Originally published October 30 2013
U.S. pharma company buys Irish company to shift profits offshore and pay lower taxes
by B. Pierson
(NaturalNews) Recently, Perrigo, a U.S. drug manufacturer agreed to purchase an Irish drug development company. This action will help Perrigo move its assets offshore, increasing the profits earned by the drug manufacturer while avoiding taxes that it would have to pay in America.
Elan Corporation, PLC is a Dublin, Ireland based drug development company that made the news in 2002 for its failed Alzheimer's trials and fraudulent accounting practices. After that, new management steered the company into joining Massachusetts-based drugmaker Biogen Idec to develop Tysabri, which was designed to reduce the paralyzing effects of Multiple Sclerosis, a widespread and incurable disease that debilitates the central nervous system. When Tysabri was release in 2005, it was disastrously linked to the development of an often fatal brain-inflammation disease. Despite this, regulators agreed to put Tysabri back on the market in 2006 under new regulations. Since then, its usage has steadily grown to become a world-leading treatment for MS patients.
Elan sold much of its share in Tysabri to Biogen Idec in February for $3.25 billion and and a share in royalties. In 2012, the global sales for Tysabri were around $1.6 billion dollars. The cash flow Elan receives from this drug has attracted other larger companies who want a piece of the profit. Over the past four months, Elan has been fighting off hostile takeover bids by Royalty Pharma, claiming that they were undervaluing the company. However, after putting itself up for sale, Elan agreed to be purchased by Perrigo, a Michigan based generic drug maker, for $8.6 billion.
This deal is going to have a huge effect on the future of Perrigo, which will now receive royalty rights from Tysabri sales in addition to tax savings that come with being domiciled in Ireland. Profitable Irish based companies like Elan are especially attractive to companies like Perrigo because the corporate tax rate, at 12.5 percent, is less than half what it is in the United States, at 35 percent.
"We're excited by what it means for the international expansion. We think it's financially compelling and when you put it together with an Irish domicile that has operational tax synergies, we think it's a really compelling story," Perrigo chief executive Joe Papa said. According to Papa, the move to Ireland should produce more than $150 million in savings from lower taxes and more efficient operations.
If this Michigan-based pharmaceutical company is moving to Ireland to increase profits and avoid paying taxes, how can we trust it to care about the American people? Or to even care about the health of their consumers? We will have to wait to see if purchasing this foreign pharmaceutical company with a history of releasing harmful drugs and deceiving the public might foreshadow Perrigo's future or perhaps reflect the nature of Big Pharma itself.
Sources used for this article:
http://www.irishtimes.com
http://medicalxpress.com
http://medicalxpress.com
http://www.irishtimes.com
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