After Pfizer’s coronavirus boom, CEO in crosshairs over sales slump

Albert Bourla, who four years ago led Pfizer through its scientific and financial triumph during the COVID-19 pandemic, is suddenly facing a new challenge from a large shareholder frustrated over the pharma giant’s slumping share price.

It’s a sharp turn in fortune for the chief executive and company veteran who oversaw development and mass production of the novel RNA vaccine, a race against the coronavirus that helped get the pandemic under control and put the United States and global economies back on track.

Pfizer chief executive Albert Bourla.Credit: Bloomberg

The threat to Bourla’s tenure has been launched by Starboard Value, a hedge fund that has taken a $US1 billion ($1.5 billion) stake in Pfizer, The Wall Street Journal first reported, seeking unspecified changes. Pfizer’s stock has lost about half of its value since peaking in 2021.

On Thursday, Starboard managing member Jeff Smith released a letter accusing Pfizer of threatening to retaliate against former top Pfizer executives who Starboard said had offered to assist the hedge fund “unless they publicly release a statement supporting the current chief executive officer, Dr Albert Bourla.” Starboard typically acquires a stake in struggling companies and advocates for changes to boost the value of it shares.

A path to quickly reviving Pfizer’s fortunes isn’t straightforward, some analysts say. “We do not see low-hanging fruit to boost shareholder value,” David Risinger, a Leerink Partners analyst, wrote in a note to clients. The company is facing the loss of patent protection for key drugs in the coming years and has already cut costs significantly, he said.

Starboard didn’t respond to a request for comment. Pfizer declined to comment.

Barely three years ago, Pfizer was the toast of the pharmaceutical world and Bourla, who was elevated to the top job in 2019, wrote a book about the race to develop the coronavirus vaccine.

Pfizer won the gratitude of governments and patients alike with the vaccine and its antiviral treatment, Paxlovid. CNN named Bourla CEO of the year in 2021, beating out Alphabet’s Sundar Pichai and Tesla billionaire Elon Musk. The next year, Pfizer brought in $US100 billion in revenue, more than doubling its haul from just two years before.

Flush with cash from its coronavirus success, Pfizer went on a buying spree, shelling out more than $US60 billion to expand into therapies for immune diseases, migraines, sickle cell disease and respiratory syncytial virus. The centrepiece purchase was the $US43 billion acquisition of Seagen, a cancer company with a precision-missile-like approach to targeting tumours.

But then the world moved on from coronavirus faster than Pfizer had anticipated, company executives have said, with fewer people opting to get its vaccine.

The company’s revenue went into free fall, sinking to $US58.5 billion in 2023, and its share price followed suit. Bourla didn’t receive a cash bonus that year, and his compensation, valued at $US21.6 million, was a 35 per cent pay cut from the previous year.

Bourla acknowledged in a May interview with The Washington Post that “we missed big-time our internal projections” for coronavirus.

Meanwhile, Wall Street has a new fixation: diabetes and weight-loss drugs pioneered by Eli Lilly and Novo Nordisk. Pfizer has yet to distinguish itself in the increasingly competitive race for weight-loss primacy, and is continuing to work on a weight-loss pill.

Bourla said in the May interview that the company “will be a significant player in obesity going forward.” Still, he said in the interview he believes that the market for cancer drugs is far bigger and will be one of Pfizer’s main engines of growth.

Bourla has often invoked his life story in articulating his vision and drive. He grew up part of Greece’s Jewish minority, “so that taught me how to be able to fight, for nothing is given,” he said at a 2022 Goldman Sachs conference, according to a transcript compiled by S&P Global Market Intelligence. Trained as a veterinarian, Bourla spent much of his career at Pfizer’s animal health division, where he learned “how to act without the resources” of the larger company.

As Bourla has navigated through leaner times, he has taken a knife to the company’s operations. Pfizer announced a plan last October to cut $US3.5 billion in costs. Then in May, it unveiled an effort to save another $US1.5 billion by the end of 2027. The frugal measures have yet to win over Wall Street, and its share price is roughly unchanged so far this year.

There have been some setbacks. In September, Pfizer said it was voluntarily withdrawing Oxbryta, a treatment for sickle cell disease approved in 2019 by the Food and Drug Administration that it acquired in its $US5.4 billion purchase of Global Blood Therapeutics, citing patient deaths.

“It’s hard to find a headline that’s truly jarring” in the world of pharmaceuticals, wrote Jefferies analyst Akash Tewari, but withdrawing Oxbryta and discontinuing active trials of the drug “fits the bill.”

Starboard hasn’t publicly disclosed what changes it is seeking but said it plans to present its views to Bourla and the board on Wednesday.

Starboard on Thursday alleged that Pfizer or its representatives tried to intimidate two former executives who had reportedly offered to help Starboard’s efforts, saying they were threatened with litigation and having their pay clawed back unless they publicly supported Bourla.

The allegations came a day after the two men - former CEO Ian Read and former finance chief Frank D’Amelio - said in a statement released by an investment firm that they “decided not to be involved” in Starboard’s efforts and are “fully supportive” of Bourla, his executive team and Pfizer’s board.

Starboard asked Pfizer’s board to probe the matter, calling it “highly inappropriate, flagrantly unethical, and a significant breach of fiduciary obligations.”

The Washington Post

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