GSK Plans £275m UK Investment After EU Vote

GlaxoSmithKline (Amsterdam: GO8.AS - news) (GSK) has announced a £275m investment in its UK manufacturing sites, saying the country remains "attractive" despite the Brexit vote.

The company, which is the UK's largest drugmaker, had argued against the prospect of an exit from the European Union ahead of the referendum.

But it said on Wednesday that conditions remained favourable, for reasons including "the skilled workforce, technological and scientific capabilities and infrastructure and a competitive corporate tax system".

It said that included the so-called 'patent box' which boosts profits from patented innovations by halving the rate of corporation tax - a tax relief that has faced opposition from Labour.

GSK made the decision hours before the release of its latest financial results which showed a loss before tax of £318m despite revenue rising 11% to £6.5bn.

It explained the loss on a devaluation of liabilities in its Consumer Healthcare and HIV businesses - taking a £1.8bn charge.

Chief (Taiwan OTC: 3345.TWO - news) executive Andrew Witty said of the investment: "Today's announcement reflects further investment to support our pharmaceutical pipeline and meet growing demand for our innovative portfolio of newly launched products.

"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.

"From their manufacture in the UK, many of these medicines will be sent to patients around the world."

GSK is expected to benefit from the effects of the weak pound - a consequence of the Brexit vote - as its exported products will be more competitive on price.

Mr Witty had said before the EU vote that Britain should remain due to fears that a Leave win could disrupt drug regulation and hamper access to top scientific talent.

GSK employs 16,000 staff in the UK - 6,000 of them in manufacturing.

The company said the new investment would be split between its sites at Barnard Castle in County Durham, Montrose in Angus and Ware in Hertfordshire.

It added the Montrose operation would be getting the most money to "provide a new, state-of-the-art facility for the manufacture of respiratory active ingredients."

The announcement is a boost for the Government as it moves to shore up business investment and trade following the referendum.

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The Government announced on Tuesday it was to open offices in the United States to build new partnerships while the Chancellor has already held talks in China.

While admitting the EU vote was likely to hang over the UK economy for at least two years, Philip Hammond has signalled that Britain might join an "existing agreement" such as the Trans-Pacific Partnership - a US-Asia trade pact.