Pfizer grilled by MPs – but AZ revelations shock
pharmafile | May 14, 2014 | News story | Medical Communications, Sales and Marketing | AZ, Pfizer, committee, merger, takeover
The two chiefs of AstraZeneca and Pfizer went head-to-head with MPs yesterday fighting their own corners in what is an increasingly public takeover bid.
During the three hours of questioning from the Business, Innovation and Skills Committee, it became clear that it was Pfizer who was being grilled the hardest, with AstraZeneca receiving few tough questions.
There was one revelation from the Anglo-Swedish firm that did shock however, and that was the admission by its chief executive Pascal Soriot that the firm did not pay any UK corporate tax last year.
Soriot added that the firm has paid £1.5 billion over the past five years in total, but when asked when AZ would start paying its tax bill again, he simply said he hoped ‘it would be soon’.
But the focus was very much on Ian Read, Pfizer’s chief executive, and the increasingly agitated MPs spent around 90 minutes accusing his company of wanting to carve up AZ and use the UK as a tax haven.
Read repeatedly said that he ran an ‘ethical company’ but admitted that some jobs would go from AZ should the takeover bid be successful. When pushed on the numbers, he failed to go into detail.
Pfizer did reiterate its pledge to keep 20% of its global R&D workforce in the UK, and maintain AstraZeneca’s factory in Macclesfield.
It was not lost on the Committee that AstraZeneca is itself the result of a major merger with roots in the UK and Sweden. It has also bought up a number of small to medium-sized biotech firms over the years, including the British-based Cambridge Antibody Technology (CAT) centre, which was later subsumed into its biologics arm MedImmune.
Dr Jane Osbourn, head of MedImmune in the UK and formerly of CAT, says that whilst AstraZeneca is itself a product of many mergers, she finds this one objectionable. “Our philosophy is small and medium acquisitions which are science led […] There have been redundancies but we have kept the inventors (of drugs).”
MedImmune was bought by AstraZeneca and that purchase was ‘science-led,’ she adds.
Soriot told the Committee that he ‘could not rule out’ accepting a new deal from Pfizer, but has spent months defending the company from being purchased. “Ultimately the shareholders will have to decide” whether to go through with a deal, says Soriot, but adds that he is confident he can persuade them of the merits of his independent strategy.
Analysts believe that the firm’s shareholders are holding out for the best deal – a common occurrence in pharma M&A – with sources telling Bloomberg that a sweetened deal worth more than $100 billion will be made soon. Pfizer must make another bid before 26 May under UK rules or will have to wait another six months before it can make another approach.
In perhaps the most bizarre moment, Read began talking about the ‘signature coin’ he keeps in his pocket. One side says ‘straight talk’ and the other says ‘own it’.
He told politicians that everybody at Pfizer “needs to have a sense of ownership”, and to achieve this, “you need to have the ability to straight talk”.
Brian Binley MP, one of the more ferocious of the questioners, suggests he flipped the coin that morning and it said ‘own it’ and not ‘straight talk’.
Unkind, but enjoyable session
Speaking to The Telegraph after the grilling, Read admitted he did not expect the coin to come up but was “glad I had a chance to bring it out”.
He confirmed that each of Pfizer’s nearly 80,000 employees has one, and the same privilege would be extended to AstraZeneca staff, if a deal went ahead. He described the coin as a ‘protective shield’ for staff who want to confront their bosses and insisted it came out ‘very regularly’.
He did not say whether any of his staff had shown it to him in regards to the potential deal with AZ.
The Pfizer boss also claimed he had ‘enjoyed’ his session with the committee, despite the ‘unkind’ accusation from Binley that he had ignored the coin’s advice.
There is a second hearing this morning this time by the Science and Technology Committee, which will hear from Pfizer’s R&D president Mikael Dolsten along with Read and Soriot again, as well as the Science and Universities Minister David Willetts, who has long been a champion of the pharma industry.
Readers can watch the session live from 9:15 here.
Ben Adams
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