GlaxoSmithKline is to invest £275m at three of its UK factories with the creation of new jobs, as the pharmaceutical group insisted the country is still an attractive place to invest despite the Brexit vote.
However, GSK’s outgoing chief executive Sir Andrew Witty warned that if the European Medicines Agency (EMA) relocates from London as seems likely and the UK creates its own regulatory body, the company’s regulatory burden would double. All new medicines have to be approved by regulators who check their safety and efficacy.
“Just to be blunt you would have to file two different submissions so it is obvious that you have doubled the amount of work,” said Witty. “Might the new UK organisation be able to do things differently and more quickly than Europe? Maybe... Those discussions haven’t started yet.”
He warned of the “physical disruption” if the EMA leaves the UK. Asked about the potential cost of Britain being an associate member of the EMA, he noted that Britain had always played an important role in setting rules. “So to what extent are we prepared to give up being a rule shaper in a space that we’ve dominated historically as a country?... if we remain engaged, it really needs to be on the terms of us having a strong voice at the table on the rule set.”
Witty also highlighted concerns about a potential brain drain of scientists who are EU nationals from Britain following the referendum, and urged the government to quickly end the uncertainty surrounding their status. About 14% of the company’s staff in the UK hail from other European countries and “they are super welcome at GSK and in the UK”.
The impact on UK scientists’ collaborations with the rest of the EU was also a concern, he said, although so far he saw few signs that UK scientists were frozen out of projects.
In a confidential survey of the UK’s Russell Group universities, the Guardian found cases of British academics being asked to leave EU-funded projects or to step down from leadership roles amid doubts over the UK’s ability to win future project grants. Leaving the EU will also end the free movement of researchers to and from the UK.
GSK signalled its confidence in the UK economy by announcing that it would pump more money into its factories at Barnard Castle in County Durham, Montrose in Scotland, and Ware in Hertfordshire.
Witty said that the investment decision had been made in the last couple of days. “This decision is not caused by Brexit. It hasn’t been stopped by Brexit is probably a better way to think about it.” He added: “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.”
GSK has nine manufacturing plants in the UK, employing about 6,000 people. It said the UK was still “an attractive location for investment”, partly because it had a competitive tax system. Pharmaceutical companies developing and making products in the UK pay a lower rate of corporation tax on profits generated from UK-owned intellectual property.
The company said jobs would be created but did not specify how many. Some of the jobs will be related to the construction of new facilities at the existing plants.
The drugmaker published a strong set of results, posting a 4% rise in sales to £6.5bn in the second quarter at constant exchange rates. Sales from new pharmaceutical products and vaccines more than doubled to over £1bn, helped by a 50% rise in sales of HIV medicines. GSK now expects growth of 11-12% in core earnings per share this year, the top end of previous guidance, after posting growth of 12% to 44.3 pence in the first half of the year.
Greg Clarke, the UK’s new business and energy secretary, said GSK’s investment was a reflection of confidence in Britain and “underlines our position as a global business leader”. “GSK’s recognition of our skilled workforce, world-leading scientific capabilities and competitive tax environment is further proof that there really is no place better in Europe to grow a business,” he said.
The money will be used to increase production and support the delivery of its latest respiratory and large molecule biological medicines. GSK will invest £92m in Barnard Castle, where it employs 1,100 people. It will build a new aseptic sterile plant where existing and new biopharmaceutical products will be made.
At Montrose, where it employs 450 people, it will spend £110m on a new facility to make respiratory active ingredients. And in Ware it will invest £74m to support the expansion of company’s new Ellipta respiratory inhaler by increasing capacity there. The company employs 1,200 people at the plant.
GSK’s signal of confidence in the UK economy came as other companies said the Brexit vote was not having a significant impact on business. The housebuilder Taylor Wimpey and challenger banks Shawbrook and Metro suggested it was business as usual following the UK’s surprise decision to leave the EU.