Our Experience

Industries Petroleum Natural Gas Chemicals Electronics Pharmaceuticals, Medical Devices, & Biotech Retail/Consumer Goods Technology Transportation Local/State Government School Districts Other Industries

Functional Areas Antitrust & Competition Analysis of Damages Forensic Economics Intangibles/IP Labor Economics Regulatory Economics & Finance Transfer Pricing Taxation Valuation Fiscal Impact Analysis Demographic Analysis Public Policy Analysis

 

Pharmaceuticals, Medical Devices and Biotechnology Industries

IIC, Inc. provides specialized economic analysis and valuation services for matters pertaining to the pharmaceutical, biotechnology, and medical device industries. Our demonstrated expertise in the operational nature of these industries, combined with our extensive experience in valuing intellectual property, allows us to evaluate and opine on the value generated by industry intangibles, particularly relating to the manufacture and sale of medical devices and pharmaceutical and biotechnology products. Intangible value is found in many elements of the businesses operating in these industries, particularly research and development, marketing, and manufacturing. Our knowledge and experience allows us to identify the intangible value in these areas, as well as other areas of the business, regarding the sale of specific valuable products. By applying financial and economic analyses, we are able to provide unique insight into the value of these intangibles and products.

Within the pharmaceutical and biotechnology industries, we have focused on matters relating to Section 482 of the Internal Revenue Code, as well as those relating to Section 936 and general policy issues affecting technological change, pricing, and competitive advantage in this industry. For example, with regard to a billion-dollar, “blockbuster” pharmaceutical product, we applied a comprehensive economic analysis in order to determine an appropriate royalty payment pursuant to the transfer of the intangible property from a domestic subsidiary to a foreign subsidiary. We were able to provide the client with a reliable estimate which reflected the intangible value created through the product’s valuable R&D and manufacturing process.

Pursuant to a biotechnology company’s acquisition of a third party that owned valuable biotechnology intangibles, we used financial and economic models to establish an appropriate arm’s-length buy-in payment for these intangibles pursuant to an existing, qualified cost-sharing agreement (CSA). After thoroughly investigating the circumstances surrounding the acquisition, including the stage of development of the intangible, we estimated the value of the intangibles contributed to the cost-sharing agreement, which subsequently allowed us to compute an appropriate buy-in payment. Our research also analyzed in depth the indications for which the product was to be used and the competing in-process R&D efforts of several competitors.

In another assignment involving an inter-company cost-sharing agreement (CSA), we applied a residual profit-split method to value the marketing and research & development (technology) intangibles arising from investment in these activities throughout the life of a major pharmaceutical product. In doing so, we extracted a value to be attributed to a buy-out payment pursuant to the eventual termination of the CSA. IIC, Inc. also analyzed the R&D services provided pursuant to the CSA and developed an arm’s-length mark-up for such services. We summarized our findings and analyses in a clear and concise report which guided our client to reach an unprecedented settlement.

In a study for the U.S. Small Business Administration (SBA), Office of Advocacy, IIC, Inc. analyzed the impact of certain tax expenditure programs including research credits, foreign tax credits and U.S. possession credits on small and large firms in the pharmaceutical industry. We analyzed industry-level data as well as firm-specific data from SEC Form 10Ks to measure effective tax rates and the impact of these programs on reducing the effective tax rates faced by these companies and the industry. Further, we found that large pharmaceutical firms enjoyed a substantially greater benefit with respect to both dollar amounts and percentage reduction in effective tax rates from these programs than did small firms in the pharmaceutical industry.

In another engagement involving various medical devices, IIC, Inc. determined the market value of a wide variety of intangibles that was used as the basis for determining the buy-in payments for the development and use of a variety of products of a large medical device and pharmaceutical company. Relying on our extensive knowledge of cost-sharing agreements, intellectual property issues, and the pharmaceutical industry, we provided our client with a detailed report computing the appropriate buy-in payment amount.