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Pharma faces tax hike, says PwC

01-Dec-2009

Related topics: Regulatory & Safety, Globalisation, Lifecycle management

The Pharma sector’s shift away from blockbusters could result in higher taxes according to PricewaterhouseCoopers (PwC).

A new PwC report, available here , suggests that the drug industry’s response to the global financial crisis, patent expiries and increased government pressure, which has been to reduce reliance on blockbusters, could make tax planning more complicated and challenging.

The authors explained that, for the last two decades, Big Pharma’s legal and commercial environment has resulted in low and stable tax rates with, the top 12 companies surveyed by PwC, reporting an average tax rate of just 24 per cent.

However, the analysts suggest that this situation will change as a result of greater scrutiny from authorities around the world on practices such as transfer pricing as well as the broader range of businesses in which drug firms are becoming involved.

"Pharmaceutical and life sciences companies could not only face new and higher taxes as a service provider but they will have less ability to allocate profits to lower tax rate locations."

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