Pfizer's quest for AstraZeneca becomes political theater as MPs probe $106B offer
|Pfizer CEO Ian Read|
The leaders of Pfizer ($PFE) and AstraZeneca ($AZN) are taking turns making their cases to British lawmakers, with the former trying to mollify locals afraid that its planned $106 billion buyout would maim U.K. R&D and the latter working to mount a defense in its home country.
Before a panel of Parliament members, Pfizer CEO Ian Read reiterated his company's commitments to the U.K., which include keeping 20% of a combined drugmaker's R&D workforce in the country and maintaining a "substantial" manufacturing presence. But, as AstraZeneca chief Pascal Soriot pointed out when it was his turn, that 20% figure is nebulous without knowing Pfizer's current R&D staffing and plans for the future.
And, perhaps unsurprising considering the venue, the debate took a turn for the semantic, with lawmakers trying to nail Read's qualitative vows down to quantitative commitments. Read, after declaring himself a man of his word, responded by pointing out that "You'll know it when you see it what 'substantial' is," according to Bloomberg.
Execs from both companies are slated to speak before lawmakers this week after AstraZeneca rejected Pfizer's latest bid, which weighed in at around $106 billion. The U.S. pharma giant is widely expected to return with a sweeter offer in the coming days, but if that too is rebuffed, analysts figure Pfizer will take up a hostile approach.
|Pfizer R&D President Mikael Dolsten|
Alongside Read's testimony, Pfizer R&D boss Mikael Dolsten penned an op-ed for the London Evening Standard calling his company's promises "unprecedented" and more than just "empty rhetoric," echoing its plans to follow through on AstraZeneca's $500 million research campus in Cambridge.
But Pfizer's long track record of buy-and-cut speaks louder than any recent promise, according to some Labour leaders, who likened the company to a shark, a praying mantis and other predatory organisms, leading Read to get a bit defensive.
"Pfizer is not alone in reducing employment in industry," the CEO said, according to Bloomberg. "AstraZeneca itself has reduced its U.K. workforce by 40%."
Read was unequivocal on one thing, though: R&D cuts will come, regardless of their nationality. A merged Pfizer-AstraZeneca would spend less on research than the two combined, the CEO said, per Reuters.
Read can be sure his words are being heard across the Atlantic, as well, where U.S. lawmakers have voiced concerns of their own about potential job cuts. Pfizer's designs on AstraZeneca have spurred calls for stateside employment commitments from the likes of Maryland's Martin O'Malley, a governor believed to have political aspirations beyond Annapolis. AstraZeneca's MedImmune subsidiary makes its home in Gaithersburg, MD.
For its part, AstraZeneca doesn't disagree that it could develop drugs more efficiently; instead, the company contends it's already on the path to doing so. Shortly after taking the reins in 2012, AstraZeneca's chief unveiled a roughly $2.5 billion restructuring effort designed to reinvigorate the slow-footed drugmaker's pipeline, and the company believes it's sitting on $63 billion in sales potential.
"We have the scale to succeed on our own," Soriot told lawmakers. "We have the scale. We have the people. We have the talent. We have the products. We are confident we can succeed."
Pfizer makes a case for R&D in AstraZeneca megamerger, but does anyone believe it?
Pfizer cozies up to U.K. scientists amid transatlantic scrutiny
Pfizer's megamerger pitch undermined by empty promises of the past