Home » Services » R&D Tax Credits » Industries » Life Sciences Industry

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!

eBook: The Architect's Guide to R&D Tax Credits

This comprehensive e-book is designed to help you recognize which of your activities qualify for R&D tax credits! 

Webinars: R&D Tax Credits

Testimonials: Our valued clients

Andrew Krowne, CPA
Andrew Krowne, CPAKrowne Certified Public Accountants
Read More
“We work with Kimberly Lochridge and her expertise and work-product is top notch. They are our #1 resource for Cost Segregation Studies for all of our clients.”
Lewis B. Kevelson, CPA
Lewis B. Kevelson, CPARachlin LLP
Read More
“I wanted to thank you for the cost segregation and energy tax work you have done for several of the firm’s clients. The results have been very favorable and have resulted in significant tax benefits. You have a very talented team, and I look forward to working with you more in the future.”
Lou J. Fuoco, CPA
Lou J. Fuoco, CPAFuoco Group, LLP
Read More
I have worked with Engineered Tax Services for approximately two years and feel that they are the best in the business in terms of providing cost segregation and energy tax services.

Case Studies: R&D Tax Credit


R&D Tax Credit Case Study for Specialty Manufacturer in Oregon

1 Year Tax Savings: $18,078 (Federal Only) Study Highlights   Wages $525,358 Supplies $26,953 Rental or lease of computers 27.5-Year Contract Research $11,760 Total Qualified ...

R&D Tax Credit Case Study For Specialty Manufacturer in New York

1 Year Tax Savings: $18,078 (Federal Only) Study Highlights Wages $358,407 Supplies $26,953 Rental or lease of computers 27.5-Year Contract Research $14,227 Total Qualified Research ...
R&D Tax Credit

R&D Tax Credit Case Study for Software Developer in Texas

1 Year Tax Savings: $72,430 (Federal Only) Study Highlights Wages $1,342,919 Supplies $0 Rental or lease of computers $0 Contract Research $0 Total Qualified Research ...

Articles: R&D Tax Credit

Transforming Pharmacy Profits: Insights From Kim Lochridge at the Pharmacy Profit Summit

The Pharmacy Profit Summit, held on March 10th through 11th, 2024, at the Omni Dallas Hotel, showcased innovative strategies for pharmacy owners intent on boosting ...
Read Full Article

Medical and Dental Manufacturing R&D Tax Credits Explained

Medical and dental manufacturers understand the power of innovation. Their commitment to improved treatments, better tools and more advanced materials saves lives and enhances patient ...
Read Full Article
fixed fee R&D tax credits

Fixed Fee vs. Time and Materials: Tax Credit Implications

Research and development (R&D) tax credits are a powerful financial incentive for companies willing to push the boundaries of innovation. These credits reward businesses that ...
Read Full Article