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A huge US pharmaceuticals
company, Pfizer, wants to buy a huge UK pharmaceuticals company, AstraZeneca,
for £63bn, possibly more. Is there a side to take in the battle? Or is it more
revealing to consider what each company represents?
Consider these points:
- Both companies operate in
markets heavily protected by patents that keep the prices of proprietary drugs
high.
- Both companies have lucrative
deals with public sector purchasers of their drugs, financed by taxation.
- Both market many branded drugs
whose effect is little different from generic and much cheaper products (eg
Pfizer's Anadin is basically a combination of aspirin and caffeine, but
at a price that roughly equals a regular aspirin plus a cup of coffee at
Starbucks).
- Both operate in a sector that
is infamous for producing research on the efficacy of medicines that is biased
by deliberately distorted evidence (see the valuable work by Dr Ben Goldacre,
in Bad Pharma and elsewhere).
In the UK, opponents of the
Pfizer takeover argue that it buys up other companies rather than investing in
new pharmaceuticals research itself, and that it cuts back research operations.
In Sweden, home of the Astra part of AstraZeneca, there are opponents of the
Pfizer bid too. But they need to take account of AstraZeneca's actions before
they press their case.
Zeneca is an offshoot of the
former British monopolist, Imperial Chemical Industries, and its takeover of
Astra in 1999 also led to a shift of corporate power and decision making to the
UK from Sweden. Like Pfizer, AstraZeneca has also been involved in many
takeovers of other companies to boost its ownership of pharmaceutical products.
It has not been immune from the high cost of research, which, for
example, led it to close research facilities, most recently in Loughborough in
December 2011 with the loss of 1,200 jobs.
For every jobs-related worry on
the European side about the deal, there is an equal concern in the US. However,
while understandable, to get a more grounded view as to what is happening one needs to see the bigger picture of the economics of imperialism today.
Take tax. Pfizer admits that a
key factor in its bid for AstraZeneca is the tax regime in the UK that it can
use to boost its corporate profitability. On the bid being accepted, the formal
corporate location will probably be changed to the UK, something that has led British
Prime Minster Cameron to be favourable, despite other UK opposition. It is
probably only this tax deal that stops Pfizer, like many other corporations, from
otherwise using the alternative infamous 'Double Irish' or 'Dutch sandwich' tax
tricks to achieve the same result by locating elsewhere.
Corporations, and their owners,
always want to avoid tax. But the more significant point is that scientific
ingenuity is used under capitalism as a means for private appropriation not
social gain, something exacerbated by the power of monopolistic corporations.
This would be true even if the corporate executives were not, on the whole, a
bunch of useless bastards.
Tony Norfield, 10 May 2014
