US Biotech Firms Get New Tax Credits

by Leroy Baker, Tax-News.com, New York

05 November 2010

The US government has announced that almost 3,000 firms will benefit from USD1bn in new therapeutic discovery project credits and grants created by the Affordable Care Act.

The credit covers up to 50% of the cost of qualifying biomedical research and is only available to firms with fewer than 250 employees. The credit is effective for investments made in 2009 and 2010 and firms can opt to receive a grant instead of a tax credit, so start-ups that are not yet profitable can benefit as well.

"The grants and tax credits we're announcing today will support small biotech firms with big potential across the country," said Secretary of Health and Human Services Kathleen Sebelius on November 3. "With this funding, they'll be able to hire more staff, improve facilities and move forward with research projects that might otherwise have been put on hold. We can't afford to see promising discoveries discarded or innovative businesses move overseas. Thanks to the funding provided today, firms can avoid these roadblocks and continue to do business right here in the US."

A total of 2,923 companies specializing in biotechnology and medical research in 47 states and the District of Columbia received awards under the therapeutic discovery project program, the Treasury and Health Departments jointly announced. In all, 4,606 applications from these nearly 3,000 companies were awarded funding.

According to the US Treasury, the therapeutic discovery project program is targeted to projects that show "significant potential to produce new therapies, address unmet medical needs, reduce the long-term growth of health care costs, or advance the goal of curing cancer within the next 30 years."

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