Pfizer AstraZeneca takeover: Insider warns that acquisition could be ‘devastating’ for research
Exclusive: Pfizer’s former head of research slams his old company as it raises its controversial bid for British firm
The row over Pfizer’s £63 billion takeover bid for the British drugs company AstraZeneca intensified last night as the predator’s own former top scientist railed against the way the US firm’s takeovers destroy research teams and stop the creation of new medicines.
Dr John LaMattina’s concerns about the damage his former company’s takeover sprees were doing to medical laboratories around the world fuelled fresh condemnation of the Viagra maker’s assault on AstraZeneca, which employs 7,000 staff in the UK and is a key part of the life sciences industry.
Yesterday, ministers appeared to give the deal their blessing after Pfizer gave assurances that it would not pull the plug on AstraZeneca’s jobs and research plans.
But critics, mindful of how the US food giant Kraft reneged on promises not to close a UK factory after it was allowed to buy Cadbury Schweppes in 2010, remain unconvinced.
Dr LaMattina retired as president of global research and development at Pfizer after 30 years’ service. He later published a paper in the academic journal Nature Reviews Drug Discovery, declaring: “In major mergers today, not only are R&D cuts made, but entire research sites are eliminated. Nowhere is this more evident than with Pfizer.”
Significantly, he said such “devastating” mergers should “be concerning to patients”, as well as doctors, taxpayers and other stakeholders, “particularly bearing in mind recent cutbacks in areas of research such as antibacterial drugs and neuroscience”.
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His comments were underlined by leading scientists warning that major takeover deals risked the entire UK life sciences’ premium world status.
“The UK has been a world leader in medicines research and development, but recent closures and restructuring put this position under threat,” chief scientists at the Royal Societies of biology, pharmacology, chemistry and biochemistry warned in a joint open letter.
Former minister Michael Heseltine and Lord Sainsbury also voiced concerns yesterday about the lack of protection for important UK companies from overseas takeover.
Dr LaMattina, who is currently a senior scientist at the US medicine developer PureTech, wrote his article in 2011 but last night told The Independent: “I could have written that article today: the only difference between 2011 is that I’d have more data. If you’re in R&D right now, at either company, you’re going to be worried. In a lot of these acquisitions there are dramatic cuts, and that’s going to happen here as well.”
He predicted drug discovery programmes in their early stages would be disrupted or even abandoned altogether and highlighted AstraZeneca’s divisions looking for cancer treatments as particularly vulnerable.
Yesterday, Pfizer increased its takeover offer price from £60bn to £63bn – or £50 per AstraZeneca share – but the company’s board rejected it as being too low and refused even to meet to discuss the offer. Most shareholders agreed the offer remains too low, but were optimistic that Pfizer can be made to pay more.
Another concern of AstraZeneca’s board was that the bid was driven more by Pfizer’s desire to avoid US taxes than any wider strategic view of the business.
Pfizer admits a main rationale is tax avoidance. The company has a pool of billions of dollars accrued outside the US, which it does not want to bring back to America because of corporation tax on overseas earnings. Spending the money on a takeover means it can avoid the US tax.
But Pfizer says the takeover’s rationale is also about growing the two businesses.
In an open letter to the Prime Minister yesterday, Pfizer’s chief executive Ian Read praised the “golden triangle” for research of Oxford, Cambridge and London, and pledged to complete AstraZeneca’s planned £300m Cambridge campus. At least a fifth of the combined company’s total R&D workforce would be in the UK, he said.
Science minister David Willetts told The Independent these assurances showed the success of the Government’s “hard-nosed and muscular” talks with the US company. He said he and Chancellor George Osborne had both met the Pfizer boss this week, while the Business Secretary, Vince Cable, had spoken with him about his plans for UK jobs and investment .
Mr Willetts acknowledged, however, that some in the science community are concerned.
The Institute of Directors said politicians should stay away from the deal and leave it to shareholders to decide. “It is misleading to present AstraZeneca as some kind of UK national champion… It is run by a Frenchman and chaired by a Swede,” it said.
However, it added that AstraZeneca’s board should take into account concerns about whether a deal based on tax considerations was best for its shareholders.
The Pfizer way: ‘An alarming trend’
In his article criticising the trend for major pharmaceutical mergers, Dr John LaMattina listed the large research centres Pfizer had closed since it began its aggressive spree of takeovers in 1999 – including its controversial closure in 2011 of its hi-tech site in Sandwich, Kent.
“These sites housed thousands of scientists, and many major drugs [including Viagra] were discovered there. The same pattern has been observed after most of the mergers and acquisitions by other major pharmaceutical companies during the past decade,” he wrote.
Dr LaMattina added that the number of new medicines being invented around the world were directly correlated with the number of drug companies operating, saying: “Now, with so many fewer major companies involved in pharmaceutical R&D, the chances of success in the industry overall are likely to be dropping precipitously.”
He cited Pfizer’s takeovers of Warner-Lambert, Pharmacia and Wyeth as well as “multiple smaller companies”.
“Industry consolidation has resulted in less competition and less investment in R&D,” he said. “At a time when there is a major need for new treatments for conditions such as Alzheimer’s disease, drug resistant infections and diabetes, such a trend is alarming.”
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