GSK's insincere announcement
Pharmaceutical company's old 'new' announcement raises questions
By Jaimie Kaffash | Published 13:43, 22 March 12
Curiously, GSK chief executive Sir Andrew Witty restated his company’s announcement - originally made in 2010 - on Thursday the day after the Budget. Sir Andrew not only stepped into the press melee to reannounce the ‘old’ news, but he emphatically attributed the corporate decision to George Osborne’s statement on the Patent Box in the Budget.
“The introduction of the patent box has transformed the way in which we view the UK as a location for new investments,” Sir Andrew said.
Unsurprisingly - following a Budget that has received almost unanimous negative front pages - the government was keen to seize on the announcement.
David Cameron called it “excellent news”, while Osborne praised the decision as “refreshing”, stating that it was confirmation that his Budget had “changed the view of Great Britain”.
It doesn’t add up. It feels too much like they are working too hard to dress up old news in the latest trends.
Osborne first announced the changes to the patent box - which imposes a 10 percent tax on profits derived from patented products as opposed to the corporation tax rate (24 percent from April) - in the autumn of 2010.
This means that GSK’s decision was not an endorsement of the 2012 Budget. The only “news” today in its strictest sense was the location of the biopharmaceutical factory in Ulverston.
Indeed, GSK’s decision was not even necessarily an endorsement of this government, as it was the previous Labour administration that first proposed the patent box changes.
This feels all too familiar to last year’s ‘surprise’ announcement from WPP about its intention (which hasn’t yet happened) to relocate its HQ back to the UK the day after the 2011 Budget because of the changes to the controlled foreign companies rules.
Is there a problem with this though? Well, perhaps. It is disingenuous of ministers to hail ‘old’ news as an endorsement of a Budget announced yesterday, when it clearly isn’t the case. Although that it to be expected of politicians of any hue.
But it is GSK’s motives in making this announcement today that is a greater cause for concern. It raises questions about the relationship between business and government. This was not a case of a chief executive welcoming the policies (as Premier Oil did), which is their prerogative. It was making a slightly misleading announcement to garner positive publicity for the government of the day.
We have no reason to doubt that GSK’s original decision was a result of the patent box. And it’s no secret that the patent box has been devised with the help of the big pharmaceutical companies. But when strategic announcements are timed to align with the interests of politicians - especially when they are insincere - questions must be raised over the influence corporates are having on the government. Moreover do politicians and chief executives really think our memories are so poor?