UPDATE 1-British PM tells Pfizer wants more commitments for AstraZeneca deal
* PM Cameron says "I'm not satisfied" with pledges so far
* Pfizer has given 5-year commitments on research
* Political storm deepens over Pfizer takeover proposal
* Cameron hints Britain could intervene in takeover deal (Recasts with Cameron comments)
LONDON, May 7 (Reuters) - Prime Minister David Cameron demanded U.S. drugmaker Pfizer give stronger guarantees it will keep jobs and investment in Britain in order to secure his government's blessing for a takeover of AstraZeneca.
By proposing the biggest ever foreign takeover of a British firm, New York-based Pfizer has sparked fierce debate on whether the government should let outsiders buy a pharmaceuticals group seen as a national champion in a strategically vital industry.
The government initially welcomed the bid as a vote of confidence in a tax system it has designed to attract investors. But after intense pressure in parliament, Cameron said on Wednesday that Britain had to be hardheaded and indicated he even supported possible intervention to hold up the purchase.
"The commitments that have been made so far are encouraging," Cameron said when asked about the $106-billion takeover offer during his weekly question session in parliament.
"But let me absolutely clear, I'm not satisfied. I want more. But the way to get more is to engage," he added.
"We want the investment, the jobs and the research that comes with that competitive tax system."
Though the government has only limited legal power to block any merger, Pfizer Chief Executive Ian Read has already given a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in Macclesfield and put a fifth of its research staff in Britain if the deal goes ahead.
A spokesman for Pfizer declined to address Cameron's comments directly, saying the company would be pleased to work with British parliamentary committees which have called Pfizer and AstraZeneca bosses to explain the impact of any takeover.
The ghosts of previous foreign takeovers and concerns about job cuts have haunted the Pfizer bid, ratcheting up the pressure on the instinctively free-market Conservative-led government to stiffen its stance.
Cameron's comments are especially significant as Britain prides itself on running one of the world's most open economies that has welcomed foreign investors across many industries.
But Britain has been burned too.
During Kraft's 2010 acquisition of chocolate maker Cadbury, the U.S. food company promised to keep open a key factory, only to renege on that soon after the deal was done.
Speaking to lawmakers, Cameron did not answer directly on whether he wanted to apply a "public interest test" to the Pfizer proposal but he said he agreed with Business Secretary Vince Cable who said Britain could apply the test. That would mean asking regulators to judge whether the deal was in the national interest.
"I absolutely agree with what the business secretary said yesterday but let me be clear, the most important intervention we can make is to back British jobs, British science, British R&D, British medicines and British technology," Cameron said.
"The assessment that I want is from the business department on this deal," he added. "I will judge all these things about does it expand British jobs, British investment, British science?"
The opposition Labour party has called on Cameron to expand the provisions of the public interest test to allow ministers more power over any possible takeover of AstraZeneca, though any move to do so could face legal challenges.
Just a year before a parliamentary election, those demands have increased the pressure on Cameron to be seen as tough on Pfizer while not discouraging foreign investment.
Media reports that two advisers to Cameron had previously been paid by Pfizer were dismissed by the prime minister spokesman, who said there was "nothing in" them.
Imposing such a test could further complicate Read's bid - already twice rejected by AstraZeneca - to create the world's largest pharmaceuticals business and save Pfizer billions of dollars in taxes by shifting its domicile to Britain.
Pfizer has sought to allay fears that the proposed takeover would deal a blow to drug research, saying the new company would bolster innovation and speed the development of new treatments.
It said the combined group would be able to expand its global research, speed up the development of treatments and offer its products more widely in emerging markets.
Read and AstraZeneca CEO Pascal Soriot will appear before two parliamentary committees next week to explain the merger.
"AstraZeneca is one of the bastions of the UK's world-leading pharmaceutical sector," said Labour lawmaker Andrew Miller, who chairs the science and technology committee.
"Next week's hearing will be an opportunity for us to scrutinise the pledges on research and development being made as part of this potential takeover and pose questions about how the government will ensure that these commitments are met."
AstraZeneca itself has already made large cutbacks as it has struggled to sustain profits in the face of a wave of patent expiries and past lack of success in its research laboratories.
It announced plans to shutter its Charnwood research and development centre in central England in 2010, a year before Pfizer's decided to close most of its drug research at Sandwich.
AstraZeneca's planned move to a new site in Cambridge will also involve further job losses, with the number of R&D posts in Britain expected to fall by around 400 to 2,200 by 2016. (Additional reporting by Ben Hirschler; writing by Guy Faulconbridge)