Pfizer Inc. (PFE) Chief Executive Officer Ian Read fought back against accusations that his bid for AstraZeneca Plc would harm patients and damage science in the U.K. as he faced Parliament for a second day.
AstraZeneca has resisted the 60.4-billion-pound ($101.9 billion) offer, and said yesterday that the disruption of a buyout could jeopardize its pipeline of experimental drugs.
“There’s no truth that products of a critical nature would be delayed getting to patients,” Read told the Science and Technology Committee. “If anything, we would accelerate those products.”
Pfizer’s proposed takeover is facing skepticism from U.K. lawmakers concerned by possible job cuts and the company’s unwillingness to commit to preserving AstraZeneca’s workforce. Pfizer said it would maintain 20 percent of its global research and development employees in the U.K. for five years, without specifying the number of jobs. Read said the merger would result in job cuts and a reduction in total R&D spending.
“I suspect the combined research budget will go down,” Read said. “I suspect there will be less scientists than the natural arithmetic combination of the two.”
The combined company would be more efficient and more productive, and reflects the changing shape of the industry as governments pressure drug companies to reduce costs, he said.
“The industry over the last decade, decade and a half, has been in consolidation,” he said. “Pfizer has reduced its overall employment but so has AstraZeneca. (AZN) AstraZeneca cut 40 percent of its workforce in the U.K.”
AstraZeneca CEO Pascal Soriot, who appeared before the committee after Read, said Pfizer’s offer undervalued the company, and that the buyout could be disruptive. Even a promise to protect researchers from job cuts couldn’t ensure they would stay, Soriot said.
“We always need to remember a company is made of people and you can’t decide what people will do,” he said. “If they leave, you can only replace them and it takes months to recruit them.”
The government is emphasizing the need to preserve the U.K. science base as it talks to Pfizer and AstraZeneca, said David Willetts, the minister for science.
“The voice of the science community, and the importance of science as a U.K. national asset is widely understood by government, and it features very prominently in our discussions with the companies,” Willetts told the committee. “We are pressing hard on the all key issues everyone is concerned about.”
Pfizer made an initial proposal in January that valued AstraZeneca at 46.61 pounds a share, and increased the offer to about 50 pounds a share on May 2, with 32 percent of the payment to be made in stock. The value of that offer has declined to about 48.08 pounds, based on yesterday’s closing price for Pfizer. Pfizer is crafting a new offer that would increase the value modestly and give a higher proportion in cash, people with knowledge of the matter said.
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