The corporate tax breaks announced in yesterday's budget speech by Chancellor George Osborne have borne fruit as GlaxoSmithKline (LON:GSK) confirmed plans to build its first manufacturing plant in the UK in 40 years.
The construction of the £350 million biopharmaceutical factory will kick off in 2014-15 with the facility expected to be operational in 2020.
The investment package announced by GSK today amounts to £500 million and includes £100 million for the group's two manufacturing sites in Scotland.
The investments will create 1,000 jobs in the UK, compensating for the 1,500 jobs lost last year when American drugmaker Pfizer shut down its research and development centre in Kent.
Furthermore, Glaxo is considering other investments in its UK manufacturing network, which it said should “create further jobs and reinforce the UK’s international competitiveness and as a world leader in life sciences”.
Investment in GSK’s manufacturing capacity at Ulverston could be doubled to £700 million, depending on the environment for innovations in the UK, the group added.
The confirmation from GSK came only a day after Chancellor George Osborne presented the budget for the 2012-13 fiscal year, which included corporate tax breaks such as the so-called patent box – a reduction in taxes imposed on patent-generated profits.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain,” said GSK chief executive Andrew Witty.
Prime Minister David Cameron called the decision by GSK “excellent news”, adding that it will give a major boost to the UK economy.
“It shows why we are right to cut business tax and focus on making the UK a dynamic and competitive place that can attract exactly this type of high tech investment,” said Cameron.
“We have a world class life sciences industry, and I am determined not just to keep it here in the UK but significantly increase it too.”