14th May 2014 12:46
LONDON (Alliance News) - Chief Executive of US drugs maker Pfizer Ian Read hit back at suggestions that a potential takeover of FTSE 100 listed AstraZeneca PLC could lead to delays in its products Wednesday, as the two companies faced a second day of hearings with UK politicians.
Read and AstraZeneca Chief Executive Pascal Soriot, alongside executives of both companies and Minister of State for Universities and Science David Willets, met with the House of Commons' Science and Technology Committee Wednesday.
On Tuesday, the chief executives were grilled by the Committee for Business, Skills and Innovation about the potential takeover offer, and one of the concerns raised by Soriot was the possibility of delays to AstraZeneca's business were a deal to go ahead.
Pfizer CEO Ian Read rejected this possibility, saying there was "no truth" to the claim that critical products could be delayed.
Read stressed that products that are important to patients would be "ring-fenced" during a deal, and would continue to be produced by both Pfizer and AstraZeneca.
However, AstraZeneca continued to raise concerns about delays, with Executive Vice President of Innovative Medicines and Early Development, Mene Pangalos, saying he's not sure how projects would be combined without causing delays in a competitive environment where the business will be undergoing reviews.
Soriot highlighted that it was not as simple as just ring-fencing products, as for example, it would not be able to protect those products from staff leaving the company as a result of the deal.
Soriot argued the merging of the two companies' research and development operations would be disruptive and complex, and said that part of the reason that AstraZeneca had rejected Pfizer's approach was because the structure of the new company was not clear.
One of Pfizer's key commitments it has made so far is a promise to have 20% of its global research and development workforce in the UK. However, Read also admitted that a merged business might have fewer scientists than the two existing companies combined. On Tuesday, Read said that total research and development spend from an enlarged company would likely be lower than its present levels.
Read also addressed concerns over the five-year time frame given for Pfizer's commitments, as both Soriot and representatives for trade unions Tuesday suggested that this was a short time frame given the longer nature of product development in the pharmaceutical industry.
Read said that over the last few decades its research has not been very productive, and that long periods without research being reviewed and held accountable had been the cause of this. As a result, it measures the development of its products on a five-year cycle.
Senior Vice President and Head of Pfizer's PharmaTherapeutics Research and Development Rod Mackenzie added that it does not expect to have problems with productivity after the end of the five-year period, but long time scales had historically been a problem in the industry.
"Commitments for 10, 20, to 30 years without any kind of review [on progress] doesn't actually work for a research organisation," MacKenzie said.
Read also defended Pfizer's reputation, which has come under scrutiny by commentators during the deal, asking the committee to identify "a commitment that Pfizer has not met."
Pfizer's President of Worldwide Research and Development Mikael Dolsten argued that a combined company, particularly in its Oncology division, would be better able to compete better with other large pharmaceutical companies like Roche and Novartis. As a result, the environment would be more stable, and avoid further site closures, Dolsten argued.
AstraZeneca continued to argue for its future as an independent company, saying that it could "compete in its own right" due to its strong pipeline.
The company has been releasing a string of positive pipeline news over the last few days amid the ongoing discussions over Pfizer.
AstraZeneca announced Wednesday that its MedImmune biologics arm would collaborate with Incyte Corp on an early-stage cancer treatment trial using a combination of the two companies' drugs.
The non-exclusive collaboration will look at the combination in treatment of cancers including metastatic melanoma, non-small cell lung cancer, squamous cell carcinoma of the head and neck and pancreatic cancer, AstraZeneca said.
On Monday it announced a selection of positive data from mid-stage trials from MedImmune's respiratory, inflammation and autoimmune portfolio, which it followed up Tuesday with positive results from its late-stage study of combination treatment saxagliptin and dapagliflozin for the treatment of type 2 diabetes.
It will announce Phase IIb data for its asthma treatments benralizumab and tralokinumab at the upcoming American Thoracic Society 2014 International Conference in San Diego on May 16 to 21.
AstraZeneca has rejected Pfizer Inc's second GBP63 billion approach, calling it "opportunistic." It previously rejected an initial approach at GBP46.61 a share. It has said that both bids undervalue its business.
However, at Tuesday's hearing the company left the door open for an improved approach, as Soriot said that "its impossible to say we would not accept any offer."
Pfizer is planning a second improved approach for AstraZeneca, Bloomberg reported, citing people with knowledge of the matter, but will likely wait until after the UK government hearings.
UK politicians have little say over the outcome of the potential takeover unless they change the law, as the UK is governed by EU takeover laws which leave decisions to company shareholders and anti-trust regulators. The UK has only retained a say over takeovers in some sectors, like defense and the media. However, Pfizer may not proceed with a formal deal if it meets with heavy opposition from the UK government.
Shares in AstraZeneca were trading up 0.7% at 4,672.00 pence Wednesday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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