Explore recent issues of Contract Pharma covering key industry trends.
Read the full digital version of our magazine online.
Stay informed! Subscribe to Contract Pharma for industry news and analysis.
Get the latest updates and breaking news from the pharmaceutical and biopharmaceutical industry.
Discover the newest partnerships and collaborations within the pharma sector.
Keep track of key executive moves and promotions in the pharma and biopharma industry.
Updates on the latest clinical trials and regulatory filings.
Stay informed with the latest financial reports and updates in the pharma industry.
Expert Q&A sessions addressing crucial topics in the pharmaceutical and biopharmaceutical world.
In-depth articles and features covering critical industry developments.
Access exclusive industry insights, interviews, and in-depth analysis.
Insights and analysis from industry experts on current pharma issues.
A one-on-one video interview between our editorial teams and industry leaders.
Listen to expert discussions and interviews in pharma and biopharma.
A detailed look at the leading US players in the global pharmaceutical and BioPharmaceutical industry.
Browse companies involved in pharmaceutical manufacturing and services.
Comprehensive company profiles featuring overviews, key statistics, services, and contact details.
A comprehensive glossary of terms used in the pharmaceutical and biopharmaceutical industry.
Watch in-depth videos featuring industry insights and developments.
Download in-depth eBooks covering various aspects of the pharma industry.
Access detailed whitepapers offering analysis on industry topics.
View and download brochures from companies in the pharmaceutical sector.
Explore content sponsored by industry leaders, providing valuable insights.
Stay updated with the latest press releases from pharma and biopharma companies.
Explore top companies showcasing innovative pharma solutions.
Meet the leaders driving innovation and collaboration.
Engage with sessions and panels on pharma’s key trends.
Hear from experts shaping the pharmaceutical industry.
Join online webinars discussing critical industry topics and trends.
A comprehensive calendar of key industry events around the globe.
Live coverage and updates from major pharma and biopharma shows.
Find advertising opportunities to reach your target audience with Contract Pharma.
Review the editorial standards and guidelines for content published on our site.
Understand how Contract Pharma handles your personal data.
View the terms and conditions for using the Contract Pharma website.
What are you searching for?
Inversions offer tax savings, but hurt corporate identity and culture
September 8, 2014
By: Agnes Shanley
Editor
The big news in pharma, for the past year, has been “inversions,” (p. 16) through which a large U.S. company buys a smaller one based overseas, then moves its headquarters to that country, gaining huge tax savings. Ireland, which has the lowest corporate tax rate of any country in the Organization for Economic Cooperation and Development (OECD), is a favored destination. According to Thompson Reuters data, there have only been 47 inversions in the last decade, and, since 1983, a total of 76 companies have inverted or plan to. However, this year, 14 companies have gone this route, and quite a few of them are pharmaceutical manufacturers. In July, AbbVie’s fifth formal bid for Ireland-based Shire Pharmaceuticals for $53 billion went through, as did Mylan’s bid for Abbott Lab’s generics business for $5.3 billion, which would take it to the Netherlands. The reasons for inversions are understandable. The U.S. tax rate is over 39%, where the average in OECD nations is in the twenties, and Ireland’s 12.5%! In addition, the U.S. taxes companies on global earnings, where other countries tax only on what is sold within their borders. Pharma CEOs have defended inversions. Critics argue that future inversions could reduce the U.S. tax coffers by nearly $20 billion. Lawmakers in the U.S. are examining ways in which they might prevent more corporations from going the inversion route. Democrats in the U.S. House of Representatives have proposed the “Stop Corporate Inversions Act of 2014,” and a similar bill has been proposed in the Senate. Perhaps reflecting the conflict, and the fact that its share prices dipped considerably once word got out that it might be considering an inversion, the huge U.S. retail drug chain Walgreen’s decided against going the inversion route in its merger with Alliance Boots. One problem with inversions, regardless of what experts say, is the specter of future job loss. That already happens with mergers anyway….requiring that 25% of the company’s employees be based in the new headquarters only gives companies more incentives to lay people off. In turn, that could lead to less indirect employment, as plant sites shut down and communities around them stagnate. Another problem is apparent randomness. One of the most dramatic inversions last year was Perrigo’s acquisition of Elan Corporation (based in Ireland). Of course, everyone says they invert in order to grow. But what does Perrigo’s focus on over-the-counter (OTC) brands such as Mucinex, have in common with the types of research and development in autoimmune disease, neurological therapies, and oral insulin that made Elan famous? Similarly, how much do AbbVie’s and Shire’s pipelines have in common? Another example is Actavis Pharma, now based in Ireland. The company’s morphing from Watson Pharmaceuticals, a low-key California company with a good reputation, into Actavis Pharma, and now amorphously combined with Forest Labs and Warner Chilcott, has been difficult to follow. Earlier this year, we watched in suspense as Pfizer launched multiple bids for AstraZeneca, and then finally withdrew its offer. The new company would have been based in the U.K., where Pfizer closed down some vital, groundbreaking research labs of its own a few years ago. Despite some supporters, it drew mainly criticism from those in the industry, as being narrowly self-serving. Loss of identity With inversions, much is lost in the area of corporate identity. With that goes the sense of individual culture, an intangible that is based on positive public opinion and a cohesive image. Local culture and connection build that image over time. AbbVie has strong ties to Chicagoland. Mylan has deep roots in West Virginia, with headquarters in the sleepy college town of Morgantown, and a charismatic CEO who is the daughter of a senator and former governor of that state. What will happen to the West Virginia connection when the company headquarters moves to the Netherlands? Shire has built up outstanding operational excellence programs. Can these remain intact? Without a knee-jerk “Let’s keep jobs in the U.S.” response, couldn’t there be other, more sensible routes to tax savings? Should state and federal governments change the tax code and offer more incentives for firms to set up and hire locally? For now, it appears, inversions remain a fixture of the U.S. business landscape. But they also suggest corporate cultures that are up for grabs, and companies whose actions seem to be motivated entirely by short-term economic benefit. Doesn’t pharma have enough challenges improving its public opinion? But what do you think of the current inversion trend? Please write in to ashanley@rodmanmedia.com and let me and Kristin know. Agnes Shanley, Editor
Enter your account email.
A verification code was sent to your email, Enter the 6-digit code sent to your mail.
Didn't get the code? Check your spam folder or resend code
Set a new password for signing in and accessing your data.
Your Password has been Updated !