Pfizer pledge 'insufficient' says top scientist
Pfizer's commitments to maintain research and jobs should it take over AstraZeneca have been dismissed as "vague" and insufficient.
The comments were made by the President of the Royal Society, Prof Sir Paul Nurse, in a letter seen by BBC News.
Sir Paul has written to the chairmen of the Commons Business and Science Select Committees.
The company has made a five-year commitment to research and guaranteed jobs in the north-west of England.
In written evidence to both select committees, Pfizer has given a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in Macclesfield and put a fifth of its research staff in Britain if the deal goes ahead.
Both committees will be hearing from the head of Pfizer, Ian Read, over the next two days.
Mr Read will appear before the Business Committee later on Tuesday, and the Science Committee on Wednesday.
He is expected to tell MPs that AstraZeneca's revenues are due to decline sharply as some of its exclusive patents expire shortly and that without Pfizer's financial muscle the UK company may not be able to realise the potential of its promising research.
But in a letter to both select committee chairmen, Nobel Prize winner Sir Paul says Pfizer's commitments are "vague, come with caveats and have an inappropriate timescale".
Sir Paul adds that a five-year commitment to the UK is "insufficient".
"A commitment of 10 years is required. Science is not a quick-win sector - it requires long-term investment."
Sir John Tooke, President of the Academy of Medical Science, has said that "there is anxiety among the biosciences community because of Pfizer's past behaviour."
"The assurances they have made are welcome but they may not be able to hold on to those commitments because of commercial pressures."
In response Pfizer said: "These commitments represent significant investment in the economy, skilled workforce and scientific knowledge base of the UK. With our commitment to foster research and development in the UK, we are matching words with deeds—and we will keep our word."
The company adds that the commitments are "legally binding".
The chairman of the Business Select Committee, Labour MP Adrian Bailey, told BBC News that lawyers to whom he had spoken were "rather puzzled" by Pfizer's claim that it was bound by law to keep its promises.
Pfizer argues that the Takeover Code will require it to adhere to any statement it makes should it take ownership of AstraZeneca.
However, Mr Bailey is concerned that the Takeover Code has flimsy legal underpinning, with little if any sanction if it is breached: "Here you have a hugely significant strategic industry in this country of enormous significance. We can't afford to have anything less than a robust procedure to bind any company to keep to its commitments."
Mr Bailey told the BBC's Today programme that his Business Committee hearing on Tuesday would want to know how legally binding were Pfizer's commitments on UK jobs and investment. "Pfizer has a history of buying businesses and then closing them down," he said.
He said it might be necessary to amend the Takeover Code - before any acquisition of AstraZeneca - to ensure that the government could intervene if any commitments were broken. Pfizer, he said, had spoken a lot about the tax advantages of the acquisition.
"The last thing that we want to do is start adding to their tax pile without any benefits to the country," he said.
Former Conservative Chancellor, Lord Nigel Lawson, told BBC Newsnight said Pfizer was "perfectly respectable" and a takeover could, on balance, be the better option for the UK.
The Financial Times has reported that Anders Hamsten, the head of the Karolinska Institutet - which carries out half of the medical research in Sweden - said that Pfizer had a "dismal history" in his country.
"Pfizer took over Pharmacia (in 2003) and at that point fairly strong commitments were made to invest and do research in Sweden, and that didn't really turn out to be the case," he told the FT.
Last week, one of the world's largest private funders of medical research, the Wellcome Trust, confirmed it had written a letter to Chancellor George Osborne, to express its concerns. The Trust's chairman, Sir William Castell, and its director, Jeremy Farrar, told the chancellor that "Pfizer's past acquisitions of major pharmaceutical companies have led to a substantial reduction in R&D activity, which would be replicated in this instance".
"We think it essential that its R&D and manufacturing capability it offers to the UK is maintained."
Between 2000 and 2009, Pfizer acquired three large companies — Warner-Lambert, Pharmacia and Wyeth as well a number of smaller companies, after which it closed numerous research sites in the United States. It also sold the site of its UK R&D research headquarters in Sandwich, Kent, in 2011 with the loss of 1,500 jobs.
In an article for the science journal Nature Reviews in 2011, Pfizer's former head of research John LaMattina pointed out that research productivity dropped following mergers:
"At times, companies have invested as much as 20% of top-line revenues into their pipeline. However, Pfizer now projects that in 2012 this figure will only be 11%," he wrote.
Ironically the concerns over cutbacks in AstraZeneca's research may make the cutbacks more likely. Resistance to the sale has driven up AstraZeneca's share price - so should a takeover go through, Pfizer may be forced to recoup its outlay by deeper cuts in the UK than it would otherwise have planned.
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