Activist hedge fund Starboard Value's chief investment officer Jeffrey Smith said on Tuesday that drugmaker Pfizer Inc's (PFE.N) board needs to hold management accountable for its underperformance.
"We measure success in producing blockbuster drugs and we all get measured by our track records. The track record here is not great," Smith said, speaking at the 13D Monitor Active-Passive Investor Summit in New York.
Starboard has built a $1 billion position in Pfizer, but had not previously detailed its concerns about the drugmaker. Smith met with Pfizer CEO Albert Bourla last week, some days after the hedge fund's campaign at the company became public.
Investors have fled from Pfizer as pandemic worries declined and billions of dollars in COVID-19 vaccine and treatment sales disappeared. At around $30 a share, the company's stock is currently trading at about half its pandemic-era high.
Smith argued that Pfizer has lost value because of poor capital allocation, research and development failures, and problems with forecasting and budgeting.
Beyond the loss of COVID-19 revenue, Pfizer has also had to contend in recent quarters with disappointing data for a closely watched experimental obesity drug, the weak launch of its respiratory syncytial virus (RSV) vaccine, and pulling its sickle cell disease treatment Oxbryta due to deaths in its clinical trials.
Smith did not make any specific prescriptions for Pfizer or its management at the presentation.
"You have to just do something different," he said. "I could define what that is -- I'm not going to define what that is. But they need to do something different to make sure that they're changing the way they're allocating capital internally in order to get the right return on that investment."
Starboard's campaign got off to an unusual start. Two former Pfizer executives had indicated they were working with Starboard to press for changes at Pfizer but then reversed course and said they supported the company's current CEO, Albert Bourla.
