US drug company Pfizer hints that it could raise its £63bn takeover offer, but AstraZeneca says that combining the two companies could delay drug research and development.
Video above: Economics Editor Faisal Islam reports
Appearing before the Commons business committee, Pfizer Chief Executive Ian Read also said a takeover would mean fewer jobs at the two companies, less spent on research and development, but higher profits.
Mr Read, who was born in Scotland, told MPs there were various “options” if AstraZeneca continued to reject its offer. Pfizer has gone directly to AstraZeneca’s shareholders with a presentation setting out the “strong strategic rationale” for the tie-up.
Having pledged to keep a fifth of research jobs in Britain, Mr Read said: “We’ll be efficient by some reduction in jobs. What I cannot tell you is how much or how many or where. We’ll look at this as our global combined footprint and then we’ll make decisions.”
He said he expected spending on research and development to be lower if the two companies combined.
Pfizer’s offer for AstraZeneca, which employs 6,700 people in the UK, would be the biggest ever takeover of a British company. It is likely to make an improved bid for the company after the parliamentary hearings have ended.
What has takeover target AstraZeneca done for the UK?
AstraZeneca Chief Executive Pascal Soriot told the committee that a takeover would create “a distraction that would potentially delay some of our projects”.
He added: “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?”
Pfizer’s reputation in the UK suffered after it closed most of its research in southern England, where Viagra was invented, with the loss of 1,700 jobs.
The company has made a five-year commitment to complete AstraZeneca’s new research centre in Cambridge, retain manufacturing in Macclesfield and base a fifth of its research staff in Britain if the deal goes ahead. But it has also said it could change its strategy if circumstances changed “significantly.”
In a statement, it said engagement between the companies could “help deliver optimal deal terms and structure”.
Mr Read told MPs he was a “man of my word” following an appearance by the Unite union’s Tony Burke, who said his members were “very, very concerned” about Pfizer’s record of cutting 65,000 jobs worldwide since 2005.
Pfizer, the biggest pharmaceutical company in the world, has also been criticised for seeking to re-domicile to the UK, where it would pay less tax than in the US.
In a letter to MPs, Sir Paul Nurse, president of the Royal Society, said the merger had the potential to be a force for good.
But he added: “Any potential threat to the long term strength of our life sciences sector, and thus to our national economic interest, must be taken very seriously. For example, a five-year commitment to the UK is insufficient. A commitment of at least 10 years is required.”
Labour leader Ed Miliband has accused Prime Minister David Cameron of acting as a “cheerleader” for a deal and has called for an independent assessment of the impact it would have on the “long-term science and industrial base of this country”.