The UK’s largest pharmaceutical company will create around 1,000 jobs and invest £500 million in manufacturing following tax reforms announced by the Government.
GlaxoSmithKline (GSK) said a 10% reduction in corporation tax on profits generated from UK-owned intellectual property will allow the firm to develop new technology, build new facilities and invest in fledgling companies.
Chancellor George Osborne announced 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 research and development and related manufacturing in the UK.
Commenting on the proposals, GSK chief executive Andrew Witty said: “In the current challenging and uncertain economic environment, this is a welcome step by the Government to improve the attractiveness of the UK as a place for the private sector to locate and invest.
“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.
“For GSK, the successful introduction of the patent box will enable us to increase investment in communities where we have existing facilities by scaling up current manufacturing and building a significant new plant.”
GSK said the successful implementation of the patent box, scheduled for 2013, will secure new investment in its respiratory inhalation device for asthma sufferers at its facility in Ware, Hertfordshire.
The move will ensure the UK is the location for GSK’s next biopharmaceutical manufacturing plant.
GSK said it would also be able to launch a new £50 million UK venture capital fund, focused on investments in early stage healthcare companies.