Bayer calls for R&D tax breaks in Germany
pharmafile | December 17, 2008 | News story | Sales and Marketing |Â Â GermanyÂ
Bayer has called for more tax breaks to support research and development in Germany.
The company has urged the German government to increase tax breaks by deducting R&D expenditures, as happens in other European countries such as the UK.
Bayer chairman Werner Wenning said the tax breaks would create additional incentives for investment in innovation that would in turn benefit the country's economy.
"For a research-based company located in Germany, it is particularly important that this countrys innovative capability will be further enhanced," he said.
In the UK R&D tax credits provide companies with tax relief by either reducing their tax bill or, for some small or medium sized companies, providing a cash sum.
The system works by allowing companies to deduct up to 175% of expenditure on R&D activities when calculating their profit for tax purposes.
Small or medium sized companies, that is, companies with fewer than 250 employees or an annual turnover not exceeding 50 million euros can in certain circumstances surrender this tax relief to claim payable tax credits in cash.
The aim of the tax credits is to encourage greater R&D spending, and is one of the ways a government can promote investment in innovation.
The call for tax breaks follows recent evidence that Germany is increasingly seen as a hostile environment for pharma.
Heavy mandatory price-cuts imposed by the government in 2006 have persuaded a number of companies to freeze investment or pull out of the country.
Merck Serono moved its headquarters out of Germany following its merger, and Japanese company Astellas also recently moved out of the country, citing the stringent healthcare cost-containment measures enforced by the German government
Over half of Bayer's R&D workforce is based in Germany, the companys biggest research location and Bayer says it is keen to further expand its research and development activities, despite the current global economic slowdown.
"The task is now to set the right course," said Wenning. He added that the company would continue to focus on innovation in order to generate the growth that would sustain its future success.
The company has the largest R&D budget in German pharma at 2.8 billion euros and accounts for around five per cent of all R&D spending in the country. In line with other big pharma companies it focuses on disease areas with significant unmet need to boost its capacity for innovation.
Kidney cancer drug Nexavar and anticoagulant Xarelto are among the company's most promising candidates for future growth with a combined peak sales forecast of $3.8 billion.
Xarelto (rivaroxaban) is one of a group of drugs set to revolutionise the prevention of strokes and blood clot-related conditions and Nexavar (sorafenib) is now in phase III clinical development for the treatment of lung, breast and skin cancer.
Bayer has significantly expanded its research activities in the field of oncology and recently formed a strategic alliance with the German Cancer Research Centre in Heidelberg.
The company has also recently complemented its biologicals pipeline by buying Cologne-based biotech Direvo.
A notable biotech drug in phase III clinical trials is the active ingredient VEGF Trap-Eye for the treatment of wet age-related macular degeneration.
The company also has two cardiovascular drugs in its biologicals pipeline: riociguat for the treatment of thromboembolic and arterial pulmonary hypertension and cinaciguat for the treatment of acute decompensated heart failure.
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