By Michael Erman and Bhanvi Satija

(Reuters) -Pfizer CEO Albert Bourla, under pressure from activist hedge fund Starboard Value, made his case to Wall Street on Tuesday that the drugmaker's turnaround is succeeding after it reported a higher-than-expected profit due to strong sales of COVID-19 treatment Paxlovid.

Still, investors said the company had work to do to show it can improve its prospects, and Pfizer shares were off 2.4% at $28.18.

Bourla made his first public comments on Starboard's criticism of management on a conference call to discuss the financial results.

He said Pfizer has been taking steps for some time to cut costs and has made changes to its corporate structure, including top management of its commercial operations and a new chief strategic officer. The company plans to name a new head of research and development soon, the CEO added.

Activist hedge fund Starboard Value has argued that Pfizer's board needs to hold management accountable for the company's underperformance, particularly questioning its record for producing profitable new drugs from internal research and development or acquisition.

Starboard declined to comment on the quarterly results.

"We plan to engage with shareholders, including Starboard, and consider any good ideas to create long-term shareholder value. But I don't think that the statement 'Something needs to change,' is really pragmatic, because it's coming 15 months late," Bourla said.

The New York-based drugmaker has struggled with a sharp fall in sales of its COVID vaccine and antiviral Paxlovid from pandemic highs, prompting it to launch a cost-cutting program last year and focus on deals to bolster its business.

On Tuesday, the company said the better-than-expected rise in Paxlovid sales reflected higher infection rates during the quarter and strong commercial execution.

The company also raised its annual profit and sales forecast.

Pfizer shares are trading at roughly half of their pandemic peaks. Investors and analysts have said they want to see improved profitability from the cost cuts as well as revenue growth powered by its recent deals.

'STILL SO MUCH TO DO'

Pfizer said it was on track to deliver at least $4 billion in savings from its cost cut program this year.

"It's a first step across the start line of a marathon for them," said Dave Wagner, portfolio manager at Aptus Capital Advisors, which owns about 260,000 Pfizer shares.

Wagner said he would like Pfizer to streamline its portfolio and cut costs further, especially in the supply chain.