R&D Tax Credit Solutions for Biotechnology & Pharmaceutical Companies
Biotech and Pharmaceutical companies are some of the largest beneficiaries of the R&D Tax Credit. The activities required to take a new drug from laboratory concept to fully approved commercial product naturally require intense experimentation in highly scientific areas. These activities and costs are a perfect fit for the R&D Tax Credit incentive.
R&D Tax Credits offer non-dilutive funding and can allow Biotech’s to increase their runway or generate more free cash flow to the firm. Qualified startup companies have the option to use R&D Credits to offset payroll taxes.
Research Activities
Biotechnology & Pharmaceutical companies performing the following activities are eligible for the R&D Credit:
- Product discovery and development
- All early stage research and formulation activities
- Computer modeling and laboratory experiments
- Design of experiment work
- Pre clinical research and IND work
- In vitro, in vivo and animal model studies
- Phase I and Phase II study design
- Development of GMP manufacturing processes
- Development of QC processes
- Manufacturing material for Phase I/ II testing
- Observation of study results
- Data analytics and machine learning activities (R, Python, SQL, etc.)
R&D Costs
Common Biotech expenses that are calculated toward the credit include:
- Wages (Scientists, Lab, CSO, Tech Transfer, QC, Manufacturing)
- Consulting costs (including CRO, University, and CDMO payments)
- Laboratory supplies
- Material consumed in testing
Case Study
A TX-based Biotech company incurred $3, 194,963 on qualified research expenses in 2024. This generated a tax credit of $319k. $250k of this credit will be used to offset payroll tax in the coming year. The remainder will be carried forward as a book asset.
Free Analysis
For a free analysis of your potential R&D Credit benefit, please contact the team at Alternate Tax Solutions or visit our R&D Credit Estimator.
