When we think of R&D, we typically think of scientists in white lab coats and in the case of the Pharmaceutical industry, we’ve hit the nail on the head! The industry is known for the vast amounts of research and development work that it undertakes to bring drugs to market. There are, however, thousands of businesses within it that are still not taking advantage of the UK’s R&D Tax Relief schemes.
Not only does the discovery and development of new drugs and treatments make a business eligible to make an R&D Tax claim; there are also many businesses in the supply chain that face technical uncertainties in the work that they do, which means they also qualify for relief.
What Qualifies
As long as the research seeks to achieve an advance in overall knowledge or capability and resolves scientific or technological uncertainty (the HMRC definition of R&D), then claiming R&D Tax for qualifying expenditure is possible.
Drug Discovery
This stage usually involves chemical research and identifying promising new chemical entities (NCE’s) that could treat or relieve a medical condition, illness or ailment. Most of these activities will qualify for R&D Tax Relief.
Preclinical Development
Promising NCE’s are then tested in the laboratory in vitro and with non-human subjects to gather initial feedback on their properties and effects.
Any compounds that are found to be effective and have promise will be progressed to Clinical Trials.
Clinical Development
Clinical trials allow a company to test NCE’s that showed effective therapeutic intervention on human subjects – eligible clinical trials for R&D Tax purposes are Phases I-III.
Phase I tends to use healthy volunteers to identify how the drug interacts with the human body, the maximum non-toxic dosage and common side effects.
Phase II will test the drug on a small group of patients that suffer from the target condition or disease, establishing the dose-response effect, side effects and a benefit/risk assessment.
Phase III will study a large sample group of patients that suffer from the target condition or disease, investigating the efficacy and tolerability of the drug.
The results of Phase III trials will produce the details needed to submit the drug for regulatory approval. Further trials and data may be required for the product licence to be granted.
Additional R&D goes into testing the delivery method of drugs – whether it be a liquid, pill, patch or even a slow release delivery method, as well as the taste, shape and size to make it attractive for use by patients (where applicable).
Manufacturing
Manufacturing is an area that can benefit largely from performing research and development to implement new processes. Many of the activities required can benefit from R&D Tax and this is no different when manufacturing pharmaceuticals.
As with any industry, pressure is placed on manufacturing to produce products quicker, easier and for less money. Luckily for manufacturers across the UK, implementing a new production line, developing new machinery and systems, waste valorisation and ensuring all of the aforementioned are compliant with regulatory requirements are considered eligible R&D activities.
Packaging
Packaging for drugs is incredibly important. Considerations may include chemical compatibility, shelf-life, storage temperatures and child-proof closures. In many cases, packaging also needs to show signs of tampering, or that a seal is broken.
Furthermore, sustainability is becoming a focal point for all kinds of packaging, and the pharmaceutical industry is not exempt. Single-use plastic is a worldwide issue that needs to be addressed – are there new packaging solutions that can cover all the bases? The above factors can make a significant proportion of packaging development eligible for an R&D Tax Credits claim.
This article was written by Medilink EM Patron, TBAT Innovation.
