06/18/2010
Survey of Biotech Executives Reveals Strong Interest in Tax Credit Program, Forecasts Hiring Plans
Palo Alto, Calif. – June 18, 2010 – Cooley LLP today announced results of a survey conducted to gauge interest among biotech executives in the Qualifying Therapeutic Discovery tax credit and grant provisions of the Health Care Reform Act, as well as potential job creation resulting from the program. Sixty seven biotech and medical device executives nationwide responded.
Nearly 90 percent of respondents indicated they intend to complete an application, with 40 percent planning to submit multiple applications for projects to qualify for the tax credits or grants. Approximately two thirds (64 percent) of submissions will be for therapeutics projects, followed by device/device-therapeutics (27 percent) and diagnostics (9 percent). Applications will be available beginning Mon., June 21 and are due by Weds., July 21.
The potential positive economic impact of the credit is demonstrated by the number of employees respondents plan to hire. The cumulative total anticipated jobs created or preserved if respondents' companies receive full funding is anticipated to be more than 2,700 -- 1,630 internal positions plus 1,130 consulting positions.
Approximately half (52 percent) of respondents anticipate creating one to ten positions should they receive full funding, while 28 percent of respondents anticipated hiring between 11 and 50 people. In addition to internal positions being created, some companies anticipated engaging outside consultants should they receive full funding. While nearly 40 percent did not anticipate hiring consultants, one-third of those surveyed anticipated contracting out between one and ten positions. Finally, 16 percent anticipated contracting between 11 and 50 outside positions.
Respondents forecast that most submissions will be for early-stage projects -- 47 percent are at research or preclinical stage. Phase I and II stage projects make up 34 percent of anticipated submissions and later-stage projects - phase III and beyond - comprise 19 percent of anticipated submissions.
"We are seeing great interest and excitement about the new tax credit program, and the potential for job creation is clear from this survey," summarized Fred Dorey, an attorney in Cooley's Life Sciences practice. "We look forward to working closely with clients to ensure their applications are fully compliant and as persuasive as possible."
Submission guidelines provide that the maximum total tax credit or grant available to a company is $5 million regardless of the number of project applications the company submits. In addition, while there is no assurance that the companies responding will receive the maximum grant, the survey asked respondents to reply as if they would receive full funding.
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