The war over drugs: what’s at stake?

The takeover tussle between rival drug giants Pfizer and AstraZeneca has uncovered some interesting truths about government and corporate policies on taxes and R&D funding. Of course, the shadow of Pfizer still looms over UK-based AstraZeneca, with continuing speculation that the US-headquartered Viagra manufacturer will revive its bid later this year. Both firms face imminent ‘patent-cliffs’ as profitable older drugs near the end of their patent protection. Pfizer’s strategy, backed by the Economist, is to acquire new drug products through acquisition. AstraZeneca is a particularly attractive target because the UK’s corporation tax rate is 20% compared to 40% in the US, allowing Pfizer to shift its headquarters to the lower-tax jurisdiction. But some UK politicians worry about job losses among UK research staff if the merger goes ahead – although AstraZeneca’s research activities are already highly de-centralised.