Tuesday 13 May 2014

They can't stop Pfizer...nor should they try.

It's very boring when Politicians start grand-standing and one of the worst committees in recent years has been the appearance before various non-entity parliamentary committees. These self-appointed committee's achieve little in public life but serve to further the names of the back-bench MP's keen to show the world they do something other than draw expenses and flip houses.

They have no regulatory or statutory powers - surely a sign that the Government as a whole knows better in the long-term than to trust real power to populist fools.

The latest example today, of the CEO of Pfizer appearing before the skills committee is just the latest example. Politicians who know nothing of the pharma industry are able to opine as to the CEO's position to make a pitch for Astrazeneca. He will make promises about jobs and commitment to the UK. The politicians will be unsatisfied.

There is no regulatory power to prevent a take-over of the company which is barely British anyway - created out of a series of 1990's mergers with UK, Swedish and other European countries.

Moreover, shareholders bought the shares in the company, they are their property and they have the right to decide to sell or not to sell. That really is the end of it. I find it hard for once to disagree with the IOD's statement on the matter:

"We do not believe that there is any case for extending the existing public interest test for takeovers. However, this is not to say that government has no part to play in establishing a world class environment for life sciences in the UK.

“It has a crucial role in ensuring that the UK’s university sector remains at the leading edge of scientific research and training. It should renew its efforts to promote and nurture the financing and support of entrepreneurial and start-up activity in the sector. And it will remain instrumental in determining the fiscal and regulatory environment that will attract high value added research and development activities.

“But attempting to second guess the industrial logic of takeover decisions is not one of government’s strengths, as was demonstrated throughout the 1970s at British Leyland and elsewhere. Recent proposals from Lord Heseltine and Chuka Umunna to extend the public interest test would put at risk the UK’s hard won reputation as a compelling destination for inward investment from around the world.

“Over time, excessive government intervention in the market would cost far more jobs than might be saved by efforts to politicise this particular deal.”

Grandstanding is futile and worse would be interference. Better would be acknowledgement that Big Pharma can do what it likes, the money and the research is often in the smaller start-u['s that we luckily excel in producing. Let's celebrate the desire of Big Pharma to move to the UK rather than hand-wring about management issues which may or may not come to pass.

Imagine too where we would be had blocked foreign owners take-over our car industry in the 1980's and 1990's

18 comments:

purplepangolin said...

Typo on penultimate paragraph:
start-u['s

hovis said...

Yes and No.

Can they /should they stop it - no they can't even if they wanted to it will be an EU decision

Should they? - Maybe. By it's record Pfizer have shown they have no real interest in the UK as a base for R&D, running down Sanwich in comparison to its other sites ins the US such as Ann Arbour. Then using that as the rationale for closure. (btw I used to work there before the post Viagra decline).

Will Pfizer use AZ as atax avoidance vehicle - highly likely.

I saw teh FT had MP demanding "cast iron" guarantees on jobs. How apt as Iron can be very brittle.

No matter we can look to our own corruption infested GSK to fly the flag.

SumoKing said...

It is a very odd deal (from anything but a Tax perspective, from a Tax perspective it makes perfect sense but that is not the same an efficient market operating), Pfizer gutted their UK R&D a couple of years ago and flounced off, no wonder some people are a bit skittish about this circling.

CityUnslicker said...

I have no flag for Pfizer and agree they are probably lying. Which is why the gaurantee means nothing....
which is why MP's are just grandstanding..

dearieme said...


The Golden Age of medicine is over. Big Pharma is facing secular decline. They will respond by cost-cutting mergers/takeovers, and by portfolio swaps, both of which work partly by suppressing competition.

Naturally the detail will be governed by tax questions, CEO psychopathy and the other usual suspects in anything to do with big business.

Bill Quango MP said...

£14,039 is the bunce the chair of a committee gets.

In the House we have been trying to create 325 committees.
325 chairs.
325 deputy chairs.
650 extra remuneration posts.

And the chair of committee X is the deputy of committee y. So everyone is a chair and a deputy.

Its a wonderful system for getting an extra £25k+

But it does explain how an ex-librarian is trying to fathom the workings of international corporate takeovers, pharmaceutical practices and priorities in a globalised market and the limitations of government control of private business.

hovis said...

That said Bill, we need parliamentary oversight on all laws. See the post over at Raedwalds re this. The quality of the MP's may not be up to much but then are PPEs any really better?

john miller said...

Their money that they receive in expenses and salary is our money, but they don't see it that way.

Our money isn't their money when it's invested in shares, but they don't see it that way.

Our money resting in our bank accounts is our money, but they don't see it that way.

I believe the mantra used to be "All your money belonga us." But at least that lot wore masks, so you could tell who the bad guys were.

Anonymous said...

"Gutting UK R & D"?

Sprog, a life science researcher, says it's all going over to China and India where, and it may come as a surprise, there are a lot more potential customers.

Who would have thought it?

Electro-Kevin said...

"Although Britain represents just 2-3% of the global drugs market, it accounts for about 10% of global R&D spending. This research heft is partly a legacy of the early NHS, which created a big market, but it owes something to Britain’s universities and to a wave of mergers. The coalition government that has run the country since 2010 has tried to nudge the proportion higher. Prompted by the job losses in Sandwich, in 2011 it introduced a life-sciences strategy that increased R&D tax credits and created a patent box that lowers the tax rate to 10% on profits earned from inventions patented in Britain."

So it's not a UK Govt issue then ?

Why do other developed countries seem so much better at keeping their key industries at home ?

Electro-Kevin said...

"The facts are clear: EU regulation 139/2004 makes it plain that all mergers with what they call a 'community dimension' must be approved by the European Commission."

What is the veracity of this ?

And if it is true then if the EU has a say then why not our own government ?

Electro-Kevin said...

Could we be being set up for a 'rescue' by the EU in the run up to the EU elections ?

Kilgore Trout said...

EK

"...if the EU has a say then why not our own government?"

The EU is our government. It is what the politicians voted for, so if is no good them bleating about it now... especially when their next sentence probably involves ridiculing Farage for pointing out this easily verifiable fact.

Commercial policy is an "exclusive EU competence", along with trade, fisheries and agriculture. Hooray!

SumoKing said...

It's a competition/ dominant position issue from an EU perspective and probably would be one in the UK too.

Possibly the only thing stopping skewed tax regimes buggering up market efficiency

Blue Eyes said...

The government's sole role in all this is to make sure that the UK is a competitive environment. That is the only way we create and maintain "good" jobs. And the way the UK government does that is by not messing about with private property rights and the rule of law.

Red Ed is playing to a weird, 1970s ignorant sense of economic nationalism. There is no such thing as a British or American or Swedish company.

Electro-Kevin said...

The funny thing about 'competitive' UK, Blue was that this banker chappy on Andrew Marr's Sunday show was claiming that bankers' wages must be stratospheric in order to attract the right people to make the banks able to compete.

Much taxpayer money has gone into supporting in order to keeping banking here.

That must apply to vastly better qualified research chemists too then. I know that most people would like hi tech firms, jobs and qualified people to remain here too.





CityUnslicker said...

I note Simon Jenkins nicked plenty of my ideas in this post for his piece in the guardian today!

fifa coins online said...

The actual humorous point regarding 'competitive' UNITED KINGDOM, Azure had been this bank chappy upon Tim Marr's Weekend display had been declaring which bankers' income should be stratospheric to be able to appeal to the best individuals to help to make the actual banking institutions in a position to contend.


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