• Activist investor Starboard Value has acquired a $1 billion stake in Pfizer, aiming to instigate performance improvements.
• Starboard has approached former Pfizer executives Ian Read and Frank D'Amelio for support in its endeavor.
• Pfizer's stock price has fallen significantly since 2019, reflecting the company's struggles and investor dissatisfaction.
• Starboard's move marks a significant moment in the pharmaceutical industry, with potential impacts on Pfizer's future strategy and performance.

In a move that has sent ripples through the pharmaceutical industry, activist investor Starboard Value has acquired a stake of approximately $1 billion in Pfizer, the U.S. drug behemoth. This move is seen as a strategic attempt by Starboard to instigate changes within Pfizer to improve its performance, which has been underwhelming in recent times.

This information was disclosed by sources familiar with the matter on Sunday, reports Reuters.

Starboard Value, known for its activist investments, has a history of pushing for changes in companies like News Corp, Salesforce, and Match Group. Its latest target, Pfizer, has been grappling with a series of challenges, including sharply lower sales for its COVID vaccines and drugs, a weaker-than-expected launch of its respiratory syncytial virus (RSV) vaccine, and disappointing clinical data for an obesity pill it was developing.

In an interesting twist, Starboard has reportedly approached Ian Read, a former Pfizer CEO, and Frank D'Amelio, who served as CFO until 2021. Both have expressed interest in supporting the activist investor in its endeavor.

Former Executives and Pfizer's Struggles

Read's tenure as CEO ended when Albert Bourla took over the position in 2019. Bourla played a pivotal role in collaborating with BioNTech to develop a COVID-19 vaccine, a move that was initially lauded but has since seen Pfizer's fortunes dwindle as the world returns to normalcy.

Pfizer's stock price reflects the company's struggles. It has fallen to $28.58 on Friday from approximately $41.00 in 2019 when Bourla took over. This decline is indicative of the investor dissatisfaction with the company's performance.

Bourla's strategy of investing heavily in acquisitions, spending approximately $70 billion since 2020, has also come under scrutiny. Pfizer's acquisitions include Seagen for $43 billion, Biohaven for $13 billion, Arena for $6 billion, Global Blood Therapeutics (GBT) for $5 billion, and Trillium for $2 billion. However, these acquisitions have not been without controversy.

Investor Concerns and Historical Precedents

GBT, in particular, has been a point of concern for investors, as its main sickle cell disease drug had to be withdrawn from the market and trials halted due to adverse side effects. While the specific changes Starboard Value plans to propose are not detailed, it is likely that the investor will advocate for cost cuts, divestitures, or strategic shifts to enhance shareholder value. Given Pfizer's current situation, this might involve a review of its acquisition strategy, operational efficiency, or a focus on core profitable areas.

This situation is reminiscent of similar historical events where activist investors have stepped in to shake up struggling companies. For instance, in 2014, activist investor Carl Icahn took a significant stake in Apple Inc., pushing for changes that included an increased share buyback program. Similarly, in 2016, ValueAct Capital took a $1.2 billion stake in Morgan Stanley to influence the bank's strategy.