Pfizer's science vows to Britain: promise or placebo?
U.S. drugmaker Pfizer Inc's effort to sweeten its bid for Britain's AstraZenaca Plc with commitments on research, manufacturing and jobs is claimed as a coup by the UK government, but many are deeply skeptical.
Pfizer Chief Executive Ian Read wrote to Prime Minster David Cameron giving a five-year commitment to complete a new research center in Cambridge, retain a factory in Macclesfield, and put a fifth of its research staff in Britain.
Cameron's spokesman described the letter as "a positive sign with significant undertakings on research, jobs and investment".
Yet five years is not long at all in an industry like pharmaceuticals, with 10 to 15 year product cycles, and Pfizer made clear it could "adjust these obligations should circumstances significantly change".
Britain has been burnt before on foreign takeovers - notably Kraft Foods Group Inc's 2010 acquisition of Cadbury, when the U.S. firm promised to keep open a key factory, only to renege on that soon after the deal was completed.
Pfizer's reputation is also under a cloud following a decision three years ago to shut most of its research work at a large R&D center in Sandwich, southern England, where Viagra was invented, with the loss of nearly 2,000 jobs.
Against that background, trades unions urged ministers and AstraZeneca shareholders not to be wooed by Pfizer's warm words.
"Similar undertakings were given by U.S. multinationals before which have proved to be worthless," said Allan Black, national officer for the chemicals industry at the GMB Union.
Chuka Umunna, business spokesman for Britain's opposition Labour party, told BBC radio that Pfizer's previous acquisitions had "led to deep cuts in the research facilities and ... intellectual asset-stripping".
A Pfizer spokesman said in response to those claims that the company recognized that its bid approach created uncertainty, which is why it had taken the unusual step of giving long-term commitments.
Pfizer executives said those commitments were based on placing more drug discovery work in Britain to tap into its great science and its history of collaboration between private and public sectors.
"The quality of the science that is done in the UK is second to none," Rod MacKenzie, Pfizer's head of PharmaTherapeutics R&D, told Reuters in an interview.
The U.S. group will also benefit from Britain's "patent box" system, which came into effect last year and offers a special ultra-low 10 percent tax rate on profits earned from patents.
MacKenzie said the 20 percent staff commitment would translate into much greater investment by Pfizer in the country: "We will be increasing our R&D workforce in the UK - it will be a substantial increase."
But he declined to give a specific prediction of how many scientists the combined company would employ in Britain, if the deal comes off, and also declined to speculate as to what the increased research effort in Britain would mean for Pfizer laboratories in other countries.
AstraZeneca, which employs 6,700 staff in Britain, has plans to open a new $500 million research and corporate headquarters in Cambridge, southern England, by 2016 - the centerpiece of chief executive Pascal Soriot's overhaul of the company and, the government hopes, a new beacon for British life sciences.
The current plan is for the Cambridge site to house 1,600 scientists and 400 head office staff, and MacKenzie said Pfizer would broadly follow through on that plan.
"The intent is to build out essentially the strategy that they had, whether it is 1,600 exactly I'm not sure, but it would be certainly of that order," he said.
Roger Barker, director of corporate governance at the Institute of Directors, cautioned against viewing Pfizer's move as a U.S. giant seeking to gobble up a key part of Britain.
"It is misleading to present AstraZeneca as some kind of UK national champion," he said, noting that the firm is a multinational enterprise that was created through mergers British, Swedish and American companies.
"The majority of its employees are based outside Europe and its shareholders are overwhelmingly foreign institutional investors," he said. "It is run by a Frenchman and chaired by a Swede. It is a multinational company active in a global economy."
(Writing by Kate Kelland; Editing by Will Waterman)