GlaxoSmithKline ($GSK) is so excited by a change in U.K. tax law that it's planning to spend £500 million ($779 million) to build new manufacturing facilities in Britain, creating some 1,000 jobs in the process. The new law--to take effect in April 2013--will slash the corporate tax rate on profits derived from patents to just 10 percent.
GSK chief Andrew Witty (photo) said this "patent box" has "the potential to transform" Britain's image among business people and investors, the Independent reports. Until now, the economic benefit of innovation in the U.K. has gone elsewhere, he said. "[D]evelopment and manufacturing, and associated employment, have been attracted to other countries that had more favourable corporation tax regimes," Witty said in a statement. "In one stroke, the introduction of the U.K. patent box will help to change this dynamic."
With GSK's expansion plans, Witty is putting his money where his mouth is. GSK has been among the most vocal opponents of the U.K.'s tax on patent-derived income, and among the most vocal supporters of the "patent box" idea, first announced a couple years ago. The new manufacturing capacity--the company's next biologics plant, production capacity for a new inhalation device for respiratory drugs, and more--is the first such expansion on GSK's home turf in some 25 years, the Wall Street Journal notes.
AstraZeneca chief David Brennan also hailed the impending tax change, saying that it will make the U.K. "a far more attractive place to invest in developing new medicines." The company itself plans to boost its U.K development spending, Brennan said.