Pfizer rebuffs Starboard criticism as it raises forecasts

Pfizer chief executive Albert Bourla hit back at Starboard Value in its third-quarter results call, criticising the activist investor for complaining about the company's direction without coming up with any alternative ideas.

His comments came as Pfizer raised its financial forecasts for the year, saying it now expects full-year revenue from $61 billion to $64 billion, a $1.5 billion increase on the prior range, as third-quarter revenues rise 31% to $17.7 billion.

"Starboard has not presented any specific actions, but they suggested something needs to change," Bourla told analysts on the call. But he argued that Pfizer has already been making changes – including its restructuring drive first announced a year ago – and the position being put forward by Starboard is "coming 15 months late."

The strong increase in revenues, which was well above analyst consensus estimates, came alongside a swing to profit from a loss last year and was driven by a strong performance for anticoagulant Eliquis (apixaban), COVID-19 therapy Paxlovid (nirmatrelvir/ritonavir), and the blockbuster Vyndaqel/Vyndamax (tafamidis) franchise. BioNTech-partnered COVID-19 vaccine Comirnaty also performed better than expected.

The figures will likely help Pfizer's board fend off the criticism from Starboard and its chief executive, Jeff Smith, that the company has squandered at least $20 billion in value since 2019 and that the board needs to be "held accountable."

The hedge fund – which started its activism campaign after taking a $1 billion stake in Pfizer – has accused the company of poor choices in a $70 billion M&A drive, running an inefficient R&D organisation, and consistently failing to meet sales targets since the pandemic.

"We plan to engage with shareholders, including Starboard, and consider any good ideas that create long-term shareholder value," said Bourla on the call.

He said Pfizer's board met with the investment group and reviewed the same slide deck it made public last week, adding: "While we agree with some of the points they raised, we have vastly different views on many others."

In particular, the CEO takes issue with Starboard's assessment of the group's capital deployment for business development – such as the company's alliance with BioNTech and $43 billion takeover of antibody-drug conjugate (ADC) specialist Seagen – asserting that its efforts "will demonstrate significant value for shareholders" and have been "transformational for Pfizer."

He also pointed to cost-cutting efforts that have produced "satisfactory results" with $4 billion of a planned $5.5 billion in savings due to accrue by the end of the year, the appointment of respected Citi analyst Andrew Baum to help prioritise the R&D pipeline, and changes to the board that have brought in additional expertise.