Billionaire Ken Griffin Just Bought 7.9 Million Shares of This Beaten-Down Pharmaceutical Stock as It Eyes the Weight Loss Market

Each quarter, hedge funds that manage over $100 million are required to file a Form 13F with the Securities and Exchange Commission (SEC). These filings break down which stocks investment firms bought and sold during the most recent quarter.

Ken Griffin is a billionaire investor who serves as CEO of the hedge fund Citadel. Last quarter, Citadel bought 7.9 million shares of Pfizer (NYSE: PFE) -- increasing its stake in the pharmaceutical giant by 63%.

The last few years have featured a lot of ups and downs for Pfizer. While shares have posted break-even returns so far in 2024, Pfizer stock has cratered by more than 30% over the last three years.

Below, I'll outline some of the bigger factors that have been weighing on Pfizer while also sharing my thoughts on what may have influenced Citadel to load up on the stock.

What is causing Pfizer stock to drop?

I see three major influences that have contributed to Pfizer's beaten-down stock price.

1. COVID-19: Along with Moderna and Johnson & Johnson, Pfizer played an instrumental role in developing vaccines that combated the COVID-19 virus. In the chart below, the grey shaded column represents the short-lived COVID-19 recession.

Between 2020 and 2022, Pfizer's revenue and profits soared thanks in large part to the company's COVID-related medications, Comirnaty and Paxlovid. However, since the fourth quarter of 2022, Pfizer's growth has witnessed a noticeable deceleration due to falling demand for these COVID treatments as the world emerged from peak pandemic conditions.

2. Acquisitions: In an effort to combat stalling growth and diversify its product offerings, Pfizer acquired oncology specialist Seagen for $43 billion back in December 2023. While revenue from Seagen will help offset the declining sales of Comirnaty and Paxlovid, acquisitions often take years of integration efforts before they are fully accretive.

3. Road map: One risk to always keep in mind with pharmaceutical stocks is that these companies face patent cliffs on their medications. Over the next few years, Pfizer expects to face patent challenges over some of its biggest drugs, including Eliquis, Ibrance, Prevnar 13, and Xtandi. Although it's difficult to know how much Pfizer's growth will be impacted as generic alternatives to these treatments hit the market, the company could very well lose out on billions in sales.

Something else may be lingering in the background

Considering sales from Pfizer's blockbuster COVID treatments are declining combined with billions more in revenue at stake thanks to expiring patents, what else can Pfizer do to offset these risks besides inorganic growth derived from acquisitions?