Pfizer admits jobs will be lost in AstraZeneca takeover

Jobs will be lost and research budgets cut back if Pfizer takes over the British drugs company AstraZeneca, the chief executive of the American pharmaceuticals giant admitted today.

Ian Read’s warning came as he was cross-examined by MPs over Pfizer’s proposed £63bn acquisition of AstraZeneca. The attempted merger has been widely criticised and raised fears that Britain’s science base would be eroded.

Mr Read acknowledged that if the merger went ahead, the two firms’ combined research budgets of around $11bn would be reduced.

He told the Business, Innovation and Skills select committee: “I do not expect the combined total will remain the same. I expect it will be lower, to what extent I cannot be specific.”

Mr Read said a merger, creating the world’s largest pharmaceuticals company, would improve efficiency, leading to redundancies.

“There will be some jobs cut somewhere that's part of being more efficient. Whereabouts in the world I cannot say."

He would not give specific commitments about jobs numbers at AstraZeneca sites at Cambridge and Macclesfield since Pfizer had not yet seen the UK firm's books.

READ MORE: AstraZeneca backer slams Pfizer for ‘aggression’

In highly-charged exchanges, he was asked by Labour MP Adrian Bailey, the committee’s chairman, to answer accusations that Pfizer behaved like a “praying mantis” and a “shark which needs feeding”.

Mr Read responded that Pfizer was a “company of high integrity focused on patients and delivering drugs to patients” and he was very proud of 35-year career at the firm.

He repeated a pledge made to David Cameron that 20 per cent of research and development workers in the combined company would be in Britain, but he would not put a number on the promise.

Several MPs protested that they could not believe his assurances that British jobs and scientific research would be protected if the takeover took place. Labour’s William Bain said: “When we probe into these commitments there is very little behind them.”

The Lib Dem Mike Crockart asked why the Government should support a Pfizer bid as "you have a reputation of being ruthless cost-cutters, and that seems to be borne out by what you have said today". The Tory Brian Binley said: “We haven’t had the level of straight talk we needed.”

Mr Read said Pfizer’s promise to site 20 per cent of research jobs in Britain for five years was unprecedented.

He said: 'Those commitments are legally binding not for one year, but for five. I am here today to honour those commitments.”

Earlier Tony Burke, assistant general secretary of Unite, told the MPs that AstraZeneca workers were angry and worried about Pfizer’s record on jobs. He said the US company had cut 65,000 jobs globally since 2005.

The GMB’s national officer, Allan Black, said: “You don't really buy a second-hand car if the guy says 'I'm giving you a guarantee but, hey, if things change the guarantees are null and void'.”

Ian Read’s claims

... on UK tax

Mr Read, asked if Pfizer had paid any tax during 2012, or whether it had actually received more money back than it had actually paid, said the company paid £400m in tax in Britain over the past three years, but that included tax on staff pay.

Pfizer reportedly paid £118m in corporation tax but received tax credits of £184m from the Government between 2010 and 2012, a net gain of more than £66m. Its sales in the UK over the same period were nearly £5bn.

... on job cuts in Kent

Mr Read was challenged over 1,700 redundancies at Pfizer’s research site in Sandwich, Kent, where Viagra was first developed. He told the MPs that the posts were axed because they were no longer crucial to the company. Jonathan Emms, Pfizer’s UK managing director, said it still employed people in Sandwich – and even helped to pay for the flood defences in the area.

The Pfizer office in Sandwich is in Discovery Park. The company still employs about 700 people there. The Government is to spend £25m on flood defences. Pfizer said it had made a “significant contribution” to those works.

... on the Swedish experience

Mr Read was asked about the Swedish government’s warning that Pfizer did not keep its promises when it bought a drugs company in 2002. He replied that the Swedes have got their facts wrong. He said Pfizer did not open a new factory because a planned drug did not obtain approval.

Swedish firm Pharmacia, a company founded in 1911 which employed thousands of people, was bought by Pfizer for $60bn (about £35bn) in 2002. Pharmaceutical industry expert Torun Nilsson has said: “There are only scraps left of Pharmacia.”

Sweden’s finance minister, Anders Borg, said Pfizer had “made quite strong promises” about Pharmacia at the time of the sale but “what we see today is that those promises had very little effect”.