It's no surprise that the pharmaceutical group now finds itself in the firing line of an activist fund.
Starboard Value, which enters the scene with a billion-dollar stake in Pfizer, in other words less than 0.5% of the capital, is aiming straight for the head, demanding to see CEO Albert Bourla's head rolled to the ground. The case smacks of a vendetta, as Starboard, advised and supported by former Pfizer Chairman and CEO Ian Read, was once Bourla's protégé.
Ian Read is a legend at Pfizer. It was he who rescued the group in the years following the great financial crisis, when it faced the risk of an acute downturn not unlike the one threatening it today. The man, however, has not left an indelible impression everywhere. Much of the growth that Pfizer regained in the wake of its new strategic direction came from monstrous price increases, particularly in oncology.
Be that as it may, Starboard's - and, no doubt, many other shareholders' - grievances with Albert Bourla are legitimate here. We said as much last December in Pfizer, Inc: A cycle for nothing?
The details of Starboard's accusations have not yet been made public, but we already know that the finger is being pointed at the group's very aggressive external growth strategy. Three-quarters of Covid's providential windfall - $92 billion from the sky - has in fact been redirected towards acquisitions that are slow to produce sparks.
The most emblematic case, of course, is that of Seagen, bought for $43 billion, in other words a multiple of more than twenty times its revenues - an amount which, at the time, caused Merck, the other candidate for the takeover, to back out, reputed for its less offensive culture than that of Pfizer.
Another cause for gnashing of teeth - and another nail in Bourla's probable coffin - is the $5.4 billion acquisition of Global Blood Therapeutics, following the latter's recent announcement that it had to withdraw its sickle-cell anaemia treatment from the market for health safety reasons.
At the same time, despite a substantial pipeline, Pfizer has long since failed to innovate in either oncology or rare diseases, and has also missed the boat when it comes to obesity treatments - the pharmaceutical industry's new horizon. Against this backdrop, the days of its current CEO appear to be numbered. Pfizer's profitability has eroded and, last year, the group posted an operating profit and free cash flow well below those of ten years ago.
Bourla may have been inspired when he signed a partnership agreement with BioNTech, but this extraordinary success is now seen more as a stroke of luck than the consecration of a robust and sound strategy.
MarketScreener, which sensed the end of the line on this one, points to another major management error: despite the providential windfall from the Covid-19 vaccine, Pfizer's debt exploded under the Bourla era, as it was inevitably difficult to pursue such an ambitious external growth strategy while distributing record amounts of dividends to shareholders.
It's not often that activist investors manage to influence the strategic plans of major pharmaceutical groups. All the evidence suggests that this is nothing more than a manhunt. And why shouldn't it be? Sometimes it doesn't take much to convince investors to upgrade a stock, offering the activist a juicy, quick capital gain.
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