For a glimpse of what may lie ahead for AstraZeneca should Pfizer succeed in its takeover bid, look no further than the US pharmaceutical group's recent history of major acquisitions.
A surge of takeovers began in 2000. That year Pfizer paid $112bn (£67bn) for the US company Warner-Lambert, and its hugely successful anti-cholesterol drug, Lipitor. Then followed the acquisition in 2003 of Pharmacia, a Swedish biotech. In 2009, Pfizer took over another US company, Wyeth, for its biotech drugs and vaccines.
What happened next? Once the businesses were under its wing, Pfizer made deep cuts to meet what it called "business objectives". Entire research facilities were closed down. Tens of thousands of jobs were axed. The Wyeth deal alone saw Pfizer scrap 19,000 staffers.
The strategy aims to grow Pfizer's top line, but it has a serious flaw. Drug companies that slash their investments in research and development similarly cut their chances of making a discovery that leads to a breakthrough drug. Just as science is making greater strides in understanding diseases, the drugs industry is becoming less and less able to turn that knowledge into treatments.
Awkwardly for Pfizer, the shortcoming in the company's strategy was pointed out by an authoritative source. Writing in the journal Nature Reviews: Drug Discovery in 2011, John LaMattina, Pfizer's former president of global research and development, noted: "If the R&D engine is not growing robustly enough to keep pace, more mergers and acquisitions will be needed to continue growth." Put another way: if you cannot make money from drugs, make money from acquisitions instead.
Would a Pfizer takeover have a destructive impact on AstraZeneca's researchers? In 2011, Pfizer concluded that the UK was a poor environment in which to do research and closed its 2,400-strong facility at Sandwich in Kent. AstraZeneca is in the process of moving its own research base to Cambridge, where Pfizer already has two sites. One focuses on pain and sensory disorders and regenerative medicine, the other on drug delivery devices. "It's very much in the lap of the gods," said David Taylor, professor of pharmaceutical and public health policy at University College London, when asked about the future of R&D at AstraZeneca. "I doubt it's good news."
The loss of research jobs and facilities has an impact that spreads far beyond the individuals and the company they work for. "Whenever these companies have merged in the past we've seen the loss of tens of thousands of highly skilled jobs, and many site closures, and that has a negative impact on the local economy and the UK economy," said Chas Bountra, professor of translational medicine at Oxford University. "But the loss of research in these companies can also mean less collaboration with universities."
It is hardly the recipe for recovery the chancellor has sought in a strategy that has life sciences at its heart. Sarah Main at the Campaign for Science and Engineering points out that AstraZeneca and GlaxoSmithKline are Britain's two only big pharma companies. To lose one will damage the whole ecosystem that has pharma companies working closely with universities and smaller biotech companies.
Even if AstraZeneca's research survives a takeover, there is little reason to be optimistic about new drugs coming down the pipeline. "I'd be highly sceptical about gains to medical science from this merger," said Nick Bosanquet, emeritus professor of health policy at Imperial College London. He cites Sun Tzu's ancient military treatise, The Art of War, in arguing that companies do best when they are under competitive pressure. Mergers reduce competition and large companies lose their fighting spirit. "In these very big firms, there's a slightly eerie feeling that it's so big you'll be there forever. If you make them even larger, the spirit gets weaker and weaker. It's only going to get worse in this case, and that's without the years needed for transition and integration."
Mergers seem to slow down drug development, and there are good reasons why. For commercial reasons, research centres are usually the last to start merger discussions, and the process involves lengthy reviews that assess each drug in turn. The discussions start with those in phase III clinical trials – and so closest to market – and work steadily backwards to the newest drug candidates. All this time there will be a probable freeze on new drug programmes and hiring. AstraZeneca has 11 drugs in late-stage development, all of which will take precedence over newer discoveries.
