Scientists, especially those employed by Pfizer in North America, need to be aware that their company’s proposed inversion (relocation of corporate headquarters to Ireland, for tax purposes, after the acquisition of Allergan) will almost certainly degrade employment opportunities.
While research and development activities in many pharmaceutical companies can be located around the world, most place their leading R&D center within commuting distance of the corporate office.
The future of a pharmaceutical firm is its pipeline. For innovative firms, the ability to charge monopolistic prices due to patent-protected products is the key to the high stock valuations. Thus, there is a bias to situate potentially high-risk, high-reward projects close to home. Also, communication is easier when facilities are in the same time zone.
Facilities are frequently placed near the home of the business leader. Mr. Ian C. Read, the chief executive of Pfizer, is a Scotsman.
Mr. Read has tried to reassure Washington officials that moving Pfizer abroad would be good for America, since it would free up money for investment. What a crock! One benefit of inversion to Pfizer is avoiding the repatriation of $74 billion in untaxed earnings accumulated abroad. Bringing any of it into the U.S.A. to pay for more R&D should trigger a taxable event. This would work against increasing R&D jobs in the U.S.A.
As scientists, what can we do? Write your congressperson or senator. Alternatively, write the Federal Trade Commission at
[email protected] for help in stalling (or stopping?) the merger; it is clearly anti-competitive since it further reinforces an already monopolistic position.
Robert L. Stevenson, Ph.D., is Editor Emeritus, American Laboratory/Labcompare; e-mail: [email protected].