Major concern in Britain regarding the planned Pfizer takeover of the British drug manufacturer AstraZeneca has led parliamentarians to threaten a full-on enquiry into the deal. Specifically, the British parliament’s business, innovation and skills committee wants to hold an enquiry very soon, primarily to ensure that local jobs are not threatened.
AstraZeneca is the second-largest drug manufacturing company in the U.K. after GlaxoSmithKline. It currently employs about 51,500 people, while Pfizer reportedly employs 77,700, only about three percent of whom are based in Britain. It is said to be worth less than half of Pfizer (£51.5 billion or $86.88 billion versus £120 or $202 billion), and to have a fraction of the profits (£1.94 or $3.27 billion versus £9.3 or $15.69 billion.) Pfizer’s premier products are Viagra, for erectile dysfunction, and Lyrica, which is used to control fibromyalgia, nerve pain and seizures. AstraZeneca’s main products are Crestor, a prescription medication for cholesterol, and Nexium, used to treat heartburn, excess stomach acid and acid reflux.
But the takeover bid has not been totally amicable, and reports state that Pfizer is likely to have to up its offering around £60 or $100 billion to £70 or $118 billion to make it happen. In the meantime, Pfizer is said to have contacted British Prime Minister David Cameron in an endeavor to facilitate the deal, stating that it would agree to certain guarantees relating to jobs and manufacturing. The Financial Times reported last week that Cameron had appointed senior officials to negotiate with Pfizer. However, officially the British government has remained neutral stating that the deal is a commercial one that must be decided by shareholders.
Britain’s GMB trade union is particularly concerned that thousands of jobs will be lost if the deal goes through, and has attacked the British government for engaging in talks with the drug giant. The Union wants the government to take the takeover bid to the competition authorities.
Key issues that have been raised relate mostly to Pfizer’s prior history in the U.K. For instance it has been reported that when Pfizer took over Wyeth in 2009, employment figures dropped from close to 130,000 to around 116,500 in the first year, and then continued to drop to 77,700 – which, in reality, translated to more than 51,000 jobs lost in a five-year period. There was also considerable concern after the invention of Viagra (at the time a Pfizer coup) when the U.S. company shut down a drug research facility in the south of England. There are also concerns that relate to the fact that it is accepted Pfizer sees the U.K. as a good place to do pharmaceutical research, and to manufacture drugs because there are government tax incentives. But this does not help with local employment or guarantee future investment on the part of the company.
The parliamentary committee is also concerned about previous company takeovers by American companies, including the U.S. Kraft deal that acquired the British Cadbury company in 2010, which resulted in a swift shut-down of a factory that Kraft had said would be kept running. While Pfizer has promised Cameron it will employ at least 20 percent of the company’s international workforce in Britain, there is considerable skepticism because this is seen quite simply as “a gentleman’s agreement.” Commentary that has been published recently points out that if Pfizer were to reduce its workforce, then the U.K. employees would also be chopped.
Chairman of the business, innovation and skills committee, Andrew Bailey, has stated publicly that because this is a “straightforward commercial issue” the British government has absolutely no role to play in the outcome. AstraZeneca is a “world leader in research in pharmaceuticals,” and according to Bailey it currently contributes 2.3 percent to the total exports of the country. It is also “very strategically positioned” in the U.K. he says.
Another committee member, Ann McKechin said this week that they would wait for a few days to see how events panned out before taking action. She said that “clearly given the scale of the proposed merger,” it was important to consider the impact on employees and wider British interests of the planned Pfizer takeover of AstraZeneca. Nevertheless, there is little doubt that the committee will press ahead with its efforts to hold an enquiry into Pfizer’s planned takeover bid.
By Penny Swift