Starboard Value is raising the stakes in its $1 billion campaign for change at Pfizer (PFE, Financial), urging the pharmaceutical giant to take decisive action to improve its performance. At the 13D Monitor Active-Passive Investor Summit, Starboard CEO Jeff Smith took aim at Pfizer's leadership under CEO Albert Bourla, accusing the company of squandering a $40 billion windfall from COVID-19 treatments without delivering meaningful returns for shareholders. Despite doubling its revenue and tripling cash flow since 2019, Pfizer's stock has plummeted over 50% from its pandemic peak, with Smith calling on the board to “actively hold management accountable” for better returns on R&D and acquisitions, warning that at least $20 billion in value has been lost.
Smith's critique underscored Pfizer's struggles to match the performance of its peers, with its 15% return on R&D and M&A spending falling well below the industry median of 38%. The company is lagging behind competitors like Eli Lilly (LLY, Financial) and Novo Nordisk (NVO, Financial), even after heavy investments in new drug development. Starboard's $1 billion stake reflects its high expectations for a turnaround, and Smith hinted that a change at the top might be necessary, stating that sticking to the same strategy would be “Einstein's definition of insanity.” The activist investor made it clear that Pfizer needs to “do something different” if it hopes to reverse its trajectory and stabilize its revenue outlook for the coming decade.
With intensifying pressures, including patent expirations and disappointing product launches, Starboard's push comes at a critical moment for Pfizer. The message is clear: past successes can't shield the company from the present reality of eroded value and waning investor confidence. Smith's call for a new direction aims to spark urgency within Pfizer's boardroom to rethink its strategy and unlock the potential that COVID-era breakthroughs should have provided. Now, it's up to the board to act or risk further deterioration of shareholder trust.
