Pfizer CEO: AstraZeneca drugs warning a ‘red herring’
Ian Read, the chief executive of Pfizer, has hit back at the suggestion that some of AstraZeneca's important, potentially life-saving drugs may be delayed if Pfizer is successful in its $100 billion plus bid for the company.
Pascal Soriot, chief executive of prey AstraZeneca, suggested in an interview with CNBC Tuesday that potential "disruptions" caused by the takeover may impact the delivery of medicines.
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In his second quizzing by U.K. members of parliament (MPs) within two days, Read said that key AstraZeneca medicines would be "ring-fenced" and potentially even brought to market more quickly, if the takeover was successful.
Mikael Dolsten, the company's head of research and development, spoke of creating a "powerhouse of science" through the merger. Combining cancer research would help both companies compete more effectively against other players like Novartis and Roche, Read argued.
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Pfizer is facing an unprecedented level of scrutiny in the U.K., even though it has yet to make an offer which has been accepted by AstraZeneca's board. The maker of Viagra has pledged to keep 20 percent of its global research and development in the U.K. for five years post-merger, but U.K. politicians have been pushing hard for further commitments. While the jobs pledge is legally binding under U.K. takeover law, this may only be for a year.
The company's pledges on U.K. jobs are "unprecedented and incredible," Read argued.
Read claimed that the company did not make similar promises in the case of Swedish company Pharmacia, which has frequently been cited as an example of the U.S. giant retreating on its pledges to keep jobs. He challenged MPs to prove whether Pfizer was lying in this instance.
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One of the reasons Pfizer's approach to AstraZeneca is viewed with such cynicism is because of the tax advantages to the company of such a deal. The "tax inversion" practice means that, if Pfizer spends its overseas cash on a foreign company rather than paying tax on it in the U.S., it can headquarter the merged company abroad, as long as the smaller company represents at least 20 percent of the combined company. There are concerns that, if tax is the main motivation, investment inresearch and development, and U.K. jobs, will be far down Pfizer's priority list.
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The prospect of the tax advantages of buying AstraZeneca being damaged by U.S. government intervention seem to have receded, after Orrin Hatch, a senior Republican Senator on the Senate finance committee, said "confusing and arbitrary retroactive restrictions on U.S. companies" would not solve the problem of "tax inversion."