Should Pfizer takeover AstraZeneca?
The present take-over bid from the US company Pfizer values the UK pharmaceutical giant AstraZeneca at over 60 billion Pounds. So far, Astrazeneca's board have rejected Pfizer's offer, and politicians and commentators are expressing alarm at what a merger between the two companies might mean for British jobs and British tax revenues. But why are Pfizer so interested in acquiring AstraZeneca, and is it such a bad thing for Britain if they do?
Chris Smith spoke with former Venture Capitalist - now conservative MP for mid-Norfolk and lifesciences advisor to the government, George Freeman...
George - For the last 50 or so years post-war, we've been able to rely on the pharmaceutical industry to bring us every year new drugs, new treatments, new devices, a constant stream of extraordinary medical innovations. Even 20, 30 years ago, cancer was a death sentence. 98% of women now survive breast cancer. So, extraordinary advances but we have a problem in the pharmaceutical sector worldwide. The cost and time of developing new medicines got too long and too high. They can't afford to develop new medicines for us. We in the west can't afford anymore to buy these incredibly expensive new medicines. And, increasingly, what we have realised is the more we know that disease, and the more we know about genetics, actually, what was yesterday the blockbuster drug that we wanted, today isn't. What we need now are targeted and personalised medicines. The more scientists are unlocking the science to understand it, it's actually breaking the market. So, the whole model is changing and the big pharmaceutical industry's companies are really having to reinvent themselves.
Today, it's all about working in hospitals with patients, with charities, looking at patients who've actually got disease and designing drugs for the patients who really need them. For too long, we've been buying drugs that the industry promises will work in everybody. And actually, in order for them to be safe in everybody, they're not working effectively in every patient. We're wasting a lot of money giving the wrong drugs to the wrong people.
Chris - So, how will this proposed merger between Pfizer and AstraZeneca deliver a solution to that problem?
George - This merger is actually driven by this dynamic. Here in the UK, we set out 3 years ago - the Prime Minister set out - a groundbreaking 10-year life science strategy to make Britain the best place in the world to develop modern medicines.
AstraZeneca, last year, in a stunning announcement, completely reinvented the way they work as a company. They closed down their old factories and are moving to Cambridge, England, to embed themselves in the extraordinary cluster of hospital, university and little companies.
Pfizer, in many ways, have been the poster child for what the industry have been doing for the last few decades - buying up other companies - in the quest to continue to deliver profits. But all these industries, all these companies, have got a basic problem: that their pipeline of new drugs is getting weaker. And so, when Pfizer announced that they're buying AstraZeneca, it's an extraordinary moment. And the question in the industry is, is this Pfizer buying the AstraZeneca model of 21st century drug design, or is this the last gasp if you like of the old model of a pharmaceutical company buying the other one out to diguise their underlying weakness in their pipelines?
Chris - The cynics could say, George, that why doesn't Pfizer just reinvent itself the way that AstraZeneca have then if it's so successful?
George - That's a really interesting question. Many people in the industry and many people within Pfizer are very excited by the fact that Pfizer are buying into this UK model of hospital-based and 21st Century medicines-design through acquiring AstraZeneca. And so there's a really interesting question here, I think, for the UK. I think we ought to be neutral about who owns these companies.
The question is, is the research being done in the UK, are British patients going to benefit, are British patients going to start getting access for new medicines again? There's a parallel here with the automotive industry. Through the crisis in the '70s, the British car industry has reinvented itself through Formula 1, high end components and supply chain. We've now become a net exporter of cars again. Now the companies making those cars are largely foreign-owned, but the employment, the R&D, the technology, the assembly, the factories, the jobs are here in Britain.
There's a similar thing going on in the pharmaceutical industry. I think we should be focusing on the level of commitment that companies like Pfizer and AZ are making to R&D are not worrisome actually about the ownership. The truth is these are global companies with global investor shareholder basis, global management. They're international businesses. The key is on the investing area in Britain in research for the benefit of British patients.
What we should be doing, I think, is saying to Pfizer and indeed to AstraZeneca, "We will sign with you a 10-year research agreement. We, the UK government, all the agencies involved here will sign a 10-year research agreement. They're very standard in the industry in which we make a series of reciprocal commitments to you and you to us. Will commit to all the things we set out in our strategy to adopt innovative medicines more quickly, fast tracking of clinical trials, quicker recruitments of patients, less bureaucracy, more access to working with doctors and patients in the NHS through the National Institute for Health Research.
That is the key to unlocking what we all want to see which is investment in the UK...