Pfizer makes a case for R&D in AstraZeneca megamerger, but does anyone believe it?

With various U.K. media groups adding their voices to a crescendo of criticism over Pfizer's ($PFE) proposed $106 billion-plus buyout of AstraZeneca ($AZN), the company's R&D chief is continuing to try and insist that this deal makes really good sense from a drug research perspective. But he's finding few buyers for that argument after years of Big Pharma reorganizations and mass layoffs in R&D.

Mikael Dolsten

Pfizer's Mikael Dolsten called AstraZeneca's pipeline "a really great fit" in a video posted over the weekend. Dolsten and CEO Ian Read put the glossiest shine possible on the prospective deal.

"I get real excited thinking about what we could accomplish" accelerating science and medicine for innovative as well as established medicines, Dolsten said in one of four taped comments. "We are currently in 6 therapeutics areas," and AstraZeneca would add expertise on three of them: oncology, inflammation and cardiovascular/metabolic disease.

A merger would allow the company to "move faster with more and deeper resources," he maintained. And trying to once again reassure UK officials about Pfizer's commitment to the country, he said that "I'm real impressed with the golden triangle (London, Oxford and Cambridge). The outcome (of a merger) would be fantastic to think about."

The general comments, though, provided no new binding commitments. And after Pfizer gutted much of its Sandwich R&D operations in a drive to carve billions of dollars out of its annual research budget, its word doesn't go very far these days. Pfizer has dropped from the number 1 spot on the top 10 R&D spenders list to number 5. Back in 2007 the company spent $8.3 billion on research, while number 12 listed Wyeth's research spending hit $3.4 billion. Five years after the two combined, the budget is hovering around $6.5 billion, a drop of more than $5 billion.

Having seen what happens after a megamerger, U.K. officials have been wrestling over what kind of commitments are needed to make sure the budget ax drops somewhere else next time. And Pfizer's assurances of keeping 20% of its research staff in the U.K. and proceeding with a new R&D center in Cambridge clearly fall short for many critics. The best reaction it received over the weekend came from Prime Minister David Cameron.

"I think the right thing to do is to engage," Cameron said to the BBC, according to a report from Reuters. "To get stuck in with these companies, as I've done and my team of ministers has done, to make sure we get good guarantees and the best deal for Britain. We've made some very good progress."

U.K. politicians, though, aren't expected to throw up insurmountable obstacles. For now it's up to AstraZeneca execs as they try to maintain loyalty among a group of major investors. And those investors may not care all that much about what Pfizer has had to say. For them, the key issue is how much Pfizer will offer to pay for AstraZeneca--not what happens to the staff next.

Ian Read will soon be in front of lawmakers to answer questions about the merger. You can bet that more general remarks about his enthusiasm for R&D will be subjected to some detailed reviews of the past.

- here's a link to the videos
- here's the story from Reuters