The U.K. has unveiled a tax incentive plan that would from 2013 offer companies a 10 percent tax break on revenues resulting from patents filed there. U.K.-based GlaxoSmithKline likes the sound of that. "The patent box is exactly the sort of active, long-term and creative support that we need from the Government to ensure that the U.K. remains an attractive place for highly skilled sectors such as pharmaceuticals," CEO Andrew Witty (photo) says in a statement.
But there's more to this story. GSK is planning to invest £500 million ($810 million) to develop and manufacture its newest drugs. Of that, £200 million ($324 million) will be invested in Ware, Hertfordshire, where GSK has a long-standing history. But there's still a £300 million ($486 million) manufacturing factory planned whose location hasn't yet been decided. Witty is threatening to invest outside of the U.K. if the government doesn't apply the tax incentives to drugs already in development. "For GSK, assuming the new regime will apply to patents currently under development it will have the immediate impact of making the U.K. a priority area for future investments, particularly in manufacturing," the CEO adds.
According to the Financial Times, the U.K. is competing with Belgium, Ireland, Singapore and other countries that have offered significant tax breaks to lure pharma businesses. GSK's veiled threat didn't fall on deaf ears. "We have taken that very seriously. It is something we are definitely working on," commented Lord Drayson, the U.K.'s science and innovation minister.
- here's the GSK release
- read the U.K.'s Department for Business Innovation and Skills' response
- read the Financial Times article for the full story