Conflicting diagnoses on Pfizer’s bid for AstraZeneca
Everyone from union officials to London’s mayor has an opinion on the offer
The furore created by Pfizer’s £63 billion (€77 billion) bid for AstraZeneca neared fever pitch yesterday. Photographer: Bloomberg
The furore created by the £63 billion (€77 billion) bid for Britain’s number-two pharmaceuticals group neared fever pitch yesterday, as politicians debated the move in the Commons and former pharma executives, union officials and even the mayor of London lined up to give their views.
Developments yesterday proceeded at a cracking pace, starting with a 7am announcement from AstraZeneca on US approval for one of its new heart pills, Epanova.
Just a few hours later, the group unveiled ambitious new sales targets as it underlined its case for independence in a strategy update that looked remarkably like a formal defence document, despite the absence of a bid.
The forecast of a leap in annual sales to $45 billion (€32 billion) by 2023, up from $25.7 billion last year, was designed to hammer home the message that Pfizer’s mooted £50-a-share offer undervalues the Anglo-Swedish company. The group’s Swedish chairman, Leif Johansson, said the “increasingly visible success of our independent strategy highlights the future prospects for our shareholders”.
The unions are backing opposition leader Ed Miliband’s call for a “national interest” test to be imposed on the deal to safeguard jobs.
Accusing British prime minister David Cameron and chancellor George Osborne of backing the Pfizer approach, the unions said neither the French nor German governments would be simply “waving through” a deal on this scale.
As the day wore on, others weighed in with their views, while in the afternoon the battleground switched to Westminster, where the speaker of the house granted MPs emergency questions on the affair.
London mayor Boris Johnson, meanwhile, said that while he believed in principle in an open system of markets, it was important to establish whether the US bidder really was committed to maintaining research and development in Britain. If he were prime minister, he would look “very, very hard” at the bid and the assurances Pfizer has given on jobs.
Some of the most colourful comments came from one of AstraZeneca’s former bosses, Sir David Barnes, who was chief executive of the group in the 1990s. He told the BBC of his fears that the US drugs group would “act like a praying mantis and suck the lifeblood out of their prey”. Noting that tax is one of the key drivers behind the Pfizer move, rather than research and development, Barnes said: “That is a very narrow basis on which to base such a massive task.”
He added: “The risk is that the past history of Pfizer has shown that they tend to extract destructive synergies, they have done that in the past.”
But another former pharma boss, Sir Richard Sykes, revealed himself to be far more relaxed about the ownership of AstraZeneca. A former chairman and chief executive of GlaxoSmithKline, Britain’s leading pharmaceuticals manufacturer, and currently chairman of the Royal Institution, Sykes is highly respected in the industry.
His view is that ownership of global drug companies is irrelevant, as is the location of their headquarters. What matters, in his view, is that companies are encouraged to do their drug discovery and development work in Britain. Without the investment of large pharma companies, coupled with the encouragement of the government, the UK will fall behind once again in life sciences, he said.
In the Commons, British business secretary Vince Cable, in what looked like a sideswipe at Osborne, said the future of the UK “was [as] a knowledge economy, not a tax haven”. He pledged that the government would approach the situation “from a position of even-handed neutrality” but made it clear that he had not ruled out intervening in the bid.
The political debate over the deal looks set to intensify over the coming weeks, as Pfizer weighs its options on going hostile in the face of AstraZeneca’s robust refusal of its terms. Representatives of both the bidder and target companies are being summoned to answer MPs’ questions at evidence sessions called by both the business and science and technology departments.
AstraZeneca chief executive Pascal Soriot, meanwhile, told reporters yesterday that the overall feedback from investors so far had been supportive of the group’s stance. However, that may owe more to the fact that many of the leading share- holders believe they will ultim- ately be able to squeeze higher terms from Pfizer and that a raised offer will, in the end, speak louder than anything the politicians have to say.
Fiona Walsh is business editor of theguardian.com