After a planned purchase of Allergan Plc was scuttled by the U.S. government, Pfizer Chief Executive Ian Read on Tuesday said he would consider another merger of any size, at any time, as long as the deal makes sense.
But he said Pfizer is at least temporarily abandoning its quest to lower taxes by relocating overseas, a main rationale for buying Dublin-based Allergan. The $160 billion deal fell apart last month after the U.S. Treasury Department issued stringent new rules against such tax inversion deals.
Pfizer pays a considerably higher tax rate than European rivals. That has long rankled Read, a trained accountant who took charge of Pfizer in 2010. He argues the higher taxes put the drugmaker at a competitive disadvantage.
“We’ll have to work harder and be smarter,” Read said in an interview. “We can beat any company, whatever advantage they’ve got, if we use our resources better than they do.”
Read said Pfizer’s strong first-quarter results, reported earlier on Tuesday, demonstrated the company’s ability to prosper as a standalone company. “Not having (Allergan) still leaves us with a good hand to play,” he said.
Pfizer remains interested in deals that could help restock its medicine chest and ensure future growth, Read said, though he declined to name any biotech companies that were of particular interest.
“We have cash and resources and I’d entertain a deal of any size; size is not the issue,” he said. “The issue is does it make sense for our shareholders.”
Pfizer plans by late 2016 to decide whether to sell or spin off its generic medicines, which it calls established products. Those products had first-quarter sales of $6 billion. Its other business, of patent-protected medicines, had sales of $7.03 billion.
Read said Pfizer would be more likely in the short term to acquire innovative drugs, following its $16 billion purchase last year of generics maker Hospira.
Asked if future deals were more likely to come before or after Pfizer decides whether to split the company, Read said he could not put such a timeline on a transaction. “Assets appear and you make a decision whether to buy them or not.”
If the opportunity for a major acquisition arises, Read said Pfizer may again have to delay a decision whether to split up the company, as it did when the Allergan merger was announced. Pfizer initially delayed a decision by two years, but restored its original 2016 deadline after the deal fell through.
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