What the Select Committee OUGHT to ask Pfizer tomorrow .....

As the American CEO of Pfizer, Ian Reed, flies in to London this morning to give evidence to the Commons Business and Science and Technology Select Committee, and try and convince sceptical Astra Zeneca shareholders and management of the potential benefits for them of a Pfizer takeover, the fate of the Pfizer bid for Astra Zeneca sits precariously in the balance. The scale of the bid, the biggest on record, and it's implications for the UK Life Science sector, mean this is not just a commercial decision.  It IS political, too.
So this week will no doubt see a fresh wave of political positioning on the proposed Pfizer/AstraZeneca merger, with armchair analysts and pharma pundits clamouring that 'something must be done'.  But, WHAT?
The key to answering that correctly is to understand what is happening in the sector and how radically drug design is transforming. Amid all the politics, we need to remember a few basic truths.
Having worked for fifteen years in the industry – not for ‘Big Pharma’, but for insurgent biotech companies and charities, who are increasingly the ones discovering most of the new medicines – this proposed merger is fascinating because it highlights fundamental issues at the heart of the revolution transforming the pharmaceutical industry.
The truth is that ‘Big Pharma’ is failing to develop enough new medicines. Their old business model - dependent on producing a steady pipeline of expensive 'blockbuster' drugs to sell to Western Governments - is broken. Instead, these companies have now become reliant on the smaller and more innovative ‘biotechs’ (and increasingly charities) to fill their pipelines with a new world of genetically targeted medicines.  Because the more we know about disease and the ay different people respond to the same disease, and different drugs (which is why data is so important to modern research) the more we discover that 'blockbuster' 'one size fits all' drugs aren't what we need. And few Western Governments can afford to pay top dollar for the drugs for their increasingly ageing population.
The Pharma sector is radically changing from being all about the discovery of old style drugs through biological research, to the design of 'Personalised', genetically profiled drugs through research based more in hospitals than Pharma factories.
To succeed in this new world of 21stCentury biomedicine, the UK has to unleash the unique power of the NHS - a global powerhouse for modern drugs design.  If we do so we can deliver huge benefits to NHS Patients, stop the slow decline in UK outcomes in key diseases like Cancer where we have slipped down the league tables in recent years, reduce our drugs bill by making the UK the fastest and best place in the world to develop, test and prove these new medicines, allowing us to pay a discounted rate, AND kick start a 21stC Life Sciences cluster.  It's a massive prize.
That’s why I was so pleased when the Prime Minister invited me to help the UK set out our groundbreaking Life Science Industrial Strategy in 2011, which has been internationally welcomed.
Different companies are responding to this challenge in different ways. AstraZeneca last year electrified the sector by wholeheartedly embracing the Life Science Strategy, embedding its staff in the Cambridge biotech and hospital campus. Pfizer, meanwhile, is known in the sector as the lead exponent of the M&A model: delivering shareholder returns by acquiring other companies. In either case, the success of the Life Science Strategy was proved when both announced that after closing their respective factory plants in Sandwich and Chesire, they were moving not to Cambridge, Massachusetts, but Cambridge, UK.
The fact that these companies are in the UK, despite our becoming in recent decades one of the slowest and lowest priced purchasers of drugs, is testament to the model we have adopted. The truth is that we need to worry less about who owns these companies –  after all the shareholders in both cases are global, as is the management – and more about their level of commitment to the UK as a place to develop and sell modern medicines.
There are many parallels with the automotive sector which collapsed in the seventies but was revived thanks to the power of industrial strategy. Concentrating on Formula 1 and high-end components, it meant that the UK last year once again became a net exporter of world-class cars. Yes, it would be wonderful if Nissan in Sunderland was Triumph. But the most important fact is that thousands of people are employed in UK car factories and the automotive supply chain.
Instead of the protectionist opportunism of Ed Milliband and the Shadow Business Secretary's 'New Socialism', we need to be rolling up our sleeves and making sure whoever owns the company has a strong commitment to the UK for the right reasons, namely because it is the best place on earth to develop 21st-century medicines.  Western Governments no longer have a right to expect or demand investment. We have to compete and win it by being more entrepreneurial.
The truth is that what really matters is that the UK remains a world-class place to discover and develop new 21st-century medicines. If we get that right, we can be relaxed about where the capital and talent flows from. Without it, we won’t have any takeovers to debate. The very fact of the takeover is a tribute to the UK as a place where people want to do business. For the physical and economic health of us all, long may it remain that way.
So the question MPs on the Select Committtee need to be asking Pfizer tomorrow is: what do WE  need to do here in the UK to enable you to make a major 10year commitment to develop 21st C medicines here, for the benefit of our NHS patients?
They might be surprised by the answer.


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