Acquiring Pharmaceutical Industry Assets in the UK: 1 + 1 = 1?

The recent AstraZeneca takeover bid from Pfizer puts pharmaceutical R&D once again on the public agenda. Three pertinent questions are (a) what can be expected from this acquisition, (b) what are the implications for the UK economy and science base, and (c) whether such a deal should go ahead. Although the key driver behind this acquisition would be an improvement in company performance and shareholder value, past evidence suggests that mergers and acquisitions (M&A) of large pharmaceutical companies imply a neutral net effect on productivity, if not a decline, with employment decreasing and R&D spend following a similar trend. Similarities between the two companies include dropping sales; however, relative to its size, AstraZeneca has a more promising R&D pipeline, especially in therapeutic areas where Pfizer's strength is currently limited (e.g. oncology). Ensuring a portfolio diversification would make Pfizer's takeover proposal a knight's one, but history points towards a knave-like behavior.