US drugmaker Pfizer hinted it could raise its proposed $106 billion offer if AstraZeneca would only engage in talks, as its boss was grilled by British lawmakers on his commitment to research spending and jobs.
In response AstraZeneca said it would have to consider a compelling offer but accused Pfizer of an "opportunistic" proposal and a ploy to cut taxes that risked its reputation.
Pascal Soriot, the French-born boss of AstraZeneca, came out fighting after Pfizer's Chief Executive Ian Read made clear the New York-based group would not rule out a hostile bid if Britain's second-biggest drugmaker did not enter merger talks.
Having warned that AstraZeneca could wither without its financial muscle, Pfizer expressed its frustration at being rebuffed.
It said that working with the British company's board could help deliver "optimal deal terms" which AstraZeneca could recommend to its shareholders.
Mr Soriot - who appeared after Mr Read to answer questions from a parliamentary select committee - said Pfizer's proposal risked disrupting its research and delaying getting life-saving new drugs to market, as well as undervaluing the business.
"What will we tell the person whose father died from lung cancer because one of our medicines was delayed – and essentially was delayed because in the meantime our two companies were involved in saving tax and saving costs?" he asked.
Pfizer's plan to cut its tax bill by re-domiciling to Britain if it buys AstraZeneca also posed a reputational risk, Mr Soriot added.
"The proposed tax inversion structure, we are afraid, could generate substantial controversy and potentially delay this merger and potentially impact the reputation of our company."
AstraZeneca rejected Pfizer's May 2 cash-and-stock offer worth £50 a share and said it had a bright future as an independent business.
But by early afternoon its shares had risen 2% to £47 on anticipation it would have to consider a second proposal.
"If Pfizer continues to aggressively pursue the deal by raising the price, then AstraZeneca's board would have to little choice but to engage," said Ketan Patel, analyst at Ecclesiastical Investment Management, a holder of AstraZeneca shares.
Pfizer is expected to come back with a sweetened offer for AstraZeneca this week, although people with knowledge of the matter said it would likely wait until after the parliamentary hearings.
Both chief executives, who gave confident performances, will appear before another panel tomorrow to answer questions about the science aspects of the deal.
Pfizer's bid would be the largest foreign takeover of a British firm and is opposed by many scientists and politicians who fear it will undermine Britain's science base.
Parliamentary select committees cannot block corporate transactions but they can question executives ferociously, as banks, energy companies and Rupert Murdoch's News Corp have all found out: The media coverage resulting from these sessions confirmed them as corporate bad guys for much of the public and placed future dealings under even closer scrutiny.
British business minister Vince Cable told the panel Pfizer's assurances on jobs, research and manufacturing had to be meaningful and binding or the government could take action.
"When we are talking to the companies about assurances, they have to understand that as a government we would under certain circumstances consider intervention," he said, though he added that doing this using public interest rules was "quite tricky" and would have to comply with European merger law.
Pfizer has a tarnished reputation in Britain after shutting down most of its research in southern England where Viagra was invented, with the loss of some 1,700 jobs.
Now it faces scepticism about its long-term commitment to AstraZeneca, though Read told the panel: "I'm a man of my word."
Pfizer has given a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in the northwestern English town of Macclesfield and put a fifth of its research staff in Britain if the deal goes ahead.
Having pledged to keep a fifth of research jobs in Britain, Scottish-born Read said he could not commit to maintaining a specific R&D budget there.
"We'll be efficient by some reduction in jobs. What I cannot tell you is how much or how many or where. We'll look at this as our global combined footprint and then we'll make decisions," Mr Read said.
He told the panel he expected the combined research expenditure of the merged drugmaker would be lower than that of the two separate companies, noting one of the drivers of his proposed deal was to increase efficiency to keep both firms competitive in an increasingly tough marketplace.
Allan Black, national officer for the GMB trade union, told the select committee: "The lawyers we've consulted don't see any obvious mechanism to make a five-year commitment binding."
Tony Burke, Assistant General Secretary of Unite, the UK's biggest trade union, said members were "very, very concerned" about Pfizer's record of cutting 65,000 jobs worldwide since 2005.
AstraZeneca pushed out details on its new drug pipeline late yesterday and early today, flagging good news on drugs for asthma, rheumatoid arthritis, lupus and diabetes to prove it can stand on its own.
Unite ran an advertisement in the country's biggest free morning newspaper Metro, saying Pfizer was "the wrong prescription for Britain."