There are no real winners from this botched Big Pharma saga

 
Allister Heath

SO IT’S all over for Pfizer’s bid for Astrazeneca – or at least that is what it now seems like. Some small possibility of a deal remains: angry shareholders could yet conceivably force the Astra board to reach out to Pfizer or the US firm could bid again at a later stage (increasing either its price or the offer’s cash component). The most likely outcome, however, is that this is it, and that both firms will now to go their own, separate ways.

It’s been an especially bitter battle, and one of the more fascinating clashes the City has seen in years. The outcome is strangely inconclusive and disappointing; on the one hand, one ought to congratulate the defence for seeing off a raider so easily; on the other, too many shareholders are upset for this to be seen as a victory and Astrazeneca itself would probably have been happy to sell up for a few pounds per share more.

Did the personal triumph over the professional? Did the Pfizer boss miscalculate, or was it Astrazeneca’s “fault”? There are many questions and few objective answers. It almost seems as if every side has lost out.

If no deal materialises, then at least we will be able to test both firms’ cases, and especially Astrazeneca’s. We will sadly not fully be able to gauge the unfortunate view – propounded by economic nationalists – that British ownership is somehow inherently superior for the UK economy because we will never know what would have happened had Pfizer triumphed; however, we will soon find out whether Astrazeneca is indeed a “British champion” destined for an astonishing job and export-rich renaissance.

Within a couple of years, we ought to have a better idea as to whether Astrazeneca’s much-vaunted pipeline materialises in the way that it hopes, delivering far more revenues than is currently implied in the firm’s horribly deflated share price. Or will the company’s hopes and plans be dashed, brought down by a troubled and difficult environment for pharmaceutical giants, and will shareholders angrily rue the day their board didn’t sell out when it had the chance?

Regardless of what happens next, the political debate has shifted in the UK, and for the worse. Protectionism is once again a mainstream view, and future high-profile foreign takeover bids could easily run into even greater political resistance. That isn’t good news for the UK’s reputation as an open economy, or its ability to attract the capital that it so desperately needs.

HOUSING CRISIS (CONT.)
ANOTHER day, another story showing that house prices are out of control, especially in London. The problem, as I keep arguing, is that house-building hasn’t kept up with a growing population. Lucian Cook of Savills has crunched the numbers, and the situation is even worse than I feared. The adult population increased by 9.4 per cent in England and Wales between 2001 and 2011; and yet the number of new households facilitated by house building increased by just 7.9 per cent.

In other words, the number of adults grew 19 per cent faster than the number of new households, a proxy for new houses and flats. The situation is even worse than these numbers suggest as they don’t account for the rising number of one person households.
But while the national figures are bad, the real problem is in London. The number of adults jumped 14.5 per cent between 2001 and 2011 and yet the number of households grew by just 8.3 per cent. Housebuilding would have needed to be at least 75 per cent greater during that decade than it was to keep prices under control. The disparity is lower but still bad in the commuter belt, so there’s no real relief there. Milton Keynes is one of the very few pressure valves: the number of households increased by 18 per cent. Elsewhere, supply is uniformly scarce.

We need more housebuilding in and around London, and we need it now.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath

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