company made with the help of windfall revenues from its COVID-19 drugs.

It has spent more than $70 billion on the acquisitions of antibody-drug conjugate (ADC) specialist Seagen for $43 billion, migraine developer Biohaven for $11.6 billion, immunology player Arena Pharma for $6.7 billion, and Global Blood Therapeutics (GBT) for $5.4 billion, alongside other bolt-on agreements, to drive growth.

There was a major setback for the GBT acquisition after the main asset in that $5.4 billion deal – Oxbryta for sickle cell disease – was pulled from the market last month. Investors have also suggested that it paid over the odds for Seagen, while some of the drugs acquired as part of the Arena deal have fallen by the wayside. Pfizer has also launched a major cost-cutting effort to try to bolster its profits, with a $4 billion programme announced in 2023 expanded earlier this year.

Pfizer's market cap is currently $171 billion, well below a peak of around $331 billion during the pandemic. Its shares rose more than 3% after Read and D'Amelio's statement was published.