Wednesday, 7 May 2014

Cambridge MP questions Business Secreatary on Pfizers AstraZeneca takeoverbid

MP Julian Huppert quizzed Business Secretary, Vince Cable yesterday (Tuesday, May 6) about the government’s position on the proposed bid by American pharmaceutical giant Pfizer for AstraZeneca.

Julian led a debate in the House of Commons questioning how the bid will affect the UK economy, employment and skills after being granted special permission by the Speaker of the House to raise the issue as an urgent question.

He fired a series of questions at the Business Secretary testing whether the government had given serious thought to the implications of this bid, which would be the biggest foreign takeover in UK history. He particularly raised questions on the effects in Cambridge, as AstraZeneca have announced plans to move their global HQ and R&D centre to the city bringing 2,000 jobs and resulting in a £330 million investment on site.

In his speech to the Commons Julian said “This would be the biggest ever takeover of a UK firm, and deserves careful scrutiny.”

He asked Vince Cable to tell Parliament “what has been learnt from the failures in the Kraft/Cadbury takeover, which did not safeguard UK jobs, and what powers he has under current legislation to intervene in this area?”

Responding Dr Cable made it clear that, “the life sciences industry is of paramount importance to the UK as part of the government’s industrial strategy, which is securing a long-term plan for key sectors where we are global leaders.

“We are committed to ensuring that we continue to be at the forefront of life sciences R&D, with high-quality jobs, manufacturing and decision making in the UK,” he said.

He went on to highlight that the government is “very alive to the national interest considerations here.”

Speaking after the debate, which attracted a large number of MPs, Julian said “Vince Cable was very clear about his commitment to Cambridge and the UK life science industry, but there are a number of issues that remain unclear and I will continue to push for more solid guarantees to secure our jobs and ensure R&D investment in Britain continues regardless of whether or not this takeover goes ahead.”

The full transcript of Julian’s question and Dr Cable’s response reads as follows:

Dr Julian Huppert (Cambridge) (LD)

(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills if he will make a statement on the bid from Pfizer for AstraZeneca and the resulting effect on the economy, employment and skills in the United Kingdom.

The Secretary of State for Business, Innovation and Skills (Vince Cable):

The life sciences industry is of paramount importance to the UK as part of the Government’s industrial strategy, which is securing long-term investment in key sectors where we are global leaders. We are committed to ensuring that we are at the forefront of life sciences research and development, with high-quality jobs, manufacturing and decision making in the UK.

There has been much comment and debate in the press recently on this important issue. I stress, however, that Pfizer has not yet made a formal bid to take over AstraZeneca. The Government must, and will, approach it from the position of even-handed neutrality and recognise that it is ultimately a matter for the shareholders of both companies. I assure the House that I and my colleagues across Government engaged early with both companies to ensure that the outcome is positive for the UK, precisely to avoid the failures of previous Governments in such situations.

The Opposition are calling for changes to the law, but we are operating within the framework that they introduced in 2002, when they removed Ministers from decision making about mergers, apart from in a few specified public interest areas. I note that they chose not to reform the regime in response to the Cadbury-Kraft merger. One of the Government’s options would be to consider using our public interest test powers. That would be a serious step, and not one that should be taken lightly. I am open-minded about that, while stressing that we are operating within serious European legal constraints.

In conclusion, I want to assure the House that we are alive to the national interest considerations in this regard. We see the future of the UK as a knowledge economy, not a tax haven. Our focus is on what is best for the UK: securing great British science, research and manufacturing jobs and decision making in the life sciences sector.

Dr Huppert:

I thank my right hon. Friend for his response. This would be the biggest ever takeover of a British firm and deserves careful scrutiny. Will he tell us what has been learned from the failures of the Kraft-Cadbury takeover, which did not safeguard UK jobs? What powers does he have under current legislation to intervene in this area?

The Pfizer proposals are driven largely by tax law. What certainty does my right hon. Friend have that the USA would not simply change its tax code and that Pfizer would return to the US, jeopardising any benefit to the UK? Has Pfizer asked for any changes to our tax laws, including the patent box? What representations have the Government received from other countries, such as China, the US and Sweden? What international hurdles does he anticipate for a deal such as this, including at European Union and global level?

Pfizer’s board has given a written assurance to keep some research and development and advanced manufacturing in the UK, with an opt-out should circumstances significantly change. How broad is that opt-out and what consequences would Pfizer face if it broke assurances? Given Pfizer’s history in Sandwich, what confidence does my right hon. Friend have in its commitment to the UK?

Both Pfizer and AstraZeneca currently have sites in the Cambridge cluster due to our excellent research environment. AstraZeneca has announced plans to concentrate its R and D in Cambridge and to move its global headquarters to our successful cluster, bringing 2,000 jobs. People are already transferring to a site in the constituency of the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). What does the Secretary of State think would happen to those proposals if the takeover happened? Many other parts of the country would also be affected. I have been contacted by my hon. Friends the Members for Cheadle (Mark Hunter) and for Macclesfield (David Rutley), and the right hon. Member for Leicester East (Keith Vaz), among others. What does the Secretary of State think will be the consequences of these proposals for the UK’s science and skill base? Does he share my concern about the uncertainty for the industry and people’s jobs? What assessment has he made of Pfizer’s and AstraZeneca’s relative investment in R and D?

What assessment has my right hon. Friend made of the increased risk to the UK of there being fewer pharmaceutical companies here? What discussions has he had with the Secretary of State for Health about the medical consequences of the merger and potential delays in life-saving drugs? Finally, does he agree that companies can become too big to innovate?

Vince Cable:

I congratulate my colleague, who is representing Cambridge very effectively on this issue, as indeed is the Leader of the House of Commons, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). I recognise my hon. Friend’s expertise and his pioneering work on cancer drugs in the life sciences industry. I will deal specifically with the Cambridge question because it has obviously been at the centre of the discussion.

It may be useful to read the relevant sentence from the open letter that Pfizer sent to the Prime Minister, bearing in mind that this is a proposal and has not been agreed with the Government—we have not accepted the terms of the letter. The issue of binding obligations remains to be addressed. The letter states:

“Pfizer commits to complete the construction of the currently planned AstraZeneca Cambridge campus, creating a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions.”

My hon. Friend is concerned about decision making, not just research, and the letter continued:

“Pfizer will base key scientific leadership in the UK who will lead all European and certain global R&D functions based in Cambridge.”

We have had similar conversations with AstraZeneca to ensure that it is similarly committed.

On my hon. Friend’s wider concerns, he made a perfectly valid point about the United States’ tax regime. Of course, we have no certainty about how the US would respond, which is why I stressed in my introduction that we must view the issue from the point of view of industry strategy rather than tax. Having said that, the fact that Britain has a competitive and attractive tax environment is a positive good, and we should celebrate that.

My hon. Friend mentioned three anti-trust jurisdictions, but there are almost certainly others. This proposal involves two big, complex international companies and a variety of jurisdictions will have to assess it.

On the relative merits of the two companies, I do not propose to treat this as a beauty parade, but it is fair to say that there have been very substantial redundancies from both companies in recent years, of roughly the same order of magnitude. On the positive side, they are very considerable investors and collaborators.

On the NHS points, I have established from the Health Secretary that there are no urgent life-threatening issues in relation to drugs. On competition, there is potentially an issue for the new Competition and Markets Authority and the European competition authorities, and that is where plurality would need to be addressed.