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Generic Drug Development R&D Tax Credits

The size of the generic pharmaceutical manufacturing market in the US in 2022 is valued at $40.6 billion. Moreover, generics usage is expected to increase as a significant number of brand-name medications’ patents expire in the coming years. As a result, generic companies have increased their R&D spending, calling into question the long-held belief that innovation was the domain of originator firms. Additionally, the industry has grown to encompass not just off-patent medications but also complex and super generics and novel therapeutic entities.

Therefore, if your business invests in improving delivery methods and manufacturing processes, reformulating medications for specific groups (such as pediatric patients), and innovating branded generics, biosimilars, or generic pharmaceuticals, you might be suitable for certain tax reductions. For example, the Generic Drug Development R&D Tax Credit provided by the government and different states may allow you to reclaim some of your expenditures. Considering the location in which your firm operates, you can earn refunds totaling 22% of your claim period QREs.

Qualifying Costs and Activities

Eligible costs include employee and subcontractor wages, contract research expenses, cost of supplies, materials, and testing, and expenditures related to developing a patent. The job positions you can offset are research and clinical data scientists, automation scientists, analytical chemists, statisticians, C-suite, and product development and project managers.

Research activities that allow you to apply for the Generic Drug Development research and development tax credit are the following:

  • Considering potential new indications for existing meds;

  • Improving delivery methods efficiency (by using novel solutions like nanotechnology);

  • Developing novel formulations to enhance clinical responses;

  • Performing I to IV phases of clinical trials to get FDA and other regulatory agency clearance;

  • Upgrading production methods to increase productivity, efficiency, etc.;

  • Evaluating the effectiveness and patient safety of biosimilars.

If you need more details about the R&D tax credit in the Generic Drug Development industry, contact our team of experts. We are happy to provide a complimentary quote and assist with the claiming procedure without any upfront payments.



What kind of companies can apply?

Generic drug development companies that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, purchase orders, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.

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