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Pfizer Receives $1 Billion From Starboard Value, Stock Rises
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Shares of Pfizer (PFE - Free Report) rose 2.17% on Oct. 7 after a report from The Wall Street Journal stated that activist investor Starboard Value has taken a roughly $1 billion stake in the company.
Investors cheered the news on hopes of a plausible turnaround with this investment.
Shares of Pfizer have risen 1.5% year to date compared with the industry's growth of 19.1%.
Image Source: Zacks Investment Research
Starboard Value Invests in Pfizer
According to the report, Starboard has also approached Ian Read, a former Pfizer CEO, and Frank D'Amelio, who served as CFO until 2021. Both expressed interest in helping the activist investor.
Read served as CEO until 2019, after Albert Bourla took over.
Bourla was pivotal in developing Pfizer’s COVID-19 vaccine Comirnaty with BioNTech.
How Will the Investment Help Pfizer?
During the pandemic, Pfizer gave the world the first and most widely used vaccine, Comirnaty, and the oral antiviral pill, Paxlovid. Though in 2021/2022, no company was as strongly placed as Pfizer in the COVID-19 vaccines/treatment market, once the pandemic ended, Pfizer started to struggle.
Its stock price hit new lows in 2023 and early 2024. Due to competitive pressure, investors’ concerns rose about its long-term growth drivers beyond its COVID-related products. Sales fell 42% in 2023 from a record high of $100 billion in 2022.
In such a scenario, an investment of $1 billion should help Pfizer revive its business, even though many Wall Street analysts believe that this is not a quick fix to help it overcome its existing challenges.
Huge profits from its COVID products strengthened its cash position, which was used for acquisitions. Pfizer’s acquisition of Seagen has strengthened Pfizer’s portfolio of cancer drugs by adding four antibody-drug conjugates or ADCs — Adcetris, Padcev, Tukysa and Tivdak.
The acquisitions of Biohaven and Global Blood Therapeutics in 2022 added Nurtec ODT/Vydura for migraine and Oxbryta for hemolytic anemia due to sickle cell disease, respectively, to Pfizer’s portfolio.
However, Pfizer recently announced that it is voluntarily withdrawing Oxbryta from markets where the drug is approved. This decision is based on the totality of clinical data, which shows that the drug’s benefit no longer outweighs the risks associated with its use.
Pfizer is also trying to enter the obesity market with its investigational drug danuglipron (an oral GLP-1R agonist for type II diabetes and obesity—phase I).
However, Pfizer is a pretty late entrant in the obesity market, which is currently one of the most lucrative spaces in the healthcare sector. It is dominated by bigwigs like Novo Nordisk (NVO - Free Report) and Eli Lilly (LLY - Free Report) . The stupendous success of Novo Nordisk’s obesity drug, Wegovy, has put the spotlight on the obesity space.
The FDA approved Weogovy in 2021 for chronic weight management in obese or overweight adults. Since the approval, sales of the drug have been rising consistently, driven by increased demand.
Eli Lilly’s Zepbound also witnessed a strong uptake owing to solid demand.
Image: Bigstock
Pfizer Receives $1 Billion From Starboard Value, Stock Rises
Shares of Pfizer (PFE - Free Report) rose 2.17% on Oct. 7 after a report from The Wall Street Journal stated that activist investor Starboard Value has taken a roughly $1 billion stake in the company.
Investors cheered the news on hopes of a plausible turnaround with this investment.
Shares of Pfizer have risen 1.5% year to date compared with the industry's growth of 19.1%.
Image Source: Zacks Investment Research
Starboard Value Invests in Pfizer
According to the report, Starboard has also approached Ian Read, a former Pfizer CEO, and Frank D'Amelio, who served as CFO until 2021. Both expressed interest in helping the activist investor.
Read served as CEO until 2019, after Albert Bourla took over.
Bourla was pivotal in developing Pfizer’s COVID-19 vaccine Comirnaty with BioNTech.
How Will the Investment Help Pfizer?
During the pandemic, Pfizer gave the world the first and most widely used vaccine, Comirnaty, and the oral antiviral pill, Paxlovid. Though in 2021/2022, no company was as strongly placed as Pfizer in the COVID-19 vaccines/treatment market, once the pandemic ended, Pfizer started to struggle.
Its stock price hit new lows in 2023 and early 2024. Due to competitive pressure, investors’ concerns rose about its long-term growth drivers beyond its COVID-related products. Sales fell 42% in 2023 from a record high of $100 billion in 2022.
In such a scenario, an investment of $1 billion should help Pfizer revive its business, even though many Wall Street analysts believe that this is not a quick fix to help it overcome its existing challenges.
Huge profits from its COVID products strengthened its cash position, which was used for acquisitions. Pfizer’s acquisition of Seagen has strengthened Pfizer’s portfolio of cancer drugs by adding four antibody-drug conjugates or ADCs — Adcetris, Padcev, Tukysa and Tivdak.
The acquisitions of Biohaven and Global Blood Therapeutics in 2022 added Nurtec ODT/Vydura for migraine and Oxbryta for hemolytic anemia due to sickle cell disease, respectively, to Pfizer’s portfolio.
However, Pfizer recently announced that it is voluntarily withdrawing Oxbryta from markets where the drug is approved. This decision is based on the totality of clinical data, which shows that the drug’s benefit no longer outweighs the risks associated with its use.
Pfizer is also trying to enter the obesity market with its investigational drug danuglipron (an oral GLP-1R agonist for type II diabetes and obesity—phase I).
However, Pfizer is a pretty late entrant in the obesity market, which is currently one of the most lucrative spaces in the healthcare sector. It is dominated by bigwigs like Novo Nordisk (NVO - Free Report) and Eli Lilly (LLY - Free Report) . The stupendous success of Novo Nordisk’s obesity drug, Wegovy, has put the spotlight on the obesity space.
The FDA approved Weogovy in 2021 for chronic weight management in obese or overweight adults. Since the approval, sales of the drug have been rising consistently, driven by increased demand.
Eli Lilly’s Zepbound also witnessed a strong uptake owing to solid demand.
Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.