January 22, 2009 / 3:03 PM / 11 years ago

UPDATE 1-UK biotech group calls for big pharma tax breaks

* To encourage big pharma investment in biotech

* Also asks government to widen tax help for R&D

(Adds details)

By Ben Deighton

LONDON Jan 22 (Reuters) - The British government should offer tax incentives for the pharmaceutical industry to invest in biotechnology, a report produced under the umbrella of the UK’s BioIndustry Association (BIA) said on Thursday.

The investment-hungry sector has struggled as funding has dried up in the credit crunch, and some predict that a number of companies could wind up this year unless they can raise more cash.

The report said tax incentives to encourage big pharmaceutical companies, such as GlaxoSmithKline (GSK.L) and Pfizer (PFE.N), to invest in biotechnology companies could help rescue the ailing sector.

Big cap pharma companies are also increasingly turning to biotech for help as their blockbuster drugs go off patent, leaving them with a need to bolster their development pipelines.

“It became apparent to us that there is a need and opportunity to use this symbiotic relationship between big pharma and biotechnology to create a new business model,” John Aston, chairman of the report’s finance and investment working group, told a press conference.

“What we have done is concentrate on how we get collaboration between (biotech and) pharma companies that are getting increasingly dependent on biotechnology,” said David Cooksey, chairman of the report.

The approach contrasts with the plan announced by biotech investor Chris Evans last year to get the UK government to back two funds worth over 500 million pounds ($689 million) each to help finance the sector [ID:nL1140918].

The plans to encourage pharmaceutical companies to invest in biotech include tax relief on up-front capital contributions, and lowering the proportion that a company must own of a biotech before it can place the company’s losses against its own taxable income.

There is also a range of other measures in the report such as extending the government’s tax credit scheme for research and development and attracting overseas companies to list in London as a boost to the sector overall.

“We hope we’ve got this on the agenda early enough for inclusion in the March budget,” said Cooksey.

Among a range of further measures recommended by the report, it also called for an enquiry to assess the long-term impact on the cost and the uptake of drugs of the UK’s medicines cost-effectiveness watchdog, NICE.

The Review and Refresh of Bioscience 2015 was produced by a grouping of industry executives, investors and representatives from government departments, supported by the BIA, an industry group.

It follows the original Bioscience 2015 report, published in 2003, which called for a number of measures including the government to ring fence funding for medical research, which the BIA says has been achieved. (Editing by Will Waterman)

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