Drugs giant Pfizer has not ruled out a merger abroad to take advantage of low tax rates, despite the US clampdown on the tax inversion loophole.
Speaking at the firm’s third quarter earnings call, Pfizer chief executive Ian Read said he still believes there is value to be had from tax inversions and he doesn’t think the US Treasury Department’s proposed regulations will stop the practice of buying foreign companies to get a tax cut – although it will be more complicated and potentially limit the value created.
“For Pfizer, enhanced financial flexibility from redomiciling is certainly still one potential source for creating value… I think it’s fair to say [the US Treasury Department] has made it more difficult and perhaps changed the timing on realisation of the value. But we still believe, on a case-by-case basis, there is meaningful value to be had from inversions.” That value is the “liberation of a substantial proportion of your future cash flows outside of the US tax system into a territorial system”, he said, adding that Pfizer continues to evaluate options on a case-by-case basis.
To read the full story and find out what US tax reform might mean for the pharma industry read our news story from the November issue of PharmaTimes Magazine here.