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Drugmakers applaud UK govt's 'transforming' patent box

UK News / World News | November 30, 2010


Kevin Grogan

Drugmakers applaud UK govt's 'transforming' patent box

AstraZeneca and more emphatically GlaxoSmithKline, have given the thumbs-up to the confirmation that the UK government will introduce a 'patent box' that will lead to lower taxes for innovative firms.

Chancellor of the Exchequer George Osborne has announced that the coalition will proceed with plans drafted by the former Labour government and is consulting on "a preferential regime for profits arising from patents", ie the patent box (see accompanying story on today's PharmaTimes UK News e-lert). The intention is to introduce rules in the government's Finance Bill for 2012.

Commenting on the proposals, GlaxoSmithKline chief executive Andrew Witty said the introduction of the patent box is "a bold and forward-thinking measure which builds on the UK’s strength as a global centre of excellence for science and R&D". He added that "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."

Mr Witty went on to say that when implemented, 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". He claimed that "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". He added that  "in one stroke, the introduction of the UK patent box will help to change this dynamic".

Mr Witty confirmed that GSK will now be making new investments in the UK worth more than £500 million. Specifically, more money will be put into the manufacture of its next generation high-technology respiratory inhalation device for asthma and chronic obstructive pulmonary disease at Ware in Hertfordshire and the new proposals now "ensure that the UK is the location for GSK’s next biopharmaceutical manufacturing plant". 

In 2011, the company will conduct a feasibility study on the location of this facility and current GSK manufacturing sites in Montrose in Scotland, and Ulverston and Barnard Castle in the north of England will be considered first. The drugs giant also noted that construction of major biopharmaceutical manufacturing facilities usually takes seven years or more from conception to the start of commercial production.

The patent box proposals have also secured further investment in continuous tablet manufacturing technology at Ware and a new topical manufacturing centre of excellence at Barnard Castle. Also a new facility at the University of Nottingham focused on the development of ‘green chemistry’ technology is to be built, and GSK intends to make "a significant financial contribution to this project."

GSK is also launching a new £50 million UK venture capital fund, focusing on investments in early-stage healthcare companies and spin outs from academia. The firm's existing corporate venture capital arm, SR One, was founded in 1985 and has laid out more than $600 million in biotech companies, though 70% of the companies invested in are currently US-based.

GSK concluded by noting that these new investments will lead to the creation of 1,000 new jobs in the UK over the lifetime of the projects.  They will also benefit "the wider construction industry and the more than 10,000 companies which supply GSK with services and facilities in the UK", the firm added.

AstraZeneca did not give any details about specific plans  but chief executive David Brennan said that "in response to the implementation of a competitive patent box, we plan to increase our UK investment in intellectual property in diabetes, cancer and respiratory disease." He added that "this groundbreaking initiative is welcome and will make the UK a far more attractive place to invest in developing new medicines".

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