“The underlying attractiveness in terms of the UK’s economic strengths and its fiscal environment haven’t changed and that’s why we feel very strongly that this investment makes sense”, said chief executive Sir Andrew Witty.
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GSK employs 16,000 people in Britain. And with the company also today announcing plans to invest £275m in the United Kingdom to expand three of its manufacturing sites, leaving the European Union should cause no worries for Glaxo shareholders.
“Momentum across the group is being driven by growth in new product sales, continued cost control and delivery of restructuring and transaction benefits”.
Life sciences specialist Helen Cline of Pinsent Masons said: “This announcement today by GSK is a welcome vote of confidence from the sector that the United Kingdom is open for business and will continue to deliver on its life sciences strategy”.
“From their manufacture in the United Kingdom, many of these medicines will be sent to patients around the world”.
It plans to increase production of next-generation respiratory drugs and biotech medicines. In total GSK operates nine sites in the United Kingdom, employing approximately 6,000 people.
The new investments will be split among the Barnard Castle plant in Durham, to construct a new aseptic sterile facility; the Montrose plant in Angus, Scotland, to construct a new facility for the production of respiratory active ingredients; and the Ware plant in Hertfordshire, to expand manufacturing capacity for the company’s respiratory product line.
“The company views the United Kingdom as an attractive location for investment in advanced manufacturing due to a number of factors including the skilled workforce, technological and scientific capabilities & infrastructure and a competitive corporate tax system”, the company said. But that’s still a nice amount of cash, and now that a return to earnings growth is all but confirmed for this year, I’d say we’re still looking at an attractive valuation. The company said the growth offset the decline in sales of blockbuster drugs like Advair. It lauded the United Kingdom’s place in the pharma world and the benefits of the so-called patent box tax legislation from several years ago which taxes at a lower rate profits on new intellectual property created in the United Kingdom.
British Secretary of State for Business, Energy and Industrial Strategy Greg Clark welcomed the GSK announcement, saying: “An investment of this scale is a clear vote of confidence in Britain”.
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Witty, together with AstraZeneca CEO Pascal Soriot, chairs an industry task force set up by the government to address regulatory and other issues facing the pharmaceutical sector following Britain’s decision to leave the EU.
