PHARMACEUTICAL firm GlaxoSmithKline (GSK) said its commitment to the UK was as strong as ever despite concerns in the industry over Government interference in drug pricing.

The new director-general of the Association for the British Pharmaceutical Industry (ABPI) warned that companies may pull out of the UK if they are forced to reduce the cost of drugs.

A Government review of the cost of branded medicines sold to the NHS is under way.

But GSK, which has a base in Barnard Castle, County Durham, insisted that despite price fears, the UK remained an extremely important part of the firm's business.

A GSK spokesman said: "We have a very strong presence in the UK and it's clear this is a very important part of our business.

"It's hard to see this changing in the future, despite the current discussions on drug prices."

The Anglo-American company employs nearly a quarter of its overall workforce in the UK and has invested heavily in its facilities in the country.

The Pharmaceutical Price Regulation Scheme, a voluntary arrangement between the ABPI and the Department of Health, is being renegotiated.

Some reports have suggested the drop in price could be as much as ten per cent.

Richard Barker, the new director-general of the ABPI, said if the drugs industry does consent to price reductions imposed by the Government, it could effect the country's attractiveness as a place to invest.

State sanctioned price cuts of 16 per cent in Germany led to a major pharmaceutical firm closing research and development operations there, Dr Barker said.

He said the industry would prefer a voluntary scheme on pricing.

GSK employs 1,100 people at its plant in Barnard Castle. It faced a lawsuit in the US recently over cover-up allegations concerning its anti-depressant drug Paxil.

The firm has agreed to pay $2.5m and publish all tests on the medicine since December, 2000, after allegations that it withheld negative information about the pill, which is also known as Seroxat.

Despite the lawsuit, the blue chip group posted profits in July of £1.63bn.