UK budget includes £1bn biopharma investment package
UK Chancellor John Healey prepares to deliver the Budget.
Among the highlights of UK Chancellor John Healey's first Budget was more than £1 billion in investment by Convatec, Vertex Pharmaceuticals, and Kindeva, supported by £70 million in government funding.
Medtech firm Convatec has agreed to invest more than £500 million over the next 10 years to build an R&D hub in Manchester for products used in wound care, ostomy, continence, and infusion care products, which is due to open in early 2028.
The facility will be located at the Citylabs SciTech campus and will house roughly 200 workers, with some transitioning from Convatec's older Deeside site, alongside newly created local positions.
Meanwhile, Vertex has pledged over £300 million to develop a brand-new facility in Oxford focusing on medicines research and pharmaceutical innovation, and drug delivery specialist Kindeva is planning to spend £200 million in Loughborough to boost local drug delivery development and manufacturing capabilities
Overall, it is expected that the investments will support more than 1,000 jobs across regional innovation hubs, according to Kenan Poleo, director of the UK Office for Life Sciences (OLS).
"These numbers matter. But what matters even more is what sits behind them: companies choosing the UK to invest, innovate and grow, talented people getting high-quality jobs, and patients ultimately benefiting from new treatments," he added. "Lots still to do, but today is another important vote of confidence in UK life sciences."
The Association of the British Pharmaceutical Industry (ABPI) welcomed the investment, along with the government's maintaining the corporation tax cap at 25% and maintaining full expensing – a tax relief that allows companies to deduct 100% of their spending on qualifying plant and machinery from taxable profits in the year the purchase is made.
The trade body said it was also pleased by new powers under the Regulation for Growth Bill to test innovative products, including medicines and medical devices, in a supervised, time-limited, live-market environment.
VAT move on free medicines applauded
Another key development was the closure of a VAT loophole that has made it difficult for pharma manufacturers to make medicines available to patients for free.
The longstanding issue was the policy of HM Revenue and Customs (HMRC) to treat free-of-charge medicine supplies as "deemed supplies" or barter transactions and so subject to a 20% VAT charge, even though no money changed hands. That means that, until now, companies could face a VAT bill on medicines they provided without receiving any payment.
Drugmakers mainly provide drugs for free to patients in the context of early access programmes for those that address an unmet clinical need, compassionate use for patients who have exhausted other treatment options, or post-trial care that plugs the gap between the end of studies and a medicine becoming approved and funded by the NHS.
In some cases, companies agree to make a medicine available for free to the health service while further evidence of benefit in real-world settings is gathered.
"Removing the VAT charge on medicines that companies provide free of charge is a significant win for patients, lifting a barrier to access, protecting continuity of care and supporting the clinical research that brings new treatments to the UK," said Joe Edwards, executive director for UK competitiveness at the ABPI.
"We support this measure, which follows sustained work by patient groups, the ABPI and our members to inform this change," he added. "We will keep working together to ensure the relief is simple to use and covers the full range of programmes that matters to patients."
