The head of US drugs giant Pfizer admitted Tuesday that jobs could be lost if it succeeds in taking over British competitor AstraZeneca in a £63-billion deal ($106 billion, 77 billion euros).
Chief executive Ian Read also told a British parliamentary committee that the combined total of $12 billion currently spent by the two pharmaceuticals firms on research and development would fall.
AstraZeneca’s chief executive meanwhile warned the same committee that a takeover could delay the development of new drugs.
Politicians and unions have expressed concern that a tie-up would lead to job cuts and damage Britain’s position as a research and development hub.
Pressed repeatedly on what savings Viagra maker Pfizer was planning to make in the event of a tie-up, Read admitted “there will be some job cuts somewhere”.
“I’m not sitting here saying that we can become more efficient without some reduction in jobs. We’ll be more efficient by some reduction in jobs. What I can’t tell you is how much or how many or where,” he told the committee.
AstraZeneca employs 6,700 people in Britain.
In occasionally testy exchanges, the Pfizer boss rebuffed criticism from lawmakers that the firm was a ruthless cost-cutter and insisted it had acted with “integrity” in past takeovers.
Scottish-born Read said he was “very proud” of his 35-year career at Pfizer and described it as a “company of high integrity focused on patients and delivering drugs to patients”.
Paul Nurse, president of the scientific body the Royal Society, has written to the committee to express his concerns that Pfizer’s commitments are vague and that a five-year pledge on research and jobs is insufficient.
– Pfizer bid ‘opportunistic’ –
The head of AstraZeneca, Pascal Soriot, said a takeover by Pfizer could delay the production of life-saving medicines.
Soriot warned that the mega-merger would prove a distraction from its scientific priorities.
“What will we tell the person whose father died from lung cancer because one of our medicines was delayed because our companies were involved in saving taxes or saving costs?” he told the committee.
AstraZeneca described the latest announcement outlining the US company’s proposals directly to its shareholders as “opportunistic”.
Pfizer wants to create a new pharmaceuticals giant that will be domiciled for tax purposes in Britain.
But Soriot told the Commons Business, Innovation and Skills committee that it would create “a distraction that would potentially delay some of our projects”.
So far, AstraZeneca has rejected Pfizer’s advances, arguing the terms of the offer — increased from a previous informal bid of $99 billion — has “substantially” undervalued the company.
Unions in Britain want the government to block any takeover.
On the eve of the hearing, Pfizer appealed directly to AstraZeneca shareholders, setting out the “strong strategic rationale” for the takeover.
Turning up the heat, Pfizer said Tuesday that it was willing to alter the terms and structure of its cash-and-shares takeover bid, pitched at £50 per AstraZeneca share, in order to win approval from management.
Last week, Pfizer faced political pressure in the United States over the potential impact of the takeover.
The governors of Maryland and Delaware pressed Pfizer on Friday about the impact on jobs in their states, citing the lack of assurances.
And US senator Ron Wyden called for an overhaul of the tax code to discourage deals like Pfizer is pursuing, which would allow the new company to avoid paying billions of dollars in US taxes.