Pfizer-Allergan Deal Is a Blow to R&D

For shareholders, this may be their lucky charm. By merging with Allergan, Pfizer will be able to shift its legal headquarters from New York to Dublin and pay lower taxes, which should bolster its bottom line. But in the process, scientists are likely to lose their jobs, innovation may suffer, and consumers could pay more for Pfizer medicines.

This is often true of many large mergers in the pharmaceutical industry as companies look to slash expenses and quickly appease investors. In this case, about $2 billion in cuts are planned. But the type of deal Pfizer is pursuing, which is known as a tax inversion, appears destined to accentuate the downsides.