Ebb & Flow

Pfizer (PFE) had a busy week, what with announcing a restructuring at its investor day and news that FDA wants the company’s Bextra COX-2 inhibitor off the market. But what should have grabbed the interest of the biotech crowd was the pharma giant’s announcement that it plans to repatriate more than $28 billion in cash from outside the U.S. this year.

The influx of international cash results from the October 2004 passage of the American Jobs Creation Act of 2004. The law allows U.S. corporations to repatriate earnings of foreign subsidiaries at a temporarily reduced tax rate of 5.25% - versus the normal 35% - if the income is permanently reinvested in the U.S. All the money has to be repatriated in 2005 and invested before Dec. 31, 2007. This could be good news for biotechs in the U.S., as this reinvesting could include product partnerships and M&A. ...