Pfizer boss Ian Read hits back over AstraZeneca
Read confirms he has abandoned £69bn offer for Pfizer's UK rival and criticises UK's 'complicated’ takeover rules for the 'missed opportunity'
Pfizer's boss has ended his battle for AstraZeneca with a parting shot at the British Government – and a call for sweeping reforms of drug pricing and takeover laws.
Ian Read told the Telegraph that the rules capping drug prices are discouraging investment in Britain, and are “inconsistent” with the Government’s apparent desire to attract research and development.
The Scottish-born chief executive also said that the Takeover Code which governs acquisitions is “overly complicated, overly bureaucratic” and does not promote the interests of shareholders.
Mr Read’s comments came as Pfizer confirmed it had thrown in the towel in its attempt to buy AstraZeneca in what would have been the biggest deal ever in the drug industry. The US drug giant officially withdrew its final “compelling, full value” £69bn offer yesterday afternoon and must now walk away from a possible deal for at least three months, at which point it could only return at the invitation of AstraZeneca’s board. It cannot make a fresh, unsolicited approach for six months.
“It is inconsistent to me [for the] Government to wish to have a vibrant science centre and vibrant investment in clinical research, and yet not to have big market incentives,” Mr Read said.
“They’re rightfully proud of the work being done in oncology, yet the UK is one of the countries that has the lowest reimbursement [of] and access to oncology products.”
At the moment, the National Institute for Health and Clinical Excellence (Nice), decides whether drugs are sufficiently cost-effective for use by the NHS. It effectively bars some drugs from use, and sets caps on the prices of others.
Pfizer's retreat marks the end of an acrimonious four weeks which stirred up fierce divisions among shareholders, scientists and politicians over whether the takeover would lead to a reduction in R&D investment in Britain.
Over the last month, Mr Read has promised that the merged group would employ at least a fifth of its global R&D workforce in the UK for a minimum of five years, and that the company would have moved its tax domicile to Britain from the US, in a process known as inversion.
Leif Johansson, chairman of AstraZeneca welcomed the end of the deal, saying the Anglo-Swedish company would "continue building on the momentum we have already demonstrated as an independent company".
He also praised Pascal Soriot, chief executive of AstraZeneca, for his "dedication and focus over a period of uncertainty".
But on Monday, Mr Read said the deal’s failure was a “missed opportunity” for Britain.
“I think it is regretful because, long term, there was a missed opportunity to have the largest pharmaceuticals company in the world domiciled in the UK, committing 20pc of its R&D over a long period. That would have been very healthy for science in the UK and manufacturing in the UK,” he said.
He also said it was a “missed opportunity” for AstraZeneca shareholders.
As soon as Pfizer’s interest became public, “our conversations never really got to the point of engagement beyond talking to the chairman,” he said. “There was never any willingness or wish to do due diligence. [We had had] more than several conference calls with the chairman and the board had rebuffed our approach so we felt the only way was to make a full and final offer.”
Pfizer made four approaches to AstraZeneca, culminating in a “full and final” offer of £55-a-share which valued the business at £69bn. According to Mr Read, AstraZeneca turned the proposal down after a mere 15-minute conversation.
Many analysts criticised Pfizer for making such a decisive move, instead of keeping the door for discussions open until the 28-day takeover deadline, which expired on Monday at 5pm. However, Mr Read said that he had “no regrets” about his tactics, and that he had remained disciplined on price throughout.
“We got strong signals from our interaction with most of the shareholders. Most of them encouraged us that they [thought] a bid above £50-a-share would be well-received and they would expect AstraZeneca to engage…the full and final offer was a no-regrets move,” he said.
However, he argued that Pfizer was constrained by the Takeover Code, which was designed to protect shareholder interests by limiting the amount of time companies have to make offers for listed businesses they want to acquire in the wake of the controversial takeover of Cadbury by Kraft in 2009.
“Takeover Rules are not very conducive to getting the right solution for shareholders,” he said. “[They are] overly complicated, overly bureaucratic. They were put in place to be in the best interests of shareholders. I don’t necessarily believe they serve that function,” he said.
The Takeover Code is thought to have influenced Pfizer’s tactics during the battle, but many observers blame the febrile political atmosphere for ultimately killing off the deal. Critics styled it as the takeover of a British company by an American predator, comparing Pfizer to everything from a “shark that needs feeding” to a “praying mantis”. At one point, Ed Miliband, the Labour leader, called for a “national interest test” for foreign takeovers, and accused David Cameron, the Prime Minister, of acting as a “cheerleader” for the transaction.
However, Mr Read told the Telegraph that politics had nothing to do with the deal’s failure.
“I don’t think politics was a problem. We were treated respect by the government. They made it very clear where they stood in terms of their expectations that we were serious investors,” he said. “It was never a negotiation [with government]. It was just a discussion. They were making points to us so we could reassure them and the British people that we could be good corporate stewards in the UK.”
However, he also cast doubt on whether the deal could accurately be described as a foreign takeover, as many critics – and AstraZeneca - claimed.
“It was part of AstraZeneca’s strategy to paint itself as a British company,” Mr Read said. “It has a huge presence in the US. It is made up of a Swedish company and a British company. Then they bought an American company…it’s a global company like any pharma company is global. Global companies do their research where there are great academics and great science,” he said.