The pharmaceutical, nutraceutical, and bioceutical industry is filled with R&D tax credit opportunities. More obvious areas of R&D include activities performed by chemists, process engineers, and quality engineers. Often overlooked areas of R&D include secondary costs such as support employees, computer leasing costs, and consumable supplies or raw materials that are utilized within the development process. Another often overlooked area is the time and expenses related to batch formulations during the scale up production process. The time that goes into the production, testing, and validation of the initial production runs can be qualified in cases where the formulation is new, or has been modified.
Qualified Research Activities for Pharmaceutical/Nutraceutical/Bioceutical Industry
- Development or improvement of formulations to improve shelf-life, reaction time, efficacy, or consistency
- Experimentation with alternative materials and formations
- Assay development
- Development or improvement of production processes including scale up batches
- Trials for scaling up to production from a lab setting
- Testing of formulations for regulatory compliance
- Development of automated production processes
- Development of active ingredients to target specific outcomes
- Development of unique packaging solutions and processes
- Creation of pilot plant for creating validation batches of unique formulations
- Quality control activities
R&D Tax Credit Case Study: Pharmaceutical / Nutraceutical / Bioceutical
For over 25 years this company has supported healthy lifestyles and pet care through their research and development of high quality, innovative products. As an industry leader in production standards and quality control the company supports extensive laboratory research and clinical studies on its products which have been published and presented in medical and veterinary journals.
R&D Tax Credit Qualification for Pharmaceutical / Nutraceutical / Bioceutical
The company’s design and development cycle began when the need for new or improved products was identified by customers, internal personnel, or when new scientific industry data was discovered during a literature search. Several groups of individuals were involved in this part of the process including the Research and Development Laboratory, the New Product Development department, the Analytical Chemistry Laboratory, Project Managers, and the Executive Team. Once a research project was underway additional personnel such as Formulation Scientists and Food Technologists would also participate. Quality Control also got involved to ensure the research was progressing to company and industry standards regarding documentation, design control, and other processes. One example of research was the investigation of the pharmacokinetics of the ingredients on different species. This determined if and how much of the ingredient would be safe for cats, dogs, horses, humans, etc. In addition, this would also help determine the efficacy of the product along with what form of the final product would be most effective – liquid, tablet, powder, etc. In the next phase of product development, the correct protocol of testing is defined and assays are developed. Development of the correct assay was often a challenging endeavor. Once the correct assay method is determined and proven accurate, the results of the tests are documented. Products often failed testing and then require a reformulation of the product’s ingredients. This testing process was a continual cycle between formulation and evaluation until the test requirements are met through product improvements. The testing phase also involved packaging design. For example, if the strength of the product decreased after only a month, this determined the amount included in one package. All of these activities represented qualified research.
Results Speak For Themselves
By focusing on education and becoming a partner in the R&D process, Source Advisors was able to foster a decade long relationship, performing studies on an annual basis. In the most current year, the company’s qualified research activities generated a combined federal and state tax credit of over $600,000.