Pfizer chief faces hostile grilling on takeover bid

As Westminster grillings go, the enquiry into Pfizer's proposed £63 billion (€77 billion) takeover bid for AstraZeneca was a relatively restrained affair.

While the questions directed at Pfizer chief executive Ian Read were overwhelmingly hostile, the session lacked the brutality of, say, the savage treatment meted out to former G4S boss Nick Buckles when MPs roasted him over the Olympics fiasco.

That session was almost unbearable to watch at times, as was the skewering of the former Co-op Bank chairman, the disgraced Rev Paul Flowers, who proved incapable of answering even the most basic questions about the bank.

The cringe factor was certainly there yesterday, not least when Scottish-born Read pulled out a special coin from his pocket to show the business committee. One side engraved "Straight Talk" and the other "Own It" the coin encapsulated the American drug giant's corporate culture, he said.

No custard pies

No custard pies were lobbed, as in media mogul Rupert Murdoch’s appearance before the culture committee a couple of years go

.

But there were highly-charged moments, notably when AstraZeneca's French-born chief executive Pascal Soriot rammed home with some emotive words his belief a takeover risks disrupting AZ's vital research work. "What will we tell the person whose father died from lung cancer because one of our medicines was delayed – and essentially was delayed because in the meantime our two companies were involved in saving tax and saving costs?" he asked the committee.

While Read repeatedly declined to give precise figures, we did learn for the first time that the overall research and development spend at a combined Pfizer/AstraZeneca group will be reduced.

Read repeated his pledge that 20 per cent of the group’s R&D workforce will be located in the UK for at least five years after any takeover, but declined to say what the headcount would be. An unspecified number of jobs will be lost, he admitted, in unspecified locations.

The Pfizer boss was pressed on the timescale of what he insisted were "legally binding" pledges on R&D but pointedly refused to extend the promise beyond five years. Leading scientists say that, given the lengthy lead times in pharmaceutical R&D, this is far too short a period.

'Binding commitments'

Read, who now has US citizenship, has been at Pfizer for his entire career, joining the group after graduating from London’s Imperial College with a science degree in the 1970s. And the ghost of another American chief executive hung heavy over yesterday’s proceedings

– Kraft's Irene Rosenfeld.

She declined to appear before MPs during Kraft’s controversial takeover of Cadbury and compounded this by later going back on a pledge she would not close the chocolate manufacturer’s factory in Somerset. This broken promise – the penalty for which was merely a reprimand from the takeover panel– is coming back to haunt Pfizer. Why, the committee asked, should we trust Read’s pledges any more than Rosenfeld’s?

"I'm a man of my word and Pfizer is a company of its word," said Read. That, however, is not enough for the politicians. Prime minister David Cameron, who has been accused of favouring the Pfizer deal, has already said he wants more. And business secretary Vince Cable made it clear he wants to see "more meaningful and binding" commitments from the US drugs group. Blocking a takeover was, he said, "tricky".

The Westminster showdown served largely to entrench the views of those who are hostile to the deal. Read turned in an unruffled performance but earlier in the day there were signs Pfizer is stepping up its assault.

Expressing its "disappointment" at the AZ board's refusal to engage, Pfizer issued a statement aimed directly at shareholders, detailing the "compelling rationale" of a deal – and hinting a higher bid may be on the way if AZ comes to the negotiating table.

Fiona Walsh is business editor of theguardian.com