Health Reform Package Includes Biotech Credit

Analysts and industry officials say a research tax credit included in the new health care reform law could give a significant boost to biotechnology companies. The highly publicized bill allows biotech companies with 250 or fewer employees to claim a credit for 50% of their investment in qualifying therapeutic discovery projects for tax years 2009 and 2010, or a grant for the same amount tax-free. "This new therapeutic credit provides small biotechs with much-needed capital to sustain their R&D programs, and it couldn't have come at a better time, with the current investing climate," says David Ji, a biochemist and managing director of the tax services firm Alliantgroup. Qualifying therapeutic discovery projects include those designed to find treatments for or prevent diseases or conditions by conducting preclinical or clinical studies for the purpose of securing FDA approval of a product. The tax credit will provide "some financial relief to research-intensive small biotechnology companies that continue to suffer from tight credit markets," says James C. Greenwood, president of the Biotechnology Industry Organization, a lobbying group.