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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline

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July 8, 2014

AbbVie and Shire, Quietly

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Posted by Derek

Pfizer's bid for AstraZeneca made headlines for weeks on both sides of the Atlantic. But there's another US drug company trying to buy a British one right now - AbbVie for Shire - and it's going on very quietly indeed.

Over at FierceBiotech, they're wondering why that should be so, after an article in the Telegraph. There are several reasons, some better than others. For one thing, the whole deal is a smaller affair than the Pfizer saga. Most importantly, it would involve fewer UK jobs, because Shire itself doesn't really have all that many employees in the UK (91% of them are elsewhere!) Some years ago, they reworked themselves into an Irish-domiciled company, anyway, for (you guessed it) tax purposes. But there's not much noise in Ireland about this deal, either.

Fewer politicians have an interest in what's going on. If names change on pieces of paper, and it hardly affects anyone in their constituencies, then they have other things to worry about. The financial reasons behind the deal are similar to Pfizer's - relatively generous corporate tax policies, but the principles behind those, and behind deals predicated on them, was never the primary political concern. You might have gotten a different impression from some of the speechmaking that went on during the Pfizer/AZ business, but that's what comes from listening to politicians, rather than watching their actions with the sound off. I recommend that technique; it improves the signal/noise immensely.

Comments (7) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. simpl on July 8, 2014 7:29 AM writes...

I apologise to politcos in advance for this prejudical view.
To borrow a sporting metaphor, AZ and Shire are in two different leagues. AZ is the residue of a chemical empire, like Pfizer or Sanofi; whereas Shire is opportunistically kitted together, like Valeant or Teva. It is not impossible to move from one division to another, up or down, but the players from the top league have an intangible wealth of historical experience. The history in turn correlates to the measure of political interest.
What I find interesting is that Shire is valued at almost half AZ was - so "class" is not merely a question of value.

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2. John Wayne on July 8, 2014 8:40 AM writes...

This may be getting less quiet; it is the top story on BBC news online.

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3. Anonymous on July 8, 2014 11:46 AM writes...

my grandparents would know who astrazeneca and pfizer are. i doubt they would have heard of shire never mind know that they are 'british'

i guess having a few well paid bodies in the uk, while paying tax somewhere cheap and having the rest of your workforce god knows where doesnt exactly make your name ring out amongst the general population.

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4. Gandalf the Grey on July 8, 2014 12:45 PM writes...

But will Shire's board say: YOU SHALL NOT PASS! to AbbVie once again?

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5. Anonymous on July 8, 2014 12:47 PM writes...

@3: The name AstraZeneca is more recent than Shire.

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6. Keiran Lee on July 8, 2014 2:08 PM writes...

Shire had a bunch of openings at their Lexington site. It might be risky to take one of these positions if offered as I would suspect Abbvie to cut everyone once the deal was made.

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7. rico on July 8, 2014 2:12 PM writes...

Of course the deals are or were being done for the same "tax efficiencies". The difference is that AbbVie and Shire don't have as public a history as Pfizer does in terms of predatory acquisitions and then laying off large swaths of employees. Ian Read suffers because of the poor decision-making and public behaviors of his predecessors - that is why when he "gives his personal promise" to MPs - they do not believe it and it isn't worth the oxygen he used to say it...the next CEO could come into Pfizer next year and lay-off everyone in the UK (b/c that is their track-record). Whether Pfizer would do it is a different question...it is simply that they are likely to do it b/c they have done it before.

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