05/08/2014 06:45 pm ET Updated Jul 07, 2014

Pfizer: The Madness of Mergers and Acquisitions Hurts Us All

In pursuing Astra Zeneca for the tax benefits the U.K. company offers, Pfizer acknowledges its failure to innovate. The only strategy it has for making money is changing tax territory. What a miserable admission of failure that is.

Miserable, but probably also doomed. Depending on whose research you credit, mergers and acquisitions have a failure rate of between 50 and 80 percent. Put simply, most fail to achieve the strategic purpose for which they were carried out. Beyond the Deal has done some intriguing research documenting the failure rate and its reasons but the bottom line is: these deals are risky for investors and risky for employees. They are highly profitable for lawyers and advisory banks and they garner headlines for chief executives but no one else benefits from them. It isn't just that mergers and acquisitions mostly don't work. Or that innovation in pharmaceuticals needs to focus on products not finance. Every corporate combination stalls innovation. One scientist I know has worked in the same organization for his whole career -- but its name, ownership and management has changed with monotonous regularity. Every time, he told me, it's like introducing an air bubble into a heating system: the innovation pipeline looses heat. It takes at least a year, often longer, before serious progress is resumed.

It's easy to dismiss this as a problem for investors but, actually, it should concern us all. Science has the capacity to address many of the most pressing issues we face. In particular, the failure of all big pharmaceutical companies to introduce new antibiotics has meant that we face a crisis in antibiotic resistance which leading health care officials in both the U.S. and the U.K. deem a national emergency. Sally Davies, the U.K.'s Chief Medical Officer has said "if we don't take action, we may all be back in an almost nineteenth-century environment in which infections kill us as a result of routine operations." At the Center for Disease Control in the U.S., director Thomas Frieden says "our strongest antibiotics don't work and patients are left with potentially untreatable infections."

But instead of pursuing real challenges, Pfizer distracts Astra Zeneca and the rest of the pharmaceutical industry with tax ploys.

Margaret Heffernan's book on competition and collaboration A BIGGER PRIZE is out now.