The move is welcome news for Prime Minister Theresa May, who has struggled to win over large sections of industry as Britain prepares to leave the European Union.

Thanks to the strength of UK universities and the presence of two major pharmaceuticals companies in GlaxoSmithKline and AstraZeneca, the drugs industry has been a bright spot in the British economy for many years.

But the highly regulated sector faces potential obstacles to trade as a result of Brexit unless London and Brussels manage to align regulatory regimes for medicines.

In a bid to soften the blow, the government has backed a report by immunologist and geneticist John Bell designed to boost the pharmaceutical sector via fresh public-private collaborations.

That has paved the way for the Life Sciences Sector Deal, which will see GSK invest 40 million pounds of new money in genomic research, including a plan to sequence DNA from all 500,000 volunteer participants enrolled in UK Biobank, the world's most detailed biomedical database.

GSK's head of research Patrick Vallance said the deal showed Britain remained an attractive place for drug discovery, but he cautioned: "The UK needs to recognise going forward that science is an international endeavour, not a parochial endeavour."

Other investments by pharma companies include plans by Johnson & Johnson and the Medicines Co to work on new clinical trials and genetic research by AstraZeneca.

U.S. drugmaker Merck & Co had already announced plans to expand UK research operations under the deal last week.

In all, the government said the deal brought together existing and future commitments by 25 global organisations.

Other companies in discussions with the government about investments include Philips, Roche Diagnostics, Siemens, GE Healthcare and Toshiba Medical Systems.

As a key part of the deal, the government said it was committed to increasing investment in R&D to 2.4 percent of GDP by 2027 and 3 percent over the longer term.

(Reporting by Ben Hirschler; Editing by Gareth Jones and Louise Heavens)

By Ben Hirschler