Global drug giant GlaxoSmithKline (NYSE: GSK) is expanding its investment stake in India and its manufacturing and research presence in the U.K. with investments totaling some $1.35 billion.

The home-country growth comes in the wake of the U.K.’s recently overhauled patent system and is the result of a pledge from Chief Executive Officer Andrew Witty to look favorably on growth there if patent changes were made.

On Monday, GSK offered to spend $1 billion to raise its stake in its Indian prescription pharmaceuticals unit to tap growing demand for medicines in the second-most populous country. 

Glaxo said it would buy as many as 20.6 million shares of the Mumbai-based business to raise its stake to 75 percent from 50.7 percent.

The increased holding would expand Glaxo’s role in India’s market for drugs that PricewaterhouseCoopers estimates at about $12 billion. The stake increase follows a 48 billion-rupee ($775 million) investment in Glaxo’s Indian over-the-counter consumer health business, completed in January.

“With the two transactions together, we’re bringing over $2 billion into India,” Chief Strategy Officer David Redfern said in a telephone interview today. “We are positive about the future of India and therefore want to increase our economic exposure.”

The U.K. company withdrew a proposal in July to increase its stake in its Nigerian business after the market value rose during negotiations.

The Indian pharmaceuticals business makes, distributes and sells respiratory, cardiovascular and cancer drugs, antibiotics and vaccines. Its top four products in the country are the antibiotic Augmentin, Calpol, Zinetac and Ceftum, according to the company’s website. The consumer health-care unit sells Horlicks and Boost nutritional drinks, Sensodyne toothpaste and Eno antacid, among other products.

Price Controls, Other Issues

Prices of essential medicines have been capped since July at the average of all brands that have a market share higher than 1 percent. The Glaxo unit’s profit in India is likely to drop for a third straight quarter, according to analyst estimates compiled by Bloomberg.

“The price controls have had an impact this year, but we take a long-term view,” Redfern said. “We’re focused really on the volume opportunity, and we see lots of potential there.”

Protection of intellectual property has been a concern for drugmakers operating in India after the country’s Supreme Court denied Novartis AG’s request for patent protection for its Gleevec cancer treatment in April, ending a seven-year legal process.

“We spend over $5 billion globally on research and development for very innovative new drugs and vaccines, and it’s important that that’s underpinned by a robust intellectual property framework,” Redfern said. “We’re very focused on innovation, but we’re also very focused on access. We clearly price differently in India to the United States or to Europe, and the differences are substantial.”

U.K. Expansion

Late last week, GSK announced some $350 million in expansion in the U.K., creating a center for pharmaceutical manufacturing inn ovation and upgrading three existing manufacturing sites.

Roger Connor, GSK’s President of Global Manufacturing and Supply, noted the investments came after the so-called “Patent Box” changes.

“The establishment of the Patent Box has transformed how we see the UK as a place to invest,” Connor said. “As a result, last year we announced we were building our first new factory in the UK for 40 years. The investments announced today are in addition to that and will allow us to harness new technologies that have the potential to deliver a step-change in how we make medicines. These new technologies could significantly reduce costs, improve quality and enable the manufacture of medicines in weeks rather than years and I am delighted that we have been able to bring these investments to the UK.”

GSK also announced two other U.K. expansions earlier this year. 

The company operates its North American headquarters in RTP.