Shot in the arm to UK manufacturing as GlaxoSmithKline invests £500m

The pharmaceuticals giant will, among other things, build its first new UK drugs manufacturing plant in 40 years. And it's all thanks to the Budget.

by Emma Haslett
Last Updated: 04 Jun 2013
GlaxoSmithKline announced this morning that it’s planning to invest a cool £500m in manufacturing in the UK, with a new factory in Ulverston in Cumbria, and investments in two sites in Scotland. The move will create about 1,000 new jobs – a huge boost to manufacturing in the UK. GSK said it’s all thanks to George Osborne’s new ‘patent box’, without which the pharmaceuticals industry may well have withered away. So at least the Chancellor got something right – although others may recall a similar idea emerging from the New Labour brains a few years ago…

GSK said the plant, which will cost about £350m to build, will be its first new manufacturing facility in the UK in about 40 years. Work will start at the site (which actually already employs 240 people, manufacturing materials for antibiotics) in 2014/15, and the new factory won’t be up and running until at least 2020. It will manufacture biopharmaceuticals including vaccine components.

So if the recovery continues as the Government hopes it will, that means the company’s contribution will be minimal. But it’s nevertheless excellent news for the sector: the UK’s pharmaceutical industry is still reeling from the decision by US drug company Pfizer, which last year decided to close its Sandwich-based research and development facility, losing the industry about 1,500 jobs.

GSK said it had made the decision after the Chancellor confirmed in the Budget yesterday that he was introducing a ‘patent box’, which allows companies to pay a lower rate of tax on any profits they generate from intellectual property held in the UK. Thus, any drugs developed at the facility will be cheaper to manufacture here than else where (or that’s the idea) . The company’s CEO, Sir Andrew Witty, was very impressed: ‘[It] 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,’ he said. If things go according to plan, he hinted that investment could rise to £700m.

Witty added in an interview on the Today programme this morning that GSK had also been impressed by Osborne’s decision to reduce corporation tax to 24%, with a further 2% to come. ‘The combination of the patent box, combined with falling corporation tax has really changed the position [of the UK].’

So it seems Osborne’s got at least part of the nation on-side – even if half the papers today reckon he’s nothing more than a granny-basher…

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today