Drug industry groups welcomed corporate tax cuts and increased research credits set out in the UK budget last night suggesting they are good news for manufacturers.
Chancellor George Osborne announced plans for a 1 per cent cut in corporation tax – down to 20 per cent by April 1 2015 – and suggested the move would indicate that “Britain is open for business.” He also said he would increase the tax credit firms earn by engaging in R&D in the UK to 10 per cent the year after next.
Reaction to the plans was varied with some observers suggesting they would make the UK more competitive for business while others argued the measures, combined with wider cuts to public sector spending, amounted to an attack on the British public .
The drug industry’s response was fairly positive, particularly on the implications for manufacturing.
UK Bioindustry Association (BIA) CEO, Steve Bates, told in-Pharmatechnologist.com that: “The further reduction in the UK corporation tax rate to 20% in 2015 and the increase in above-the-line R&D tax credits are two measures that will add to the overall package of measures that makes the UK an attractive place for biopharmaceutical manufacturing.”
Bates likened the measures to incoming Patent Box legislation – a 10% tax rate on income generated from patents filed after April 1 this year – which he said had been important in attracting GSK to commit £500m ($645m) to manufacturing and construction projects in the UK.
He also flagged up the Government backed National Biologics Industry innovation Centre as a further example of its support for manufacturing, explaining that the centre “will be an open-access facility to help companies to develop processes to manufacture new biologic medicines such as antibodies and vaccines.”
The Association of the British Pharmaceutical Industry (ABPI) also backed the budget plans, commenting that: “Investment is highly mobile and one of the key planks of the Government’s growth plan is to make sure that the UK is one of the best places in the world for the life sciences industry to invest in and operate.
“We were pleased therefore to hear that the rate of corporation tax is to be reduced further and that the ‘above the line’ R & D tax credit will be increased to 10 per cent."
The organisation also told this publication that while “It is very difficult to say the precise impact that corporation tax and an increase in R&D credits will have…adds to a more competitive environment which is good news.
The ABPI also referenced the Patent Box as an example of the Government’s backing for drug manufacturing, explaining that it “has encouraged investment in the UK and Eisai have said before that it was pivotal to their involvement in the UK market.”