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The Lifeblood of Innovation: R&D Tax Credits in Life Sciences

The life sciences industry is a dynamic and rapidly evolving field, with companies constantly pushing the boundaries of scientific knowledge and technological capabilities. This relentless pursuit of innovation is not just driven by a desire to advance human health, but also by the potential financial rewards that come with successful developments. One such financial incentive is the research and development (R&D) tax credit.

life sciences

The Power of R&D Tax Credits in the Life Sciences Industry

The R&D tax credit was established by Congress in 1981 as a strategic initiative to maintain the United States' position as a global leader in technological innovation. This tax incentive rewards and reimburses companies that create new products and improve existing ones through the scientific method of trial and error. For companies in the life sciences industry, this can translate into significant financial benefits.

Every year, the life sciences industry invests billions of dollars in developing or modifying pharmaceutical drugs, medical devices, delivery systems, diagnostics, biologics and a multitude of additional products and processes designed to improve patient care. These investments are often high-risk, with no guarantee of success. However, the R&D tax credit can help offset some of these risks, providing a much-needed financial cushion for companies to continue their innovative work.

Qualifying Activities for R&D Tax Credits in the Life Sciences Industry

The range of research activities in the life sciences industry that can qualify for the R&D tax credit is broad. Some examples include:

  • Creating new pharmaceuticals
  • Developing new or enhanced medical devices and drug delivery systems
  • Creating new or improved testing and analytical methods and procedures
  • Originating prototypes for medical devices
  • Improving existing products
  • Automating processes
  • Creating new or improved manufacturing processes
  • Developing software for use in life sciences
  • Undertaking clinical trials
  • Pursuing long-term safety studies
  • Subjecting therapeutic agents and applications to testing
  • Conducting animal tissue testing
  • Investigating a drug’s interactions and its effectiveness in comparison to other drugs
  • Researching the potential new uses and patient populations for existing drugs
  • Ensuring that a product’s requirements and specifications meet FDA and industry standards
  • Research activities, including data collection, quality testing, regulatory compliance and maintaining lab equipment

Getting an R&D Tax Credit Analysis to see if you qualify is the first step!

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