Life Sciences Newsbrief – February 2012, Issue #40

Welcome to PwC’s monthly issue of the Life Sciences Newsbrief. This publication provides you with a snapshot of developments in the Canadian and global life sciences industry along with upcoming Canadian events and thought leadership. If you need further information, please contact any of the life sciences professionals listed on the right.

Thought Leadership

15th Annual Global CEO Survey: Industry Reports for Pharma/LS and Healthcare
PwC’s 15th Annual Global CEO survey, Delivering results: Growth and value in a volatile world explores CEO’s perspectives to understand how businesses are preparing for growth in their industries. The industry reports supplements the survey and provide a more tailored perspective on the results and draw on additional insights from high profile industry-specific CEOs.

Key Findings in the Pharmaceuticals & Life Sciences Industry
Based on interviews with 82 Pharmaceuticals & Life Sciences CEOs in 29 countries, CEOs are pinning their hopes for growth on innovation. They’re looking to new technologies and alliances with other organizations to help them innovate, and they’re targeting the emerging markets of China and Brazil in particular.

  • 43% of CEOs are focusing on the development of new products and services (compared with the overall average of just 28%)
  • 20% aim to increase their share of existing markets — evidence, perhaps, of how demanding healthcare payers in the mature economies have become.
  • 51% say it's become more difficult to hire suitably qualified workers.

Read more at here.

Key Findings in the Healthcare Industry
Interviews with 32 CEOs heading private or public healthcare organizations in 18 countries reflected general optimism that healthcare will continue to be a growing industry in 2012 and that faster, better, cheaper solutions to healthcare problems are paramount. However, the current economic climate is certainly a concern for healthcare CEOs.

  • 56% plan to make strategic changes over the next 12 months
  • 78% will focus on developing new products and services, 9% more than the average across all sectors
  • 28%, more than twice the overall average, hope to complete M&A deals in the next 12 months
  • 69% list improving organizational efficiency as a top priority

Learn more here.

Read the full Global CEO Survey here: www.pwc.com/ceosurvey.

Tax Updates

New U.S. Excise Tax for Medical Devices
The Medical Device Excise Tax (MDET) will come into effect on January 1, 2013, subjecting manufacturers, producers and importers of most medical devices to a 2.3% federal excise tax on sales made in the US. The IRS recently issued proposed regulations which help clarify many aspects of the tax. Comments on the proposed rules must be submitted on or about May 7, 2012 and a public hearing is scheduled for May 16, 2012.

A taxable medical device is any device defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act, intended for humans. Section 201(h) defines the term "device" as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which meets certain requirements.

Calculating the MDET cannot necessarily be calculated by simply multiplying U.S. sales by 2.3%. Complexities can exist in a variety of situations including retail exemptions, rebates, trade-ins, leases, instalment sales, convenience kits, dual use devices, contract manufacturing, and combination products. To comply with the tax provisions, a fully functional automated compliance system needs to be designed, built, tested and deployed ahead of the effective date. Before an organization can embark on this effort, it is important to understand the operational impacts of the tax, and analyze what operational constraints and improvements should be factored into the future state model.

For a discussion geared towards your company, please contact us.