* U.S. firm says commitments to Britain are legally binding
* Questions Astra's ability to deliver new drugs on its own
* Pfizer CEO faces two panels of UK lawmakers May 13 and 14
* R&D head denies M&A bad for science, pledges "laser focus"
* Any new Pfizer bid expected after parliamentary hearings
(Adds Pfizer statement to parliamentary committee, latest
By Ben Hirschler
LONDON, May 12 Pfizer defended the business case
behind its plan to acquire AstraZeneca on Monday and
questioned the UK drugmaker's ability to stand alone for much
longer as the New York-based group's CEO prepared for a grilling
from British lawmakers.
Aiming to douse questions about its commitments to British
jobs, Pfizer also said its agreement to complete AstraZeneca's
new research centre in Cambridge, retain a factory in northwest
England and put a fifth of its research staff in Britain if the
deal goes ahead were legally binding.
The comments are Pfizer's latest counter to critics of its
proposed $106 billion deal, which would be the largest foreign
takeover of a British firm and is opposed by many scientists and
politicians - as well as AstraZeneca itself.
With its bid now the subject of heated debate in Britain's
Houses of Parliament and across the country's news channels, the
U.S. drugmaker took a harder line on Monday, saying the merger
would create "a UK-based scientific powerhouse".
It also took a swipe at AstraZeneca's go-it-alone strategy
by arguing that Britain's second biggest pharmaceuticals
business lacked the financial muscle to make the most of its
"Looming patent expiries and near term revenue losses
jeopardise its ability to deliver on its very promising
pipeline," Pfizer said in a written submission to a
Pfizer's Scottish-born Chief Executive Ian Read faces tough
questions from British lawmakers on Tuesday about his plans to
acquire AstraZeneca - a deal driven in large part by Pfizer's
wish to cut its tax bill.
Lawmakers will also interrogate AstraZeneca's French CEO
Pascal Soriot and business minister Vince Cable on Tuesday. Then
a second parliamentary committee on May 14 will question both
CEOs again, along with British science minister David Willetts,
about the science aspects of the deal.
In response to worries about safeguarding the British
company's research, Pfizer's R&D head Mikael Dolsten posted a
video on Pfizer's website saying he had been through five
different mergers which did not disrupt drug research.
"If you keep your sense of curiosity and an open mind, you
can learn tremendously," he said.
"We must stay laser-focused on our important projects. And
that's, of course, true for Pfizer scientists and AZ scientists
and will be true also if we can make a potential combination
Dolsten said there was "a really great fit" with the
products that AstraZeneca had in its portfolio, with potential
for combining drugs in areas such as lung cancer to offer much
more effective treatments.
There is considerable scepticism about Pfizer's long-term
commitment to British jobs, given its record of cost cutting
after past acquisitions and after it said it could adjust those
promises if circumstances change "significantly."
But Pfizer said the fact it had made the promises as part of
its offer made them legally binding and the pledges should be
given "full weight".
Prime Minister David Cameron said on Sunday he had made
"very good progress" in securing guarantees from Pfizer, though
the firm's latest statements contained no new offers.
Pfizer is widely expected to come back with a sweetened
offer for AstraZeneca this week, though people familiar with the
matter said it was likely to wait until after the parliamentary
select committee hearings.
The British group rejected a May 2 cash-and-stock offer
worth 50 pounds a share from its larger American rival, and CEO
Soriot has been on a roadshow to meet leading investors and lay
out his strategy for a prosperous independent future.
Soriot has secured the backing of several high-profile
shareholders, but others have told Reuters they would like him
to engage with Pfizer if the U.S. group makes an improved offer.
In addition to wanting a higher price - many analysts think
Pfizer will have to offer around 55 pounds a share - investors
are also keen to increase the proportion of cash in any deal
from 32 percent at present.
Pfizer is limited in the amount of cash it can offer since
in order to keep the tax advantages of re-domiciling to Britain
it must ensure at least 20 percent of the enlarged group is
Under British takeover rules, Pfizer has until May 26 to
make a firm bid for AstraZeneca or walk away.
A slide in Pfizer's share price following its first-quarter
results last week has reduced the current value of its May 2
offer to just under 48 pounds. AstraZeneca shares traded 0.3
percent higher at 46.15 pounds by 1115 GMT.
Pfizer has a tarnished reputation in Britain after shutting
down most of its drug research in Sandwich, southern England,
where Viagra was invented, with the loss of some 1,700 jobs.
(Editing by Sophie Walker)