Drug giant GSK invests $360 mln in UK

Drugsmaker had opposed Brexit from EU

LONDON, July 27, (RTRS): GlaxoSmithKline plans 275 million pounds ($361 million) of new investments at three drug manufacturing sites in Britain, signalling its confidence in the country despite last month’s vote to leave the European Union.

Britain’s biggest drugmaker, which had argued against Brexit before the referendum, believes the UK remains an attractive place for making medicines, thanks to a skilled workforce and relatively low tax rates.

The country’s so-called patent box boosts profits from patented innovations by halving the rate of corporation tax. This tax relief, which favours pharmaceutical companies, has come under fire in recent days from the opposition Labour Party.

GSK said on Wednesday it was investing in sites at Barnard Castle, in the north of England, Montrose, in Scotland, and Ware, north of London. It plans to increase production of next-generation respiratory drugs and biotech medicines.

The vast majority of these products will be exported.

“It is testament to our skilled UK workforce and the country’s leading position in life sciences that we are making these investments in advanced manufacturing here,” said Chief Executive Andrew Witty.

Business minister Greg Clark said GSK’s move was a clear vote of confidence in Britain and demonstrated that “there really is no place better in Europe to grow a business”.

The company, which will report quarterly results at 1100 GMT, has a large part of its global research and manufacturing cost base in Britain, even though nearly all its sales are generated overseas.

Witty, who is retiring next year, had said before the vote that Britain should remain in the EU, due to fears that Brexit could disrupt Europe’s unified system for drug regulation and hamper access to top scientific talent.

Despite this, the company, which will be helped by recent falls in sterling, has concluded that the country remains a good place to do business.

Britain accounts for nearly half of GSK’s worldwide research and development and around a third of its manufacturing. It has a total of nine UK manufacturing sites employing some 6,000 staff.

Uncertainty surrounding the vote to leave the EU in last month’s referendum has raised fears over corporate investment in Britain, which some economists fear could exacerbate difficult times ahead as the government negotiates future trade relations.

GSK’s substantial investment therefore gives some reassurance and follows signs that foreign buyers, lured by a plunge in the pound, are looking to snap up bargains in Britain, led by Japanese group SoftBank’s $32 billion swoop for chip designer ARM Holdings.

The board of French utility EDF, meanwhile, will meet on July 28 to consider a final investment decision on its $24 billion Hinkley Point C nuclear project in Britain.