I noted this headline in the FT's emails this morning, and without ever actually reading the related article I have to say I fundamentally disagree with it:
First of all, most drug development takes place with substantial government support. In my opinion it does matter very much who gets that support: we need to know that those who are subsidised are accountable for the benefit that they receive. There is a greater chance of that in the case of a UK-based company.
Second, knowing that the benefits of any such activity will stay in the UK matters. Again, this is much more likely if a company is based in this country.
Thirdly, UK companies are more likely to employ UK staff. I know that the relationship will not be perfect, and that very clearly there are some UK companies that have been more than willing to embrace outsourcing, but I think that the correlation is real, and will certainly be of significance to employees. That matters. People drive innovation. Employees needs have to be considered on this issue.
Lastly, I have to say tax matters. US Companies aren't too good at paying tax in Europe right now. I want to see a return on the UK's investment in pharmaceutical companies, and don't believe that will happen with a US controlled company undertaking research here.
So, very definitely, ownership matters. Only the naive or neoliberals who are indifferent to the interests of the state argue otherwise.
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According to Bloomberg, Astra-Zeneca (AZN) is already 46% owned by US shareholders, and only 25% held by UK owners. As such, it’s not a “UK company” – it’s just based here.
Surely then you must be happy that Pfizer wants to buy AZN, given they will likely relocate their global or at least European HQ to the UK post a purchase?
Based here is real
Pfizer has already admitted it will be phoney re location
Why trust a phoney?
“Based here is real”
Fine, but your headline says “ownership matters”. if that is the case, AZN is already majority foreign owned.
“Pfizer has already admitted it will be phoney re location”
I can’t find any reference to this. AZN’s workforce is only about 12.5% UK based at the moment, and the likelihood is more jobs would move to the UK from other countries than the other way around, as the joint company moves an HQ to the UK.
Regardless, Pfizer and AZN are private companies. They aren’t owned by the state and should be, along with their shareholders, allowed to do what they want within the bounds of the law. Last I checked it was a free country.
Pfizer says it is not going to move its management to the UK
The news out there at the moment is that Pfizer will move its Global or European HQ to the UK, in part to take advantage of lower tax rates (so-called tax inversion). In part that is what the fuss is about.
Where the management physically sits is of little or no importance, and has no bearing on the “ownership matters” topic you brought up. You’ve conjured up a straw man.
Odd how the world seems to agree with me, from the FT on
I’m not sure what the FT is agreeing with you about. There are numerous stories out there regarding the deal, but most point out the Pfizer might move it’s HQ to the UK, and might indeed split it’s own business into three different arms, let alone any decisions on the AZN business. Anyway, a decent piece from the Guardian, which I understand you contribute to.
http://www.theguardian.com/business/2014/apr/28/pfizer-astrazeneca-takeover-tax-benefits
Posted subject to point 5 of the comments policy
UK jobs will be preserved of course….much like they were (not) when Kraft took over Cadburys.
Will someone nudge up Vince Cable, I think he may have nodded off. Surely the deal isn’t in the public interest and a referral to the MMC should be made.
I think the problem is it is probably not something that falls in the remit of being ‘in the public interest’ and from my understanding all though both are pharma’s their markets have very little cross over so MMC and the US and EU equivalents won’t have any power to block it.
I suspect others will decide and your opinion will not matter
That wasn’t an opinion it was a statemnt of what I belive the unfortunate case to be.
My ‘opinion’ is this state of affiars ‘sucks’.
Sorry!
I agree
No problem or need to be sorry – Part of the downside of the written forum is its easy to be misinterpreted and to misrepresent yourself – It sounded fine when I said it in my head, but I can see how you can read it as you did 🙂
Richard, it never ceases to amaze (and profoundly anger me) that capitalists intone the mantra “Ownership is not the issue – management and profitability are”, and then move heaven and earth to make damn sure they secure ownership!
Why can’t they be happy to own dividend producing shares? Well, once they own something, they can asset strip it (think Manchester United!), not just of its physical assets, but of its intellectual capital in the case of a cutting edge technology company as is Astra Zeneca, and make sure its human capital is replaced by their own, to the detriment of the acquired company. Hostile takeovers are so named for good reason!
“Second, knowing that the benefits of any such activity will stay in the UK matters.”
Surely the primary benefits of drug development (the availability of new medicines) are something we should hope are spread globaly?
I presume your incomprehension is deliberately obtuse
There is a matter that has not been discussed that angers me. All this money being paid to buy the shares should be invested in research but this is too risky for the money men, they just want to buy it. This attitude is endemic in the mining industy as well.
You are right
In comparison drugs are cheap to pioneer
The gut unease on this deal is actually a questioning of the liberalisation policy that UK governments, starting with Thatcher, have chosen to pursue.
‘Liberalised’ means all investment opportunities open to overseas investors.
Unfortunately its still not being named and explained as such. This is what’s needed to really start to question it.
The result of having this policy for 35 years is that we don’t own anything in this country any more, and in privatised public services (PFI, contracts, sell-off) overseas investment takes us into international treaties that prevent any renationalising – as intended.
The spin is that we have a wonderful, open,liberalised economy and we encourage others to do the same, often by invading them.
Such liberalisation is a political choice. We need liberalisation named and explained in order to consider alternatives.
Odds on which way Cable, when he’s finished muttering, will come down – on the side of liberalised sell-off.
I’m amazed that this nasty, underhand piece has got the front to continue to live after the Royal Mail sell-off.
Not sure why you are such a shill for Astra-Zeneca – Zeneca was spun off from ICI to be sure but Astra is, I believe, Swiss. And for the last few years they have been laying off reaearch staff in the UK and in fact have just closed down its Brixham Ecotoxicology facility, making all the staff redundant. This had been in Brixham for over 50 years and was the towns largest employer. Ironically Pfizer might have kept it open.
It’s part Swedish
Richard, I am glad that you agree with me that Astra-Zeneca is not a British company. However, that makes your post hard to understand, doesn’t it?
It is a British company
I have not for a minute agreed with you