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Pharma welcomes UK pre-budget report

Published on 14/12/09 at 09:36pm

The pharma and healthcare sectors have been unpicking the implications of last week's Pre-Budget Report (PBR) by chancellor Alastair Darling.

The "patent box", introduced to stimulate UK-based pharma and biotech research and development, was welcomed by industry association the ABPI.

It will see a reduced corporation tax rate of 10% levied on income derived from patents in the UK from April 2013.

ABPI director general Richard Barker said the move "will bring advanced pharmaceutical manufacturing investment back to Britain".

"It is one of the most important outcomes of the work we have been doing with Government through the Office for Life Sciences, and we look forward to working with Government to finalise the design to maximise its impact on companies' investment decisions," he added.

Soon after the PBR, GlaxoSmithKline announced plans for its first UK-based biopharma manufacturing plant.

GSK has also committed to manufacture the next generation of respiratory medicines at their facility in Ware, Hertfordshire.

Taken together, all these activities will result in GSK investing in excess £500 million over the next few years in the UK and creating new jobs and safeguarding existing jobs in the UK.

GSK has six biopharmaceuticals in late-stage development for treatment of diseases such as lupus and diabetes, representing 15% of its clinical pipeline.

The company's chief executive Andrew Witty praised the box as "exactly the sort of active, long-term and creative support that we need from the government".

GSK, which works with more than 20,000 suppliers in the UK, pointed out that the move would also benefit small businesses in the field.

Science & Innovation Minister Lord Drayson said: "The Patent Box, which originated with the Office for Life Sciences, shows that the UK is serious about being home to innovative businesses and high value-added manufacturing.

"I'm delighted that GSK has been so quick to welcome the Box and I hope that leaders in other industries, which stand to benefit, will follow suit."

Pre-budget report and the NHS

Meanwhile, the King's Fund, for example, believes the PBR signals an effective cut in the total NHS budget in real terms in 2011-12 and 2012-13.

The chancellor said that 95% of health service funding will see an increase "in line with inflation".

But the thinktank's chief economist, Professor John Appleby, said clarity was needed about what is at risk if the "unprotected" 5% is cut, equivalent to around £5 billion for the NHS in England.

"There may be savings to be made in administration costs, but if training or research is cut this could have consequences for future productivity and quality," Appleby explained.

To bridge the expected funding gaps in the next decade as the government's budget deficit is chipped away, the King's Fund has already calculated the NHS must achieve productivity gains of 6% a year.

The PBR's 1% cap on basic pay rises across the NHS will reduce this by one percentage point, Appleby goes on.

However, he concludes: "We have to ensure patient safety and quality of care are not compromised."

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