GSK welcomes UK “patent box” 2013 tax plan

By Gareth Macdonald

- Last updated on GMT

GSK says UK plans to apply a reduced tax rate to all drugs patented after 2013 will encourage investment, provided it is applied to products already being developed.

The government plans, unveiled during Chancellor Alistair Darling’s pre-budget report last week, will establish a “patent box” levy of 10 per cent corporation tax on income generated from all patent filed after April 2013.

CEO Andrew Witty was generally positive about the plan, welcoming it as “the sort of support that we need from the Government to ensure that the UK remains and attractive place for highly skilled sectors such as pharmaceuticals​.”

However, Witty’s response is based on the assumption that the new rules will be applied to drugs GlaxoSmithKline (GSK) is already developing, which is a position that has yet to finalised.

Despite this note of caution, GSK said it will invest £500m (€556m) in its UK manufacturing operations, including a new biopharmaceuticals unit, which suggests the firm is committed to making drugs in the country for the foreseeable future.

While GSK did not disclose the list of UK locations being considered for the biopharmaceuticals plant, it did confirm that part of investment will be used to expand its respiratory medicines facility in Ware, Hertfordshire.

Government response

The Government was quick to respond to Witty’s comments. Business Secretary Peter Mandelson said it “reflects the value of Government and Business working closely together to design policies that foster investment and growth in high tech business​.”

Paul Drayson, science and innovation Minister, echoed these comments and added that the patent box shows “the UK is serious about being home to innovative businesses and high value-added manufacturing.

I’m delighted that GSK has been so quick to welcome the Box and I hope that leaders in other industries, which stand to benefit, will follow suit​.”


Elsewhere, Richard Barker, director general of the Association of the British Pharmaceutical Industry (ABPI) welcomed the patent box plans, describing it as “a step that will bring advanced pharmaceutical manufacturing investment back to Britain​.”

"It is one of the most important outcomes of the work we have been doing with Government through the Office for Life Sciences, and we look forward to working with Government to finalise the design to maximise its impact on companies' investment decisions​."

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