June 3, 2016
By Mark Terry, BioSpace.com Breaking News Staff
As the expression goes, Fool me once, shame on you, fool me twice, shame on me. And now that Pfizer has had two major tax-inversion deals dashed by government resistance, Ian Read, Pfizer’s chief executive officer, says he won’t be doing any more tax inversions.
In May 2014, Pfizer’s $119 billion bid for UK-based AstraZeneca collapsed, partly due to U.S. Treasury Department regulations making it more difficult for companies to participate in tax inversions. There was also significant resistance on the part of the British government.
In April 2015, Pfizer abandoned its acquisition of Dublin-based Allergan worth $160 billion as a direct result of new U.S. Treasury Department rules regarding tax inversions.
Speaking at the Sanford Bernstein Annual Strategic Decisions Conference, Read indicated that although he would still consider so-called mega-mergers, he won’t consider tax inversions. “The administration has made it clear they will do whatever it takes to stop an inversion,” Read said. “Nothing is off the table, but the inversion would have to be so clean as to be almost impossible in the present environment.”
But he also indicates that Pfizer is actively looking at deals. “If you believe you can reorganize your research into productive smaller units, there is a logic to consolidation of the industry by taking out duplicative expenses,” Read said. “The biggest pressure for that, if it comes, will come from constrained budgets on health care.”
Pfizer is also making efforts to turn around public sentiment toward the pharmaceutical industry. Part of an initiative called “Driven to Discovery the Cure,” the company’s latest foray is an advertisement called “Before it Became a Medicine” that was created by HealthWork, a joint venture between Omnicom’s BBDO New York and CDM.
“We are taking the opportunity to tell our story of how we bring new therapies to patients and our drive to develop the cures that people and their families need,” a Pfizer spokesperson told AdFreak. “Our hope is that if more people understand what it takes to bring a new medicine to patients, that together we can create a better environment for discovering treatments today and in the future.”
Meanwhile, investors are keeping an eye on Pfizer . Shares traded on Oct. 28, 2015 for $34.61, then dropped more or less steadily until Feb. 8, 2016, when they traded for $28.56. They were on their way up slowly, jumping to $32.76 on April 7. They currently are trading for $34.60.
TheStreet writes, “As Pfizer continues to drift higher, its momentum appears to be running thin. The stock has jumped more than 6 percent since leaving behind a key upside reversal on May 16. During this 13-day run, Pfizer has had only two down days while moving further into new 2016 high territory.”
Read’s talk was far-ranging, but when it came to a specific discussion of possible acquisitions, he said, “I don’t rule out anything from the point of what we would do or not do on this development. If we think it creates value and it creates more value than other potential actions we’d take, we would do what we think is necessary to create value. I mean, Anacor was a bolt-on, I think it was a good value, a buy at a good price. They had both a seller and a buyer. I think we can do a lot with that product and we continue to look for those opportunities in the marketplace. And bigger deals, we would also be open to, if we felt that it was the right time and can create value.”
