Following a tough opening salvo from Starboard Value last fall, Pfizer is getting a chance to catch its breath in the activist investor’s unfolding proxy fight.
Starboard stopped short of nominating any directors to Pfizer’s board ahead of a Jan. 25 deadline, Bloomberg reported Monday, citing people close to the matter. Shareholders are set to convene in April at Pfizer’s annual meeting to vote on the company’s director seats for the year.
A Starboard-backed director—or two—would have given the investor more leverage as it attempts to influence Pfizer’s turnaround strategy.
The temporary reprieve for Pfizer comes after Starboard—which previously agitated for shake-ups at other large drugmakers like Bristol Myers Squibb—recently built out a $1 billion position in the New York pharma. The activist investor argues that Pfizer has erased more than $20 billion from its market value since 2019, despite receiving a $40 billion boost from its COVID-19 franchise during the pandemic.
Starboard has been especially critical of Pfizer’s M&A moves in recent years, with the investor’s helmsman, Jeffrey Smith, insinuating in October that a CEO change at the Big Pharma might be necessary to reverse the company’s fortunes.
As for the latest development in the Starboard saga, Pfizer declined to comment on the situation further, Bloomberg said.
While Pfizer is in the clear for now, Starboard could still try to stoke change through Pfizer’s 2026 director vote if the two parties are unable to reach an agreement before then, the news outlet added.
Starboard’s ambitions for Pfizer became clearer during a presentation at the 13D Monitor Active-Passive Investor Summit in New York in late October, when the hedge fund called on Pfizer’s board to “hold management accountable” for what it described as poor returns on R&D and M&A investments.
Operating on the belief that a drugmaker’s success is based on its history of producing blockbuster drugs, Starboard’s Smith argued at the time that Pfizer’s track record was “not great.”
On Pfizer’s external efforts specifically, Starboard figures the company has invested nearly $70 billion in M&A since 2022. But given that Pfizer has set its own target to achieve more than $20.5 billion in sales from business development assets by 2030, Starboard believes the company overpaid on many of those deals.
Starboard highlighted Pfizer’s $5.4 billion acquisition of Global Blood Therapeutics in 2022 as one notable misstep. Shortly before the Starboard situation came to light, Pfizer in September pulled the centerpiece of the transaction—the sickle cell disease therapy Oxbryta—from global markets after newer patient outcomes data revealed an “imbalance” in painful vaso-occlusive crises and deaths.
Meanwhile, Pfizer’s biggest acquisition in recent years by far is its $43 million buyout of antibody-drug conjugate specialist Seagen. With its oncology expertise refreshed, Pfizer announced early last year that it aims to have at least eight blockbuster cancer drugs by 2030.
Still, Starboard’s calculations last fall suggest Pfizer is likely to see just a 15% return on R&D and M&A investments between 2023 and 2030, which is far below an industry peer median of 38%. Pfizer would subsequently need $29 billion more in 2030 revenue on top of a current consensus estimate of $50 billion to meet that 38% threshold, which Starboard has suggested is likely unachievable.
“We believe the board needs to actively hold management accountable for earning appropriate returns on R&D and M&A moving forward,” Starboard said in its presentation.
Pfizer's CEO, Albert Bourla, Ph.D., has attempted to downplay the investor threat. At the J.P. Morgan Healthcare Conference earlier this month, he said that Starboard had only pushed for changes "on the margins" of Pfizer's business and added that the hedge fund had not created "an aggressive situation," according to Bloomberg.
Starboard has served as a lightning rod at multiple large drugmakers in the past.
Perhaps most notably, the investor fought for months against Bristol Myers Squibb’s $74 billion buyout of immunology and cancer specialist Celgene, which ultimately closed in November 2019. Starboard ultimately gave up the fight over the Celgene deal after influential proxy advisory firms Institutional Shareholder Services and Glass Lewis voiced their support for the transaction.
More recently, Starboard reportedly took up a “sizeable stake” in Johnson & Johnson’s consumer health spinout Kenvue around the same time the Pfizer activity came to light, according to a Wall Street Journal report.