Wednesday 7 May 2014

Why Astrazeneca's Ownership Matters

Some points about the attempted take over of Astrazeneca by American pharmaceuticals behemoth, Pfizer.

1. On Newsnight yesterday evening, Chuka Umunna made the dialectically nuanced observation that there are good takeovers and bad takeovers, regardless the nationality of who is making the purchase. A bad takeover might be Kraft's swallowing of Cadbury, who've cut jobs and plant - something barely compensated by the bringing of Egg & Spoon and Jelly Popping Candy Shell bars to market. On the other hand, take North Staffs-based BakerBus, which has recently been purchased by a Bermuda-based outfit acting as a front for a Chinese coach manufacturer. As per normal, the new company came after terms and conditions but following a spirited defence by the workplace Unite branch, not only were the attacks beaten off but workers won an inflation-busting pay rise, and a 7.5% wage rise for the lowest grades. So that takeover didn't turn out too badly.

2. Chuka backed away from saying nationality of ownership doesn't matter - he prefers British companies to stay British. That's not the case with Osborne and Dave, however. Initially they were cock-a-hoop over Pfizer's eye watering bid for Astrazeneca. They were positively cheering it on until the realisation dawned on them that being seen enthusiastically egging on a US multinational's purchase of a British firm might not make good politics. Hence Dave has back-pedalled to stress the government's "neutrality", and has now come out to say he's "not satisfied" with the bid. Small wonder Unite smells a rat.

3. I don't know if some Tory MP or donor has an interest to declare. Considering how they all seem to have hands in each others' pockets, I wouldn't be surprised if that was the case. But putting that to one side, Osborne and Dave's gleeful embrace of Pfizer fits in with a pattern of behaviour. Osborne has the habit of elevating the phrase 'political' economy to a full-blown strategy. For him it's not about a Picketty-like unravelling of capitalism's mysteries, but rather subordinating economics to the political needs of his dysfunctional party. For him a take over ticks many nice boxes. A £63bn buyout would massage quarterly GDP figures very nicely. Similarly, it doesn't take much to convert that astronomical sum into inward investment figures. Both outcomes fit his threadbare recovery narrative as well as getting on the low corporation tax trumpet and blowing out the tune that low taxes on business attracts overseas interests. Such is the smoke and mirrors our government works with.

4. The Labour front bench have - rightly - called foul and want a public interest test that you find in nearly every other advanced economy. Again, correctly, they want its remit expanding to cover science/R&D. I don't think this goes far enough. Whether Pfizer are going to do a Kraft if they succeed or not, Astrazeneca are in receipt of a huge taxpayer subsidy in the form of the NHS - it's a guaranteed market for them. According to their corporate site, the company doesn't just sell new drugs and produce commissioned research. It offers organisational services - budgeting, management consultancy, marketing. As a British-based business with predominantly British-based shareholders, there is a clear public interest that the company, and therefore the huge wedge of taxpayer cash it receives stays in this country. Or does Dave and Osborne think the government should be "neutral" about letting public money fall into American coffers?

5. Pfizer's attempted takeover of Astrazeneca brings out a key difference between the Tories and Labour. The behaviour of the Conservatives over this Parliament closely mirrors capital's short-termist tendencies. All capital has an interest in driving down wages, rendering workers flexible and more dependent on the largesse of employers, and sewing division and separation wherever it can. These immediacies contradict capital's medium-to-long-term interests, which Labour now refract. Yes, once you're over the shock horror of Labour being a capitalist party (when wasn't it?) it has policies to boost wages, tackle insecurity, invest heavily in R&D, sort out the housing market and, basically, restructure British capitalism.

6. These are the stakes. There is no room for neutrality. Will Dave still cling to it?


Anonymous said...

Dave 'political expediency' Cameron, will say what people will want to hear, and then do the bidding of the rich. What's new?

Phil said...

As parties of capital, all our mainstream parties do the bidding of the rich to one degree or another. The problem for Dave and the Tories, which is what will do for them in the end, is they are utterly fixated with short termism. This is a vice British capital is known for but they've taken it to a unique extreme.