UK Government

Department for Business, Innovation and Skills: Government Welcomes GSK’s Response to Patent Box

Press Release   •   Dec 11, 2009 11:20 GMT

The Chancellor’s tax measure announced yesterday in the Pre-Budget Report already delivering major investment decisions

In response to the Patent Box announcement, GSK has already drawn up detailed implementation plans for its first state-of-the-art UK-based biopharmaceutical manufacturing plant. This will make the UK the future home of the latest generation of biological medicines.

GSK has also committed to manufacture the next generation of respiratory medicines at their facility in Ware, Hertfordshire.

Taken together, all these activities will result in GSK investing in excess £500 million over the next few years in the UK and creating new jobs and safeguarding existing jobs in the UK.

Andrew Witty, CEO of GSK, said: “The patent box is exactly the sort of active, long-term and creative support that we need from the Government to ensure that the UK remains an attractive place for highly skilled sectors such as pharmaceuticals. For GSK, assuming the new regime will apply to patents currently under development, it will have the immediate impact of making the UK a priority area for future investments, particularly in manufacturing.”

All businesses that develop patents will benefit. The Patent Box will support activity in industries such as aerospace, automobiles, telecommunications and life sciences. It will work by applying a reduced rate of Corporation Tax of 10 percent from April 2013 to income from patents.

Lord Mandelson, Business Secretary, said: “This is excellent news and reflects the value of Government and Business working closely together to design policies that foster investment and growth in high tech business in the UK. The cut in corporation tax will encourage invention, patenting and manufacturing here in order to strengthen Britain’s economic future.”

Lord Drayson, Science & Innovation Minister, said: “The Patent Box, which originated with the Office for Life Sciences, shows that 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.”

In addition, GSK have said that a patent box will make the UK a more competitive location for a new “continuous manufacturing” plant.  Continuous manufacturing in pharma will be a world first – everything else is 'batch' manufactured. It would be the first time in a generation that GSK has invested in UK manufacturing.

Notes to editors

1. For further information please contact BIS press office on 0207 215 5080.

2. The PBR announces that Government will introduce a Patent Box, applying a reduced rate of Corporation Tax (CT) to income from patents, from April 2013 to strengthen the incentives to invest in innovative industries and ensure the UK remains an attractive location for innovation.

A Patent Box reduces the rate of CT applied to income from patents, such as royalties. Other EU countries have introduced similar schemes in recent years and Government has received representations from business in favour of these schemes.

3. The Prime Minister announced in January 2009 the creation of the Office for Life Sciences (OLS), under the leadership of Lord Drayson, Minister for

Science and Innovation, in recognition of the importance of the life sciences industry (pharmaceuticals; medical biotechnology; and medical technology) to the future of the UK, and the role that Government can play in creating an environment in which the industry can flourish. The OLS was tasked, over six months, with developing a package of measures which would turn around negative trends, improve the operating environment for UK life sciences companies, and build a sustainable and integrated industry in the future.

In July, the OLS published the Life Sciences Blueprint, a package of actions to transform the UK environment for life sciences companies. Implementation of these actions is underway ahead of a further document early in 2010 that will provide an update on delivery progress for each action.

Department for Business, Innovation & Skills

The Department for Business, Innovation and Skills (BIS) is building a dynamic and competitive UK economy by: creating the conditions for business success; promoting innovation, enterprise and science; and giving everyone the skills and opportunities to succeed. To achieve this it will foster world-class universities and promote an open global economy. BIS - Investing in our future.

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