A global pandemic propelled Pfizer’s stock to record highs after the company delivered the world’s first COVID-19 vaccine, but the pharmaceutical giant struggled to chart a new course as the global health crisis waned. The company’s shares jumped 3% Monday, however, on reports that famed activist investor Starboard Value has amassed a $1 billion stake in the New York-based drugmaker to push for changes it believes can spark a turnaround.
Pfizer’s stock hit an all-time high of $61.25 in December 2021 as its COVID shot, as well as its antiviral treatment Paxlovid, helped billions return to work, school, and public life. The company hit a record $100 billion in sales in 2022, up from $40 billion just three years prior.
The drugmaker has shed about $180 billion in market cap since, however, as its stock plunged over 50%. At market open on Monday, shares traded below the $30 mark. This in part due to the company overestimated demand for its COVID-19 products in a post-pandemic landscape, with revenue falling to roughly $58.5 billion last year.
Pfizer also faces challenges in the form of new lower-priced competition for its blood thinner Eliquis and arthritis treatment Xeljanz. While Eli Lilly and Novo Nordisk have led the way in the booming obesity drug market, which is expected to capture $130 billion in sales by the end of the decade, Pfizer’s first attempt at a weight-loss pill disappointed. The company is now developing a once-daily pill it hopes will eventually compete with Novo’s blockbuster injectable semaglutide, sold as Wegovy and Ozempic.
Pfizer also placed big bets on cancer drugs as part of a $70 billion M&A strategy since 2020 that has raised some analysts’ eyebrows. Notably, the pharma giant recently pulled a drug for sickle cell disease it got in a $5.4 billion acquisition of Global Blood Therapeutics.
Under current CEO Albert Bourla, who assumed the role in 2019, the company has dramatically increased its R&D budget and scrapped its off-patent drug business. While Pfizer recently announced a new multi-year cost-cutting program, building off plans from last year, it appears Starboard is looking for further changes.
According to The Wall Street Journal, Starboard is recruiting former Pfizer executives Ian Read and Frank D’Amelio to aid its efforts, with both men expressing interest in helping. Under Read, the drugmaker’s CEO from 2010-18, the company was known for focusing on its core business of vaccines and cancer. D’Amelio, meanwhile, served as chief financial officer from 2007 to 2021.
Starboard, led by Jeff Smith, took Wall Street by storm a decade ago by completely turning over the leadership and board of Darden Restaurants, the parent of Olive Garden and Longhorn Steakhouse. The hedge fund is currently trying to eliminate the dual-class share structure that allows Rupert Murdoch to control New Corp, and it has also recently mounted campaigns at Autodesk, Salesforce and Match Group.