Pfizer's move on Astra fuels fears for British science

(Adds further reaction from scientists, politicians)

By Ben Hirschler

LONDON, April 28 (Reuters) - Pfizer (NYSE: PFE - news) 's plan to snap up its smaller rival AstraZeneca (NYSE: AZN - news) has stoked concerns about Britain's ability to remain a leader in life sciences, even as the U.S. drugmaker insists that it highly values UK research.

The pharmaceutical industry represents a rare manufacturing success story for Britain and its two flagship drugmakers - AstraZeneca and GlaxoSmithKline (Frankfurt: GS7.F - news) - provide thousands of highly skilled, well-paid jobs.

AstraZeneca alone employs some 7,000 staff in Britain, even after recent hefty job cuts, and it exports almost 7 billion pounds ($11.8 billion) of drugs each year, representing around 2.3 percent of all British exports of goods.

"AstraZeneca and GSK are the two pillars of the UK's thriving and economically important life sciences sector, supporting biotech and academia across the science base," said Sarah Main, director of the Campaign for Science & Engineering.

"To lose one of them to foreign ownership would be a blow."

Pfizer Chief Executive Ian Read, who studied science in London in the early 1970s, knows he is stepping into controversial territory with his attempt to acquire AstraZeneca (EUREX: AZNF.EX - news) in a deal that would bring new drugs for cancer and achieve major cost and tax savings.

"We reached out to the UK government this morning. We've have some initial preliminary discussions," Read told reporters in a conference call on Monday.

"We want to have a conversation with the government about the excitement we have about combining these portfolios, the excitement we have about the strength of UK research.

"This combination, if it occurs, would create domiciled in the UK the largest pharmaceutical company in the world and would bring an injection of about $100 billion into the UK economy," Read said.

Read said he saw Britain as an attractive location for both pharmaceutical research and manufacturing - helped by recent government tax incentives - but added he could not make any firm commitments on future investment or jobs.

JOB CUTS

In a previous controversial British company takeover in 2010, U.S.-based foods group Kraft promised to keep open one of its target Cadbury's factories, only to go back on the pledge soon after the deal was completed - drawing criticism for acting irresponsibly from one group of legislators.

Pfizer already has a tarnished reputation in the eyes of some British scientists after it announced plans in 2011 to shutter a large drug research site in Sandwich, southern England, with the loss of around 2,000 jobs.

AstraZeneca has also laid off thousands of scientists and other staff as it shrinks its cost base to cope with a fall in sales due to patent losses on blockbuster medicines.

In an attempt to reshape the company, AstraZeneca CEO Pascal Soriot has set out plans to move its research and corporate headquarters to Cambridge (SES: E1:J91U.SI - news) , England, by 2016 - boosting one of the country's most important science centres but causing job losses further north.

The British government, while supportive of the pharmaceuticals sector, has indicated it would take a hand's off approach to any Pfizer-AstraZeneca deal, which finance minister George Osborne described on Friday as "a commercial matter between the companies".

That stance is in contrast to the attitude of the neighbouring French government, which has said it would block any deal involving engineering group Alstom (Paris: FR0010220475 - news) it considers unfit.

For Britain's opposition Labour party, business spokesman Chuka Umunna said any potential takeover of AstraZeneca by Pfizer should be judged on whether it promoted jobs and growth, Britain's research base, and guaranteed long-term investment in Britain.

Unite, Britain's biggest labour union, called for guarantees of no job losses and for the protection of the UK's research and base in the event that Pfizer succeeds.

"We expect the UK government to pay special attention to this bid and do everything possible to protect jobs and to support the UK's knowledge base," said Unite National Officer Linda McCulloch.

($1 = 0.5948 British Pounds) (Editing by Kate Kelland and David Holmes)