CEO: Pfizer Leaving US Is Good for ... US

Freed-up cash from tax savings could be reinvested back into US: Ian Read
By Jenn Gidman,  Newser Staff
Posted Nov 24, 2015 9:20 AM CST
CEO: Pfizer Leaving US Is Good for ... US
In this May 13, 2014, file photo, Pfizer CEO Ian Read arrives for a committee hearing in London.   (AP Photo/Matt Dunham, File)

It may seem antithetical that the largest US drugmaker taking off for Ireland would actually prove beneficial to the US, but that's exactly what the CEO of Pfizer is saying after Monday's announcement of its estimated $160 billion "inversion" deal with Allergan, creating the world's biggest drug company. Ian Read has been on the horn with DC lawmakers and Obama administration officials, making his case that because Pfizer's move would significantly cut its tax rate, it would free up cash for the company to invest back in the US and add more jobs, the New York Times reports. Pfizer grumbles that it paid a 26% tax rate in 2014, as opposed to the 5% that Allergan's predecessor company paid, per the Times; with this merger, Pfizer hopes to cut its rate to about 17% or 18%, the Wall Street Journal notes. Read and Allergan CEO Brenton Saunders also say the merger would give Pfizer access to innovative treatments in eye care and dermatology, the Times notes.

Not everyone agrees with Read's sunny outlook. Pfizer failed in 2014 to merge with the UK-based AstraZeneca in a move met with similar "public uproar," per the Times. And politicians aren't shy about their thoughts on this deal: Hillary Clinton said in a statement that "we cannot delay in cracking down on inversions that erode our tax base," while Donald Trump said "our politicians should be ashamed" at such a "disgusting" deal, per Reuters. The two companies hope neither Congress nor the Treasury will scramble to revamp the tax code or create other rules before the merger closes in 2016, per the Times. The would-be pharma giant is already looking ahead to its next challenge: possibly splitting the mega-company into two down the line, with one focused on new meds and the other responsible for drugs that have lost or will lose patent protection, the Journal reports. (Check out the San Jose Mercury News' comprehensive primer on corporate inversions.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.