Starboard Value, the activist investor agitating for change at Pfizer, called on the pharmaceutical giant’s board of directors to hold the company’s executives responsible for what it described as a yearslong pattern of underperformance.
In a presentation delivered at an investor summit Tuesday, Starboard’s CEO Jeffrey Smith laid out his firm’s case for why Pfizer’s board must take action, arguing the drugmaker misfired on several high-dollar acquisitions and failed to innovate in its research.
“We believe the board needs to actively hold management accountable for earning appropriate returns on R&D and M&A moving forward,” the 74-slide presentation states. However, Starboard doesn’t lay out a specific prescription for how it believes Pfizer should improve its research productivity, or dealmaking activity.
Pfizer shares, which have fallen by roughly half since highs reached in the pandemic, fell by about 0.5% Tuesday after Starboard’s presentation was made public. Pfizer did not return BioPharma Dive’s request for comment by publication.
Earlier this month, Starboard had secured the help of former Pfizer executives Ian Read and Frank D’Amelio, who reportedly reached out to Pfizer directors and encouraged them to listen to Starboard’s pitch. But, in a high-profile reversal, Read and D’Amelio said Oct. 10 they would no longer support the investor’s push.
In a letter to the board, Starboard alleged that Pfizer threatened the two executives with litigation if they didn’t issue a statement in support of current Pfizer CEO Albert Bourla.
Bourla, who took over for Read in January 2019, oversaw the company’s dramatic success with partner BioNTech in quickly developing a safe and effective COVID-19 vaccine. Sales of the shot and Paxlovid, an antiviral drug Pfizer also developed, earned the company tens of billions of dollars in 2021 and 2022.
But the company misjudged how durable demand for its shot would be as COVID-19 cases ebbed, leading to revised forecasts, cost cuts and layoffs.
Starboard argues that, outside of COVID, Pfizer failed to deliver on a drug pipeline that could sustain growth, while overspending its cash windfall on deals that have since gone awry. Most notably, the company recently withdrew from market a sickle cell drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics.
The company has also fallen behind in a pharmaceutical industry race to develop new GLP-1 medicines for obesity.
