Starboard Advocates for Transformation at Pfizer by Highlighting Research and M&A Errors

Starboard Value, an activist investor, has urged Pfizer’s board to hold its executives accountable for what it labels an ongoing trend of inadequate performance. The request was made public during a presentation by CEO Jeffrey Smith at an investor summit on Tuesday, where he highlighted concerns regarding the pharmaceutical company’s expensive acquisitions and a lack of innovation in its research efforts.

The extensive 74-slide presentation emphasizes the need for the board to ensure that management is responsible for achieving acceptable returns from both research and development (R&D) and mergers and acquisitions (M&A) in the future. However, the proposal does not specify how Pfizer should enhance its productivity in research or its approach to deal-making.

In the wake of the presentation, Pfizer’s shares, which have almost halved since their pandemic peak, saw a slight decline of around 0.5%. Pfizer has not responded to requests for comment from BioPharma Dive as of the time of publication.

Earlier this month, Starboard enlisted former Pfizer executives Ian Read and Frank D’Amelio to assist in its efforts, as they reached out to Pfizer’s directors encouraging them to consider Starboard’s proposals. However, on October 10, both Read and D’Amelio retracted their support in a notable shift.

In a correspondence directed to the board, Starboard accused Pfizer of threatening legal action against the two executives if they did not publicly endorse the current CEO, Albert Bourla. Bourla, who succeeded Read in January 2019, was at the helm when Pfizer, alongside BioNTech, successfully created a safe and effective COVID-19 vaccine. The sales generated from this vaccine and the antiviral drug Paxlovid provided Pfizer with tens of billions of dollars during 2021 and 2022.

However, the organization miscalculated the sustained demand for the vaccine amid a decline in COVID-19 cases, prompting updated projections, cost reductions, and job cuts.

Starboard argues that apart from COVID-related products, Pfizer has not managed to develop a robust drug pipeline to ensure ongoing growth. The company reportedly overspent its substantial financial gains on acquisitions that have not materialized successfully. A case in point is the recent withdrawal of a sickle cell drug, following its .4 billion acquisition of Global Blood Therapeutics.

Additionally, Pfizer has fallen behind in the competitive landscape of the pharmaceutical industry, particularly in the development of new GLP-1 medications for obesity.