Buy British but be careful

It’s difficult not to be cynical about Pfizer’s motives for wanting to take over AstraZeneca.

The US pharmaceutical giant has made no secret of its admiration of the UK’s corporate tax rates, which at 20 per cent are half that of the US, and has a painful recent history of buying up competitors and then slashing jobs and research. Here in the UK, the 2011 closure of its R&D facility in Sandwich, Kent, and subsequent loss of 2,400 jobs, still rankles.

Should the deal go ahead, opponents fear more of the same and have warned that the proposed £63bn takeover - which would be largest ever of its kind in the UK - could lead to a devastating loss of scientific and research expertise.

AstraZeneca itself, which has so far refused to meet to discuss the deal, has also warned that the corporate restructuring that would follow a takeover could significantly set back the development of new drugs; potentially putting peoples’ lives at risk.

Pfizer, which is expected to come back later this week with a higher offer for the UK/Swedish firm has so far failed to win over the cynics. Responding to questions from a committee of MPs this week, the company’s chief executive Ian Read acknowledged that the merged Astra-Pfizer would spend less on research than is currently spent by the two separate companies and said he was unable to comment on the likely size of the firm’s UK work force.  

Against this uncertain backdrop, the firm’s proposed five-year commitment on jobs and investment look somewhat vague. Paul Nurse, president of the Royal Society this week called for a 10 year horizon at least, whilst the Swedish prime minister Fredrik Reinfeldt has accused the firm of reneging on jobs promises made following its 2002 acquisition of Swedish firm Pharmacia.

But whilst any takeover could have potentially worrying implications for British science, it’s worth pointing out that foreign ownership isn’t automatically disastrous. Indeed, there are numerous examples in the world of engineering of successful foreign takeovers that have benefitted the economy. Tata’s success with Jaguar Land Rover is the obvious recent example of how foreign ownership, when coupled with a proper commitment to a brand and its skills base, can lead to huge success.

What’s more, whilst it’s natural to question the commitment to British science of a firm with a history of aggressively cutting costs, the fact that the UK has a tax environment that’s more attractive to large corporations is surely quite a positive thing.

It’s also worth stressing that not everyone in the scientific establishment has come out against the proposed AstraZeneca deal. Some have even suggested that Pfizer’s interest - and its pledge to spend 20 per cent of its R&D budget here - is a vote of confidence in the UK’s world-leading research base.

Whatever happens next - and it seems likely that Pfizer will soon make AstraZeneca’s shareholders an offer they can’t refuse - government must now do everything in its power to extract concrete assurances from the US firm of its long-term commitment to the UK. Anything less than a binding pledge to protect existing jobs and investment plans will irrevocably damage the UK’s science base.