Pharma CEOs: Tax system flaws help overseas rivals

If the United States hopes to stop companies from moving their tax bases overseas, then it must adopt a territorial tax system, Pfizer CEO Ian Read told CNBC.

A territorial tax system, such as the sort found in Hong Kong or France, only levies taxes on a company's domestic income but not its international dealings. Read said such a tax plan would allow jobs to come back into the United States, after many corporations have left.

Read More Pfizer beats forecasts as oncology drugs grow

Read also said a potential U.S. tax holiday to alleviate some of the competitive pressures in the current corporate environment would only be a temporary solution.

Pfizer CFO Frank D'Amelio, meanwhile, called a tax holiday "directionally correct."

Pfizer announced in May that it would not be making another offer for British drugmaker AstraZeneca after its £69 billion ($116 billion) bid was rejected. U.K. takeover rules state that Pfizer would not be allowed to make another offer for six months. Read declined to discuss the failed deal, citing British regulations.

"We continue to look at all opportunities for business development," he said.

Ian Read, CEO, Pfizer,  leaves the House of Commons on May 14, 2014 in London.
Dan Kitwood | Getty Images
Ian Read, CEO, Pfizer, leaves the House of Commons on May 14, 2014 in London.

Merck CEO Ken Frazier told CNBC that none of his company's major long-term shareholders has expressed any desire for business-consolidating deals. Despite the wave of such deals in the pharmaceutical industry, Frazier said, big investors "have not asked that question," and so he has instead focused on Merck's scientific enterprises.

Frazier also weighed in on companies acquiring rivals as part of a tax inversion—a subject about which President Barack Obama has regularly spoken.

Read MoreMerck beats forecasts, as newer drugs offset generics

American companies are at a "huge tax disadvantage" in competition for global technology and scientific assets, Frazier said, calling for a change to a "broken" system that "favors our ex-U.S. companies." Still, Frazier emphasized that his primary concerns at Merck are to focus on the company's scientific business, and not the "issue du jour."

—Reported by CNBC's Meg Tirrell, written by Everett Rosenfeld.