The UK taxation rates and policy on worldwide earnings has lead to the decision by Shire Pharmaceuticals to move its tax base from the UK to Dublin, Ireland. The difference in rates is such that it makes relocating away from the UK a significant advantage. Tax on global profits if based in the UK is 28%, compared to only 12.5% in Ireland. With benefits like these, it is only a matter of time before other big players follow suit.

Shire Pharmaceuticals (SHP.L) rose 47p (4.98%) to 990p amid speculation that Pfizer, the US drug giant is considering a £13 a share offer. The mid-cap company is likely to be the centre of such speculation from larger competitors as the sector looks to consolidate. Indeed GSK and AZ are also rumoured to have been interested in Shire.

Shire has developed well regarded drugs, with its Human Genetic Therapies (HGT) franchise expected to provide nearly 30% of its sales revenue by 2011. Such an earnings stream will bolster any suitors income.