Mark Leftly: Suspend all your disbelief and the drug chiefs' claims are compelling
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent titles. He writes a weekly column, Parliamentary Business, published on a Wednesday, that covers politics and the City. He is a multi-award winning reporter and was named Press Gazette's business magazine journalist of the year prior to joining The Independent on Sunday.
Friday 16 May 2014
Westminster Outlook Wow, this must be some sort of personal record for Vince Cable: one of the Business Secretary's many curiously emphatic opinions proved wrong within 48 hours.
At Tuesday's Business Select Committee hearing over Pfizer's £63bn tilt at fellow drug maker AstraZeneca, MPs pointed out that the world was increasingly protectionist.
The UK and Netherlands, it was argued, were alone among EU countries in not introducing rules that discriminate against overseas investors. These are the sort of rules that, if introduced in the UK, would prevent America's Pfizer buying a company that accounts for 9 per cent of Britain's private sector spending on research and development.
"I do not think it is correct to say that other European countries operate according to different rules where takeovers are concerned," argued Mr Cable, displaying either hitherto well-hidden diplomatic skills or remarkable naivety.
"If you followed the debate recently in France on Alstom and General Electric, although people were unhappy about it, they had to accept they were operating within constraints – so to that extent, there is a level playing field."
Yesterday, the French Government published a decree that means the state can block the Connecticut-based GE's $16.9bn (£10.1bn) bid for Alstom's energy assets, such as turbines for power plants. A nine-year-old law related to the defence industry was expanded so that ministers can in effect veto foreign investment in sectors deemed to be vital for national security, including energy.
Not, then, one of the more sage comments made in the pair of Pfizer-AstraZeneca hearings with MPs this week. Sadly, Mr Cable's claim was far from the worst.
Take Pfizer's chief executive, Ian Read. Pressed to quantify his company's meaningless guarantee that, post-merger, "substantial" commercial manufacturing facilities would be retained at AstraZeneca's Macclesfield facilities, he protested: "I am a man of my word; Pfizer is a company of its word. If we say substantial, it will be substantial."
So, politicians, scientists and an ill-defined proportion of the 1,800 AstraZeneca workers who make and package medicines in a market town in Cheshire shouldn't be worrying about all this. A bloke that many people in the UK hadn't heard of until the other week says he's a pretty straight kind of guy.
Since that's the case, can we hand over GlaxoSmithKline too, please?
Most observers felt that Mr Read was extremely well coached for these gruelling hearings, at which the Business Select Committee's chairman, Adrian Bailey, reminded him that Pfizer has been described as a "praying mantis". Getting that training was wise: witnesses from big business are subjected to a form of parliamentary waterboarding and presumed guilty of whatever a grandstanding politician deems to be a corporate crime that day.
Yet Mr Read was over-coached, because even if he is a man of his word, most MPs found him to be obsequious and therefore untrustworthy. As he took his leave, he laughably claimed that it had been "a pleasure to be here" – though maybe that was a form of parting, passive antagonism.
On both days, when Mr Read left, his opposite number at AstraZeneca, Pascal Soriot, arrived to what was close to a hero's welcome. He made perhaps the most outrageous comment of all, claiming that should Pfizer formalise a bid, lives would be lost as scientists worried about their jobs rather than their research.
"What will we tell the person whose father died from lung cancer because one of our medicines was delayed because … our two companies were involved in saving taxes or saving costs?"
I'm amazed that a boss of a huge, London-listed multinational, who is chiefly responsible to shareholders, could get away with presenting his group as so altruistic – and his employees so self-absorbed.
After all, it was only two years ago that AstraZeneca's then boss, David Brennan, became one of the most notable scalps of the shareholder spring when he was forced to quit over high pay and dire financial performance. Subsequently, there were job losses as AstraZeneca sold its Alderley Park R&D site in the North-west, relocating much of the work to Cambridge.
Also, Mr Soriot has conceded that the board would consider higher offers. This can only logically mean that AstraZeneca would have to tell the family of the father who died of lung cancer that a price had been put on his life.
"We gave Soriot a very, very easy ride," admitted one member of the Business Select Committee. "That was a shame. We needed to get some assurances out of AstraZeneca as well."
Pfizer's vow to keep 20 per cent of R&D in the UK is far from meaningful without knowing how many scientists will be left after the inevitable post-merger redundancies. It was, though, sufficient ammunition to force Mr Soriot to publicly guarantee thousands of jobs in the UK and ensure the tacit support of Westminster.
This was a unique opportunity to buck the market and get a major listed company to make an explicit guarantee about employment.
Instead, these were hearings notable for a secretary of state's poor judgement, an unknown begging for trust, and the chief executive of a FTSE 100 company that is itself a product of mergers claiming that takeovers in science cost lives.
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