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Pfizer/AZ deal would put UK research in jeopardy

Published on 01/05/14 at 09:17am
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The UK’s medical research collective has come together to warn the government that any deal between US giant Pfizer and Britain-based AstraZeneca, could have far-reaching consequences for R&D in the country.

The statement follows Pfizer’s announcement that it wants to buy AstraZeneca for $100 billion, which could see the firm sever much of AZ’s research base in the UK.

“Drug discovery is changing everywhere,” the scientists say. “Large pharma businesses are consolidating and downsizing, with much of early-stage research coming from an innovation ecosystem of academia and SMEs (small and medium enterprises).”

The statement comes from the leaders of the Society of Biology, Biochemical Society, British Pharmacological Society and Royal Society of Chemistry, which collectively hold more than 100,000 members.

In recent years all major pharma firms in the UK, with the exception of GSK, have either scaled back or left the isles completely – with both AZ and Pfizer pulling hundreds of R&D staff and shutting down research bases in the past three years.

This is only serving to compound the problem. “The UK has been a world leader in medicines research and development,” the scientists add, “but recent closures and restructuring put this position under threat.”

In addition Dr Melanie Lee, a fellow of the Academy of Medical Sciences, says any deal between the two companies could be a ‘nail in the coffin’ for the UK drug industry.

Lee adds: “The potential takeover of AstraZeneca by Pfizer would not present a positive move for the UK science base nor AstraZeneca’s R&D. It is likely to involve reducing R&D investment across the combined group.

“The UK scientific community and government should ask very serious questions about this proposal and understand fully that this could be a further nail in the coffin of our UK based pharmaceutical industry.”

Ian Read, Pfizer’s chief executive, was at pains this week to say that the UK had created ‘attractive incentives for companies’ to manufacture products and maintain and protect intellectual property.

AstraZeneca is currently fighting any takeover bid from Pfizer, having now rejected two advances.

Tax relief and job cuts

Pfizer appears keen to fulfil the $100 billion acquisition and move some of its base to the UK, primarily to enjoy its lower tax status when compared to the US, where it is reported the company could save $1.5 billion a year.

But in previous ‘mega-mergers’, such as Pfizer’s $68 billion deal with Wyeth in 2009, the parent company made swingeing cuts across its new acquisition and its own business in an effort to cut costs – this is the concern many politicians now have regarding any Pfizer/AZ deal.

The scientists are now calling on prime minister David Cameron and the coalition government to lead the way by setting up a ‘Pharmaceutical Council’ - which would bring together medical charities, funding bodies, businesses, academics, the NHS and academic societies to keep Britain at the ‘forefront of drug discovery’.

Sir Andrew Witty, chief executive of the UK’s largest native pharma firm GSK, tells reporters during the company’s Q1 results that he hopes Pfizer would take a ‘rational’ decision to keep drug research in Britain if a deal went through.

He adds that his firm will be an ‘interested observer’ over the deal, but had its own strategy to follow, which does not include becoming AZ’s White Knight.

Parliamentary inquiry

Adrian Bailey, Labour MP and chair of the Commons Business, Innovation and Skills Select Committee, says he is worried enough to be considering an inquiry into the issue.

He told BBC News that he will ask his Committee to launch an inquiry into whether AstraZeneca’s research facilities will be safe should Pfizer acquire the firm.

“The committee will want to make some sort of or intervention inquiry into this issue. Here we have a British company being taken over by an American company that closed down its operations in Britain a couple of years ago.

“Before there is any takeover we would want to have some sort of scrutiny into whether the takeover would be detrimental to AstraZeneca’s position in this country.”

Pfizer was hauled up in front of a similar Commons committee in 2011 after it announced its decision to axe its main European R&D site in Sandwich, Kent with the result of hundreds of job cuts.

The Financial Times is also reporting this morning that Cameron has signalled how seriously he is taking Pfizer’s approach to AstraZeneca, by appointing two of his most trusted and senior officials to lead government negotiations with the US drugmaker.

Sir Jeremy Heywood, the cabinet secretary and his close personal adviser John Kingman from the Treasury, are co-ordinating the response on behalf of the prime minister.

“He has selected his two best dealmakers,” a senior Whitehall official told the newspaper. “The prime minister has a long record on life sciences and he wants to ensure that it is an industry that prospers in the UK.”

Ben Adams

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