Glaxo welcomes 'patent box' legislation

10th Dec 2009 16:42

Drugs giant GlaxoSmithkline has answered the Chancellor's call and said it is considering spending around £500m on new facilities in Britain after the government's decision to cut corporation tax for patent-derived income.The new rate of 10% will not come into effect until April 2013, but Glaxo's chief executive Andrew Whitty predicted that the so-called 'patent box' scheme, provided it applied to patents currently under development, would 'have the immediate impact of making the UK a priority area for future investment, particularly in manufacturing.'As well as contemplating building a state of the art biopharmaceutical manufacturing plant in the UK, Glaxo intends to expand its facility at Ware, Hertfordshire, to manufacture next generation respiratory medicines. 'In combination, these new investments in UK manufacturing will amount to approximately £500m and will result in new jobs in UK manufacturing. The introduction of the 'patent box' will also benefit small businesses who supply services and facilities to sectors specialising in research and development. For example, GSK [GlaxoSmithKline] works with more than 20,000 suppliers in the UK,' the company said in a press release in response to the Chancellor's pre-Budget Report.Turning to overseas markets, the company said it intends to maintain its vigorous expansion in emerging markets, as growth in western markets slows.GSK's president of emerging markets, Abbas Hussain, said the company is prepared to get the cheque book out and grow through acquisitions in countries such as India, but complained that suitable targets are thin on the ground and often carry unrealistic valuations.Speaking before an investors' briefing Hussain said that the company was set on outgrowing its competitors in emerging markets. 'Emerging markets today are roughly worth £50bn. By 2015 this should double and by 2020 you are looking at emerging markets in size being equivalent to the US market and the major five in Europe,' Hussain said. Hussain outlined the company's strategy in these markets, saying it would ramp up generic drugs carrying the Glaxo brand, win new vaccine business and push traditional patented medicines into nascent markets.He added that the company was also open to the idea of more alliances, such as the one recently signed with South Africa's Aspen Pharmacare.'I think it's a great way to go as you are sharing the risk, and it makes good financial sense,' Hussain said.