Pfizer says manufacturing will stay in UK if it buys AstraZeneca

Macclesfield, northwest England

Pfizer will keep a “substantial” level of manufacturing in the UK if it takes over AstraZeneca, said the CEO in a letter to the country’s Prime Minister.

AstraZeneca rejected a £63bn ($106bn) takeover bid on Friday, its second rebuff since January. On the same day Ian Read, Pfizer chief, told UK leader David Cameron an eventual merger would retain “substantial” manufacturing operations at AstraZeneca’s site in Macclesfield, northwest England.

The Macclesfield site is the British-Swedish company’s second largest manufacturing facility and its European centre for packing. The plant has a workforce of around 2,000, a third of which is made up by manufacturing, packing and distributing jobs.

It is unclear how many jobs Pfizer would retain at the site in the case of a merger. Speculation on “specific numbers and location of jobs” is “premature at this stage,” Lisa O'Neill, Pfizer director of media relations, told

Manufacturing at AstraZeneca’s Macclesfield facility includes Zoladex, a treatment for hormone-sensitive prostate and breast cancers. The company announced late last year a £120m ($190m) investment at Macclesfield solely for the manufacture of Zoladex, safeguarding around 300 manufacturing jobs and creating a reported 200 temporary construction roles.

UK Patent Box

Pfizer’s CEO said in the event of a merger, the company would try to locate manufacturing operations of the combined company in the UK, “subject to the timing of the UK Patent Box proposals.

The UK Patent Box, which came into effect last year, is a substantially reduced tax rate for all income on drugs patented in the UK, slashed from the usual 23% corporate rate to 10%.

Pfizer’s media director told us this, and other tax incentives, had attracted the company to the UK:

The UK Government has created attractive incentives for companies to manufacture products and maintain and protect intellectual property, and we have seen that capital and jobs have followed these types of incentives.

The UK has a permanent R&D credit, which was recently made even more favourable to large corporations than in the past. 

In addition, the newly introduced ‘patent box’ regime will subject profits derived from UK developed intellectual property to a significantly lower 10% rate of tax.

R&D changes

The news was joined in March 2014 by AstraZeneca’s sale of its nearby R&D site, Alderley Park, to Manchester Science Parks. The company plans to move its global R&D to a Cambridge facility, currently under completion, within three years.

In his letter to David Cameron, Read also committed to “complete the construction of the currently planned AstraZeneca Cambridge campus.” The facility will become “a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions,” he said.

If Pfizer’s takeover proposals are eventually successful, the resulting mega-merger will be the biggest foreign takeover of a British company. The UK Leader of the Opposition, Ed Milliband, called yesterday for an investigation, saying Cameron’s government was “cheerleading for this deal on the basis of a short letter with inadequate assurances.

Milliband cited “concerns about Pfizer's wider track record regarding the impact on research of previous takeovers.” Following a merger with Wyeth in 2009, Pfizer closed six UK R&D sites, resulting in thousands of job losses.

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