Derek Lowe at In the Pipeline has a post on Pfizer’s hostile move on Astra-Zeneca:
What the hell is Ian Read thinking? Pfizer is apparently going hostile with their attempt to buy out AstraZeneca, all but ensuring that the deal, if it goes through, will take place at the highest price and in the messiest fashion that it possibly could. And for what?
If you’ve been following Pharmageddon from the beginning, you will know that Astra-Zeneca’s fall off the “patent cliff” was one of the steepest in the industry. The patent cliff is the term used in the industry that refers to the expiration of patents for the major blockbuster drugs.
Weirdly, most blockbuster patents have expired within the past decade because they were discovered in the 90’s, the golden age of drug research. If you’re wondering why your blood pressure meds are suddenly so affordable, that’s why. They’re generic now. Pharma can’t make as much money off them anymore. Great!, you say. And it probably is great, to some extent. The problem is there is not a lot in the pipeline to replace them, that is, if you’re interested in more effective drugs with fewer side effects. There are several reasons for this that I’ve discussed in previous posts but the primary cause is NOT for lack of trying. Researchers have seemingly endless dogged determination to preserver in the face of failure after failure. The problem is that research has to deal with *two* impossible systems: the complex biology and the self-serving, clueless managerial/finance class. And the underfunded and politicized FDA. Make that THREE impossible systems. And the class action law industry. FOUR! It all adds up to unnecessarily and ridiculously expensive drugs. But I digress.
So, according to Derek, Astra had some really rough years, laid off a ton of people in Delaware and all around the world, but hired a new guy in 2012 to turn the ship around and has plans to consolidate a tiny fraction of their research unit in Cambridge, MA where no one really wants to work because it’s a.) expensive, b.) a pain in the ass commute and c.) an insecure career environment for researchers. MBAs really are a bunch of status snob lemmings, I swear. Or magpies chasing the latest shiny thing.
My bad, that’s Cambridge, UK where AZ wants to set up its stripped down R&D division. It’s probably just as attractive to the relocated researchers (You happy few! You band of brothers!) as the American Cambridge.
Derek makes a good point in that Pfizer has a lot of money to spend on the small, nimble biotech startups that MBA types have told the analysts are supposed to be able to generate a s^&*load of drugs to inlicense. They’re like unicorns, these little startups, or like perfectly elastic collisions of particles in a box. Theoretically, they exist but in the real world? ehhhhh, not so much. Drugs rarely emerge from these tiny incubators fully formed because, helloooooo, Silicon Valley, drug discovery is NOT like writing code for a new Facebook. But you’ll find out in the next couple of years. Just sit in on one of the project teams while the biologists drone on and on and on about how much to tweak the components of their confirmatory and cell based assays to make them reproducible and it will quickly dawn on you that drug discovery makes coding look like Chutes and Ladders. Even so, we’ve got to wonder why Pfizer is choosing to forgo spending some of their billions on the biotech startups in order to sit on a pile of cash. Where is the drive for innovation we’re always hearing so much about?
Anyway, where was I? After pondering the problem for awhile, Derek hypothesizes that Pfizer is buying Astra-Zeneca, a foreign owned company, to hide its taxable profits from the US government. Or the British government. It’s like some British, Swedish, American threesome, which initially sounds like a good time for everyone except the citizens who actually count on corporations to respect them. It’s a rather strong accusation but Derek says he never wants to work for Pfizer anyway. That’s Ok for him but my pension was acquired by Pfizer when it gobbled up Wyeth and then proceeded to lay off every one of the people I used to work with. I’m kind of concerned with this wobbly third leg of my rapidly disappearing retirement stool so if Pfizer is up to something, I’d like to know what the heck it is.
The remaining survivors in research at Astra-Zeneca can see what’s coming. They must be busily rewriting their CVs and networking instead of finishing that reaction or fishing the crystals out of solution to send to the synchrotron. What a lovely way to spend your hours in the lab. And the industry wonders why there is nothing in the pipeline after 20 years of this crap.
What this research project team really needs is a financially nerdly Yves Smith type who can look at the details of the proposed takeover and report back in a meeting to tell us what’s up. More to the point, what does the UK’s new tax rates for foreign profits say about whether the conservative government is trying to make Britain into a sleeker global tax haven? I’m just a chemist. Money is not my area of expertise. This project team needs a finance specialist.