BY BEN HIRSCHLER
LONDON – GlaxoSmithKline is just an “interested observer” as U.S. drugmaker Pfizer (PFE.N) battles to win British rival AstraZeneca in a potential $100 billion deal, GSK’s chief executive said on Wednesday.
Andrew Witty said he hoped Pfizer would take a “rational” decision to keep drug research in Britain if the deal went through, but he played down the idea that GSK might intervene as a “white knight” counterbidder.
“It’s not appropriate for me to get into commentary on this particular transaction that is potentially going on around us, but obviously if there was anything specific that we were thinking of I would absolutely be obliged to tell you about it,” he told reporters on a conference call for first-quarter results on Wednesday.
Witty has insisted for several years that he has no desire to engage in mega-mergers, which he sees as disruptive, and he reiterated that he much preferred targeted transactions, such as last week’s asset swap with Novartis.
“What we’re focused on is ensuring that our organization is not distracted in the core R&D business,” he said.
AstraZeneca, Britain’s second-biggest drugmaker behind GSK, is an important part of Britain’s life sciences sector, employing nearly 7,000 staff in the country, and the prospect of it being acquired by Pfizer has sparked political concerns about big job cuts.
Pfizer has made two approaches to AstraZeneca, both of which have been rebuffed. The company is widely expected to come back with a revised offer before a May 26 deadline for it to “put up or shut up” under UK takeover rules.
The U.S. firm says it views Britain as an attractive location for both pharmaceutical research and manufacturing – helped by recent government tax incentives – but cannot make any firm commitments on future investment or jobs.
Witty, a long-time cheerleader for British science, who has also advised Prime Minister David Cameron on the country’s university system, said Britain had established a particularly attractive environment for life sciences companies.
Part of that reflects efforts to reduce overall corporation tax rates, but the pharmaceuticals sector also enjoys a further boost thanks to the so-called “patent box” system, which came into effect last year and offers a special 10 percent tax rate on profits earned from patents.
“I would really hope that rational people under any circumstance would choose to invest or continue to invest where there is great talent and there is a great environment for that investment,” Witty said.
“That’s why we invest in Britain. We don’t just invest because Andrew Witty has a British passport.” (Reuters)