GSK to build manufacturing capacity in UK
Will invest in respiratory inhalation device and build new biopharmaceutical plant
GlaxoSmithKline (GSK) is to build new manufacturing capacity in the UK in response to the UK government’s plan to cut by 10% the rate of corporation tax on profits generated from patents.
The pharmaceutical firm said it will now go ahead with plans to invest £500m (US$779.7m) in new manufacturing facilities, creating about 1,000 jobs.
UK Chancellor George Osborne announced that the government will proceed with plans for a so-called ‘patent box’ that lowers the tax rate on profits from a patent registered and then manufactured in the UK. The measure is designed to encourage investment in r&d and related manufacturing in the UK.
GSK said the reduction in corporation tax on patents, scheduled for 2013, will secure new investment in its respiratory inhalation device for asthma and chronic obstructive pulmonary disease (COPD) at its facility in Ware, Hertfordshire.
The move will also ensure that the UK is the location for GSK’s next biopharmaceutical manufacturing plant. Next year the firm plans to conduct a feasibility study on the location of this facility. Current GSK facilities in Montrose, Scotland and Barnard Castle, County Durham will be considered first.
The company is building its biopharmaceutical business and has six drugs in late-stage development for the treatment of diseases such as lupus and diabetes. Biopharmaceuticals represent 20% of GSK’s overall pipeline.
GSK said it would invest further in tablet manufacturing technology at Ware and a new topical (creams and ointments) manufacturing centre of excellence at Barnard Castle.
The company also plans to launch a £50m UK venture capital fund and build a new facility at the University of Nottingham focused on the development of ‘green chemistry’.
GSK’s chief executive Andrew Witty said: ‘The patent box has the potential to transform the way in which the UK is viewed by companies such as GSK as a location for new investments in high added-value r&d and manufacturing.
‘For too long, while great inventions and discoveries have been made in this country, downstream economic activity in development and manufacturing, and associated employment, have been attracted to other countries which have more favourable corporation tax regimes. In one stroke, the introduction of the UK patent box will help to change this dynamic.’
GSK last year spent £3.95bn on r&d globally, of which £1.5bn was spent in the UK.