Pfizer's takeover of AstraZeneca must be blocked
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Version 0 of 1. I am proud of the fact that the UK is an open trading country. I welcome inward investment such as that of Nissan, and the takeover of struggling British companies by foreign companies who turn them around, as in the case of Jaguar Land Rover. I also accept that job losses sometimes have to occur to restore failing companies to health. But I am not in favour of the takeover of excellent and strategically important British companies by struggling foreign firms whose actions are fuelled by tax avoidance, and who want to asset-strip the intellectual property of the British company and then dismember it. I also don't find it difficult to make a distinction between these two types of situation, and I don't think companies who want to do business in the UK will find it a difficult distinction to make either. The apparent strategy of Pfizer is to take over AstraZeneca, dismember it and put the different parts of it into its three new divisions, with the ultimate aim of selling off one or more. This would involve the closure of many of its operations and a substantial reduction of its research and development, and would be a devastating blow to the United Kingdom's presence in the pharmaceutical industry. It also strongly suggests that the commitments that the Pfizer chief executive, Ian Read, gave to the prime minister – and that allow him to "adjust his obligations if there was a significant change of circumstance" – were meaningless. In these circumstances the government has three possible courses of action. First, it can continue to try to get further commitments from Pfizer. This seems to me to be a total waste of time. It must be clear to everyone now that given Pfizer's record of breaking such commitments in the past, any commitments that are not legally binding are a waste of paper – and Mr Read has made it clear that he will not sign any legal document. To describe this course of action as "clutching at straws" is to flatter it. Even if Pfizer committed itself legally to maintaining some of its research and development in the UK, its takeover of AstraZeneca would involve dismembering an excellent and strategically important British company. Second, the government can leave the decision up to the shareholders and risk the takeover being successful. I think it may well be that AstraZeneca can fight off the bid as it becomes clear that it is Pfizer that is the struggling company, but I still think the government should take action to try to stop it. Third, the government can do what it ought to do – which is to make it very clear to Mr Read that it does not want this takeover to go ahead, and that it will act to prevent it. The size of the merger means that it is likely to be reviewed by the European commission rather than the UK's merger authority. The government could intervene in the commission's review in order to "protect legitimate interests" under article 21(4) of the EU merger regulation. If successful, the effect would be for Britain to examine the impact of the merger on its "legitimate interest" while the commission reviews the impact of the merger on competition. A legitimate interest could be the potential negative impact of the merger on the UK's research base. I am aware that the secretary of state is already looking at this option, and I think it is worth pursuing vigorously. I am full of admiration for the way this government, and the chancellor in particular, has supported the UK science base during this period of austerity. If this is not to be thrown away, the prime minister now needs to provide the country with the leadership it needs or risk becoming a victim of events. If he lets AstraZeneca fall into the hands of Pfizer, many people will not forgive him – and will use the ballot box to make their feelings known. |