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 The New York-based group said it was disappointed by AstraZeneca's
refusal to discuss its proposed merger. Chief Executive Ian Read did
not rule out a hostile bid, telling a parliamentary committee he had
various "options" for his next move.
Having pledged to keep a fifth of research jobs in Britain,
Scottish-born Read said he could not commit to maintaining a
specific R&D budget there.
"We'll be efficient by some reduction in jobs. What I cannot tell
you is how much or how many or where. We'll look at this as our
global combined footprint and then we'll make decisions," Read said.
He told the panel he expected the combined research expenditure of
the merged drugmaker would be lower than that of the two separate
companies, noting one of the drivers of his proposed deal was to
increase efficiency to keep both firms competitive in an
increasingly tough marketplace.
Pfizer warned that Britain's second-biggest drugmaker could wither
without its financial muscle, after AstraZeneca rejected its May 2
cash-and-stock offer worth 50 pounds a share and said it had a
bright future as an independent business.
In a statement earlier on Tuesday Pfizer expressed again its
frustration at the rebuff and said working with the UK company's
board could help deliver "optimal deal terms" which AstraZeneca
could recommend to its shareholders.
"Engagement would provide AstraZeneca management with the
opportunity to provide Pfizer a better understanding of the business
and its prospects, and the credible basis for their new long-range
targets," it said. "Pfizer will continue to be disciplined on
price."
Pfizer is widely expected to come back with a sweetened offer for
AstraZeneca this week, although people with knowledge of the matter
said it was likely to wait until after the parliamentary hearings to
make any new move.
Pfizer's bid would be the largest foreign takeover of a British firm
and is opposed by many scientists and politicians, as well as
AstraZeneca itself.
Parliamentary select committees cannot block corporate transactions
but they can question executives ferociously, as banks, energy
companies and Rupert Murdoch's News Corp have all found out to their
cost: The media coverage resulting from these firms' sessions with
lawmakers confirmed them as corporate bad guys for many members of
the public and placed their future dealings under even closer
scrutiny.
TARNISHED REPUTATION
Pfizer already has a tarnished reputation in Britain after shutting
down most of its research in southern England where Viagra was
invented, with the loss of some 1,700 jobs.
Now it faces skepticism about its long-term commitment to
AstraZeneca - though Read told the panel "I'm a man of my word."
Pfizer has given a five-year commitment to complete AstraZeneca's
new research center in Cambridge, retain a factory in the
northwestern English town of Macclesfield and put a fifth of its
research staff in Britain if the deal goes ahead.
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However it has also said it could adjust those promises if
circumstances changed "significantly." Allan Black, national
officer for the GMB trade union, told the select committee said:
"Worryingly, the lawyers we've consulted don't see any obvious
mechanism to make a five-year commitment binding."
Unite, Britain's biggest trade union, ran an advertisement in the
country's biggest free morning newspaper Metro on Tuesday, saying
Pfizer was "the wrong prescription for Britain."
Tony Burke, Assistant General Secretary of Unite, said his members
were "very, very concerned" about Pfizer's record of cutting 65,000
jobs worldwide since 2005.
AstraZeneca pushed out details on its new drug pipeline late Monday
and early Tuesday morning, flagging good news on drugs for asthma,
rheumatoid arthritis, lupus and diabetes to prove it can stand on
its own.
Read also came under fire over the ethics of re-domiciling in
Britain, for tax purposes only, in order to cut its tax bill - a
move that has sparked anger as well in the United States, where the
taxman stands to lose out.
Pfizer admits the proposed deal will involve job losses and result
in it paying less tax but argues such things are necessary to
improve efficiency in an industry where governments are pressuring
drug companies to cut costs.
In Tuesday's sessions lawmakers will also interrogate AstraZeneca's
French CEO Pascal Soriot and business minister Vince Cable.
Then a second parliamentary committee on May 14 will question both
CEOs again, along with British science minister David Willetts,
about the science aspects of the deal.
"They can make enough noise to cause embarrassment and bring a real
spotlight onto this whole deal, which could be pretty uncomfortable
for Pfizer," said Navid Malik, head of life sciences research at
Cenkos Securities.
(With additional reporting by William James; Editing by Sophie
Walker)
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