Mylan CEO Heather Bresch: We needed tax inversion in order to grow
The chief of the generic drug company discussed her “counterintuitive” strategy for creating U.S. jobs.
Mylan is one of a handful of U.S. companies that has recently completed a controversial tax inversion, as the generic drug company moved its official base to the Netherlands earlier this year. While the decision cost Mylan its place in the Fortune 500 (a list of U.S.-based companies), CEO Heather Bresch said Wednesday that the inversion has paid off in multiple unexpected ways.
Despite criticism over the tax-lowering transaction—including from Bresch’s own father, Democratic Senator Joe Manchin of West Virginia—the CEO told the audience at Fortune’s Most Powerful Women summit in Washington, D.C. that the move did more than reduce the drugmaker’s costs. (For more about Bresch and the controversy she has overcome, read Fortune’s profile of her in its recent Most Powerful Women issue, “Why Wall Street Loves to Hate Mylan’s CEO.”)
Mylan (MYL ∧ 1.98% took) advantage this summer of a major benefit to being located in the Netherlands, when it employed a Dutch takeover defense that successfully thwarted a hostile acquisition attempt from Israeli generic drugmaker Teva Pharmaceutical Industries ( TEVA ∧ 1.06% ). Had Mylan been acquired, the jobs of 5,000 employees that work in its Morgantown, W.Va. manufacturing facility might have been at risk—along with future employment that the company plans to create, Bresch said.
“Perversely, it seems counterintuitive that we needed to invert to grow here in the United States,” Bresch said. “Which is exactly what we’re continuing to try to do, even with our most recent acquisition target of Perrigo.”
Mylan is in the midst of its own hostile takeover attempt of Perrigo ( PRGO ∧ 1.73% ) , a Michigan-headquartered maker of over-the-counter generic (and drugstore brand) drugs which completed its own tax inversion to Ireland in 2013. Perrigo shareholders have until Nov. 13 to decide whether to accept Mylan’s offer and tender their shares.
During Q&A with Bresch at the MPW summit, another powerful attendee, Ilene Gordon, CEO of food flavoring company Ingredion ( INGR ∨ -1.51% ) , posed an interesting question that any leader considering a tax inversion is likely to consider: Did Mylan’s inversion change the company’s culture, or the way it does business?
Bresch’s answer, in short: No. “Operationally it did not. We still run the companies in the United states, and live in the United States,” Bresch said. “I think there’s still a lot of misnomers out there about the realities of inverting.”
Mylan still operates out of its main headquarters in Canonsburg, Pa., as several other U.S.-founded drugmakers have maintained their home bases even after officially inverting overseas, such as Perrigo and Allergan ( AGN ∧ 2.77% ) . Among generic and specialty pharmaceutical manufacturers, “We were kind of the last standing U.S.-based company,” Bresch said.
The inversion did, however, increase Bresch’s trips to Amsterdam and other parts of Europe. “While we’re governed out of the Netherlands, our tax base is out of the U.K.,” Bresch said. That means Mylan’s board now needs to meet in London when making major decisions, and holds annual meetings in the Netherlands. “It absolutely changed how our board operates,” she said.