Editorial

UK pharmaceutical industry under threat

www.thelancet.com/oncology Vol 15 June 2014

and highlighted AstraZeneca’s oncology portfolio as being particularly vulnerable. Innovation could also be stifled in the GSK–Novartis deal, which means GSK has an effective monopoly on vaccine development, and the subsequent loss of competition could deter further innovation. The mergers could also increase the onus on academia and small biotechnology companies to do more early-stage discovery and R&D work, bringing with it increased financial pressures. It is therefore vital that the UK Government does all it can to encourage companies to retain their drug discovery divisions within the UK. Although the decision ultimately lies with the companies’ shareholders, there are incentives that can be offered. The National Health Service is one of the world’s biggest procurers of drugs, and offers unique opportunities to do large-scale clinical trials. The introduction of the patent box in 2013, which allows companies to apply for lower corporation tax on earnings from patented inventions, should encourage innovative companies to remain in the UK. As a last resort, the Government could consider a “golden share” option (akin to past deals with Rolls Royce and BAE Systems) to prevent a foreign takeover, or using its public interest test powers, which can block takeovers if they could damage national interest—UK Business Secretary Vince Cable has said he would not rule out this latter option, and states that the Government sees “the UK as a knowledge economy, not a tax haven”. It is equally essential that every effort is made to ensure our universities continue to produce world-class scientists to foster scientific discovery. An announcement in April this year from the UK’s exam regulator, Ofqual, that stated practical work would cease to contribute to the overall grade of A levels—the qualifications that determine university entrance in the UK—is a major retrograde step and disconnected from the realities of science. Continued investment is necessary if the UK is to remain a world-leading, knowledge-based economy. Although mergers and acquisitions are an everyday part of business for companies that compete in a global market, sometimes national interests need to be put ahead of markets and profit, and every effort must be made to ensure that researchers and innovators are not hampered in the pursuit of better outcomes for patients. ■ The Lancet Oncology

Alan Schein Photography/Corbis

On May 2, 2014, Pfizer—the world’s largest pharmaceutical company—made a second attempt to purchase the rival firm AstraZeneca. The bid, valued at £63 billion, was immediately rebuffed, raising the prospect of Pfizer launching an attempt at a hostile takeover. These events happened soon after an asset swap between GlaxoSmithKline (GSK) and Novartis, in which Novartis sold its vaccines division to GSK, who in turn sold its oncology portfolio to Novartis; the two companies are also to merge their consumer health divisions. The sale of GSK’s oncology portfolio in particular is surprising, because the company stated on record last year that they wanted to become one of the top five players in oncology. A similar deal has also been struck between Bayer and Merck. Inevitably, concerns have been raised in the UK, where AstraZeneca’s headquarters are based, that the potential merger with Pfizer will cost the country jobs and vital income. Indeed, AstraZeneca contributes 2·3% of the UK’s exports per year, and employs more than 7000 staff in the country. Pfizer has a bad reputation in this area; for instance, it sold its UK research facilities in Sandwich, Kent, in 2011, in the process making 1500 highly skilled people redundant. Further, Pfizer has admitted that the move to purchase AstraZeneca is at least partly motivated by a desire to avoid corporation tax in the USA. Clearly aware of these negative perceptions, Pfizer’s chief executive has written to the UK’s Prime Minister, David Cameron, to promise to complete work on AstraZeneca’s research and development (R&D) hub in Cambridge, and to pledge to employ at least 20% of the combined company’s R&D workforce in the UK and locate some of the company’s manufacturing plants in Britain. However, these guarantees are only for 5 years and do not go far enough. Additional concerns are that pharmaceutical mergers will not only negatively affect the economy, but that they could also stifle innovation and the development of new drugs, further threatening the hard-won reputation of the UK as a world leader in medical R&D. The consolidation of the pharmaceutical industry threatens the breadth of research being done. Indeed, a former head of research at Pfizer recently informed The Independent that he fears drug discovery programmes in their early stages are likely to be disrupted or abandoned,

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UK pharmaceutical industry under threat.

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