Pharmacapsules @ Gowlings - July 27, 2009

Edited by Jennifer Wilkie and Chantal

Saunders

New Website Offers Cancer Patients Information And

Resource

In An Economic Downturn Biotechnology Companies Should Consider

Intangible Migration

Apotex Alleges It Is Injured By Ranbaxy's Ability To Launch

On Schedule

Outsourcing Failure Causes Generic Drug Recall In The U.K

Britain's Office Of Life Sciences Announces Blueprint

Protection Of Biologics In The U.S.

U.S. Bill Considers Access To Canadian Pharmaceuticals

New Proposed Requirements For Non-Medicinal Ingredients On

Non-Prescription Drug Labels

Recent Cases

New Website Offers Cancer Patients Information And

Resource

By: Scott Robertson

The Canadian Partnership Against Cancer has recently launched a

new website for Canadians at www.cancerview.ca which offers a centralized

resource for learning about the latest cancer clinical trials or

connecting with other patients suffering from the same disease.

The new portal offers a wealth of information and resources to

patients, healthcare workers, and anyone who may be dealing with

some form of cancer. The website is unique because it enables users

to access a number of different resources and perspectives all in

one location.

The website offers users a trustworthy source of information as

opposed to searching results which may or may not be useful and

credible.

Among the resources available on the new portal include: access

to Canada's cancer trial database, online and telephone

directory services, a community service locator which allows users

to find patient services and support programs in their area.

Currently there are over 640 clinical trials being conducted

which are posted and accessible to patients using the site.

For more information, please see:

http://www.cbc.ca/health/story/2009/07/09/cancer-portal-trials.html

In An Economic Downturn Biotechnology Companies Should Consider

Intangible Migration

By: Dale Hill, CMA - National Transfer Pricing Partner, Mark

Kirkey, CGA - Senior Director, Dr. Jamal Hejazi, PhD - Chief

Economist

Seeking Tax Savings In Troubled

Times

The current downturn in the global economy has had a dramatic

impact on several industry sectors including the biotechnology

sector. This new economic environment makes it understandably

difficult for companies to contemplate the implementation of long

term tax strategies, when the focus is strictly on meeting

profitability targets. Given that a corporation must function as a

going concern, corporations owe it to their shareholders and other

stakeholders to engage strategies which maximize short term

operations and long term value. One such relatively inexpensive

strategy which serves to minimize the level of global taxes a

corporation must pay, involves intangible migration, including

technology and other intellectual property (IP) transfers.

Migrating Intangibles: What Does It Entail?

Some biotechnology companies may have incurred or will incur

this coming year business losses that can be carried forward 20

years or back 3 years. Such loses, if not utilized, eventually

expire and can serve no future benefit, and if carried forward the

company may need to wait several years to see the refund. One

strategy that Canadian corporations should consider when such

losses exist, and where valuable intangibles (such as patents,

copyrights, trade marks and trade names) are present, is migrating

such intangibles to low tax jurisdictions such as

Barbados.1 While many considerations are relevant when

deciding to which country intangibles should be migrated, the key

benefit to consider is that profits generated from such intangibles

will be taxed at a lower rate.

Tax Implications

The sale of an intangible asset from one tax jurisdiction to

another will result in exposure to capital gains taxes. The benefit

of migrating intangibles during these difficult times is that you

may be able to offset the capital gain, on the sale of the

intangibles, by your operating losses. In the future as the economy

improves the revenues derived from the intangibles will be reported

offshore at a much lower rate. Another benefit relates to

valuation. During an economic downturn business risks increase and

the valuation of the intangibles may be much lower resulting in a

lower capital gain. Consideration should be given to the capital

gain that will be created versus the losses carried forward, and

those expected for the current year, to ensure they are

sufficiently high to offset capital gains that will result from the

sale of intangible assets.

Legislative Guidance

Many countries including Canada and the U.S. require that

intangible transfers, along with most intercompany transactions,

occur at arm's length prices. Generally speaking, approaches to

valuing intangibles include the Comparable Uncontrolled Price (or

Market Approach), the Cost Approach, and the Income Approach.

Biotechnology companies must illustrate what the fair market value

of such intangibles are in order to justify what the related party

in the lower tax jurisdiction will pay for such intangibles.

Valuation is generally performed by commissioning an expert report,

and by reference to industry comparables.

Conclusion

In these tough economic times Biotechnology companies should

consider migrating intangibles to lower tax-rate jurisdictions as

future profits that such intangibles generate would then be taxed

at a significantly lower tax rate. The usually contentious issue of

valuation is reduced since the availability of operating losses

allows the transferor to be conservative towards the source country

in valuing the intangibles. It is important to note, however, that

intangible transfer prices must represent arm's length

consideration.

Apotex Alleges It Is Injured By Ranbaxy's Ability To Launch

On Schedule

By: Isabel Raasch

In two different cases before the US District Court for the

Middle District of North Carolina Apotex has alleged that

Ranbaxy's inability to launch its generic versions of donepezil

hydrochloride (sold by Eisai Co. under the brand Aricept®) and

valacyclovir hydrochloride (sold by GSK under the brand

Valtrex®) on time will injure Apotex. Ranbaxy was the first

generic company to file for permission to market the generic

versions of Aricept and Valtrex in the United States. As such it is

entitled to a 180-day exclusivity period before other generics,

including Apotex, can bring their...