The 2012 Budget unveiled by George Osborne yesterday includes measures aimed at making the UK "one of the most attractive places in the world to invent new medicines," the Chancellor told MPs.

Announcing a budget that "unashamedly backs business," Mr Osbourne told the Commons that "Britain is going to earn its way in the world," and that the way to do this is to "stop being afraid to identify Britain's strengths and reinforce them, backing industries like aerospace, energy and pharmaceuticals, creative media and science."

"Under this government, Britain has moved into the top 10 of the most competitive places in the world to do business, but we have to do more," said the Chancellor. "We shouldn't be shy about identifying our successful industries and reinforcing them."

"Around one-fifth of the world's top 100 medicines originate from UK research, so we're backing our life sciences through creating the Francis Crick Institute at St Pancras and cutting taxes on patents, to make this one of the most attractive places in the world to invent new medicines," said Mr Osborne.

"We've protected the science budget, now we're committing £100 million of support, alongside the private sector, for investment in major new university research facilities," he told the House.

Government plans to provide another boost for the life sciences sector include "the biggest sustained reduction in business tax rates for a generation," he added.

From April, the UK's corporation tax rate will be cut to 24% instead of the originally-planned 25%, and there will be two further 1% cuts next year and the year after, so that by 2014, the UK will have a 22% rate of corporation tax.

The headline rate will then be 18% lower than the US, 16% lower than Japan, 12% below France and 8% below Germany, and this is "an advertisement for investment and jobs in Britain," Mr Osborne told MPs.

Other new help for industry includes proposed improvements to the Enterprise Management Incentive Scheme, set up to help small and medium-sized enterprises (SMEs), by more than doubling to £250,000 the individual grant limit, plus the expansion of UK Export Finance and new plans to help smaller firms in new markets.

The measures announced in the Chancellor's Budget Statement were broadly welcomed by Stephen Whitehead, chief executive of the Association of the British Pharmaceutical Industry (ABPI), who said that they "will help improve the UK's general business environment and allow pharmaceutical companies operating here to remain competitive in a global market."

"Specifically, moves towards a more competitive tax regime, including a further reduction of corporation tax so that the UK has among the lowest rates in Europe, are welcome,” he added.

"Looking beyond the Budget, it is essential that recognition is given to the importance of a strong commercial environment for the industry, where the uptake of new innovative medicines is ensured and pricing rewards innovation," Mr Whitehead went on.

The Ethical Medicines Industry Group (EMIG), which represents pharma SMEs, noted particularly the Budget's plans to simplify the tax system for such firms.

"In the UK, SMEs constitute approximately 90% of the total number of biopharmaceutical companies and it is estimated that 80% of invention is derived from these smaller companies. As such, we are delighted to see that today's strategy includes specific measures to support SMEs to grow and prosper," said EMIG chairman Leslie Galloway, speaking yesterday.

The BioIndustry Association (BIA) also said it welcomed the Budget's "continued support for the life sciences sector."

"The Chancellor's plans to help enable the commercialisation of research, invest £100 million in new university research facilities and to increase the Enterprise Management Incentive Scheme grant limit are to be welcomed,” said the BIA's interim chief executive, Glyn Edwards.

However, he added that this commercialisation would be helped if innovative companies were to have access to additional sources of funding, such as that offered by the Citizens' Innovation Funds which the BIA is proposing.

These funds, which are based on France's Fonds Communes de Placements dans l’Innovation (FPCI) scheme, would be a tax-free retail investment product allowing £15,000 per person per annum to be invested in funds which are targeted at innovative SMEs. The FCPI scheme is notable for the large sums raised from many private individuals who are keen to invest in the knowledge economy in a tax-efficient form without risking large amounts of their savings, says the BIA, adding that the UK scheme "would make the government an enabler, rather than a provider, of much-needed investment in innovative business."

* Work on the Francis Crick Institute - originally to be named the UK Centre for Medical Research and Innovation (UKCMRI) - is due to begin in July for completion in 2015. A partnership between six of the UK's most successful scientific institutions - the Medical Research Council (MRC), Cancer Research UK, The Wellcome Trust, University College London (UCL), Imperial College London and King's College London - and established as a charity, it is planned as a world-leading centre of biomedical research and innovation.