6 May, 2014 - 07:14 By Tony Quested

UK must cool Viagra maker's ardour

It is only a matter of time before Pfizer turns officially hostile in its desperation to land AstraZeneca.

AZ’s ability to hold out may depend on whether the UK government – right up to No.10 – has the brains and balls to fight the corner of Britain’s science base and finds a legitimate way of preventing the takeover.

Certainly the UK company’s major investors seem to be leaning towards pocketing the big bucks on offer.

There seems little alternative to at least opening talks and tease out Pfizer’s real intentions on UK jobs – particularly the 2,000 jobs AstraZeneca intends to bring to a new corporate HQ and R & D base in Cambridge’s science & technology nervecentre.

This week’s announcement of Q1 sales showed why Pfizer cannot afford to lose this battle.The American company only nudged ahead of Wall Street earnings forecasts because of sharp cost cuts – take stock of that because you will see a lot more of the same if the acquisition proceeds.

Pfizer’s sales fell $730 million below analyst expectations as demand declined for its older generic medicines as well as headline branded products, such as Viagra.

Figuratively speaking, Pfizer’s generally flaccid portfolio needs sexing up with a dose or two of its own famous product. The majority of AZ shareholders are meanwhile cast in the role of eunuchs.

AstraZeneca has shown its ability to stand firm without medicinal aids but there are other forces at large here and other issues that need to be considered for the greater good not of corporate Britain but of society and humanity.

One might have hoped the American corporate giants had got over their myopic, ‘grab the IP and run’ approach to buying the best of British businesses. The national media has focused on Kraft-Cadbury but the Cambridge cognoscenti can trump that with multiple examples of bungled US acquisitions of local companies.

HP reckons it can salvage treasure from Autonomy out of the wreckage of its own making but only time will tell. Few would put their mortgage on it.

Motorola – now a Google company – made a dog’s breakfast out of its acquisition of TTPCom, persuading brilliant engineers to stampede for the exit and start their own ventures.

In the mid-90s, after the initial takeover of Unipalm PIPEX by UUNET and the upward spin into WorldCom. American management talked glibly about their plans for major growth in Cambridge; even helipads at the Science Park were brokered into the blueprint. Inevitably all Cambridge jobs were axed in an even more inevitable cost-cutting exercise.

And that’s the key with America’s key corporations. If they don’t make enough money they don’t spend hours juggling individual items on a balance sheet – they decide: ‘How many heads do we need to lose?’ And out comes the guillotine.

Pfizer asks our Prime Minister David Cameron to take it on trust. The track record of corporate America makes this a high risk strategy.

Governments don’t traditionally like getting involved in corporate battles unless there are big votes in its pre-elections. Now there’s the rub for Cameron and the Conservatives.

With a General Election just a year away Cameron may go to the polls having sold out the UK’s science base unless he sits down with senior advisers – including leading influencers from the science community – and considers all the angles.

At present, AstraZeneca – in the rudest health it has ever been – is promising major jobs growth for Cambridge and the UK, significant advances in cancer and other disease areas and, with that, a handsome payback for the welfare of global humanity.

There is no guarantee that a Pfizer takeover will bring anything other than big bucks in a few investors’ pockets but major job cuts with attendant misery for staff who had been told their future is golden, a dilution of the combined companies’ medicinal pipeline and – worst of all – a setback for UK science from which it may never recover.

AstraZeneca is building something in Cambridge and the UK that in healthcare terms is historic and which Britain can build on for the good of  everyone who walks the planet.

Pfizer should be told there are some things money just can’t buy – and that includes the future welfare of millions of people through groundbreaking scientific advances that AZ on its current strategy is best placed to deliver with its partners.

 

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