GlaxoSmithKline backs UK Budget plans, announcing £500 million investment

Backing its support for UK Budget plans revealed yesterday, pharma giant GlaxoSmithKline (LSE: GSK) this morning announced that it will invest some £500 million ($792 million) across its manufacturing sites in the UK to increase production of key active ingredients for its pharmaceutical products and vaccines, and create 1,000 new jobs.

GSK chief executive Sir Andrew Witty said: “The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain. Consequently, we can confirm that we will build GSK’s first new UK factory for almost 40 years and that we will make other substantial capital investments in our British manufacturing base. In total, this will create up to 1,000 new jobs over the lifetime of the projects. We are also actively considering other investments in our UK manufacturing network which would create further jobs and reinforce the UK’s international competitiveness and as a world leader in life sciences.”

The “patent box” is a preferential (10%) tax regime for profits arising from research and patents in the UK, and was already signposted in last year’s budget; it was first mooted by the former Labour government. Yesterday’s Budget also reduces corporation tax to 24% affective next month, with a view to bringing this down to 22% in 2014-15, which Sir Andrew said in a BBC radio interview was also a factor in the company’s investment decision.