Dive Brief:
- In an interview with Bloomberg on Tuesday, Actelion CEO Jean-Paul Clozel praised the Obama administration's efforts to curb the trend of healthcare and biopharma companies pursuing domicile-shifting, tax-cutting inversion mergers.
- A planned $55 billion mega-deal between U.S.-based AbbVie and Ireland-based Shire was scuttled last week after AbbVie's board recommended pulling out of the merger in the face of new Treasury Department rules that make it much harder to acquire foreign companies for tax-shifting purposes.
- Clozel essentially said that tax-inversion deals are a superficial way of conducting business that do little to advance innovation and reward the best companies.
Dive Insight:
Clozel laid out his case for supporting new anti-tax inversion rules in plain terms. “People will have to be very careful in their acquisitions,” he told Bloomberg in a telephone interview. “I’m very happy with this new evolution. I do hope that people make acquisitions because of the value of the companies and not because of tax.”
Many other pharma company chiefs are sure to scoff at that logic, arguing that reducing their tax burdens' will, in fact, allow greater future innovation and growth. But for the moment, the healthcare industry faces an uphill battle against the domicile-shifting deals, which have proven unpopular among both the public and lawmakers from both sides of the aisle. Pharma's saving grace, for the moment, is that Republicans and Democrats can't agree on how, precisely, to reform the tax code.