This is a guest post from Susan K Finston, President of Finston Consulting. Do you have a response to Susan’s post? Respond in the comments section below.

Perhaps like me you are working and not on vacation this early August.  If so, I hope that you will join me in a mental vacation to the Emerald Isle.  So close your eyes and think of biotech in Ireland.

One data point that may come to mind is the country’s famously low corporate tax rate, particularly following recent reports of M&A activity driven in part by the opportunity to “buy into” Ireland’s 12.5% corporate tax bracket.

The buyer, Perrigo, may be the largest pharma company you never heard of:  a Michigan-based company with strengths in over-the-counter (OTC), generic prescription, and active pharmaceutical ingredients (APIs), nutritional products (formula, supplements), and related consumer products.

In a deal announced July 29th, Perrigo is buying Irish biotech Elan for $8.6 billion and moving to Ireland, reportedly to save $150 million annually in corporate taxes. This latest news involving a major U.S. company pulling up stakes and moving to Ireland to save on taxes likely may relaunch debate by American states over the plusses and minuses of “Ireland’s model for growth using state money and incentives to lure private biotechnology companies.”

So just how likely is it that tax rates are a key driver for M&A decisions and broader biotech growth?  Not very.

It may be unsettling to hear about a major U.S company jumping ship and giving up its nationality for reported tax gains, given our complicated feelings about homeland and nationality.  Corporations, however, are not people – sorry, Mr. Romney – and when they get to be as big as Perrigo, may not retain a clear national identity.

Perrigo’s strengths in generics and OTC products are driven, for example, through international acquisitions over the last decade, including Agis Industries (Israel), Galpharm Healthcare (UK), Laboratorios Diba (Mexico), and Orion Laboratories (Australia, New Zealand), among others.   Given ongoing operations of affiliated business units in Australia/New Zealand, Europe, Latin America, and the Middle East, how American is Perrigo – even before the Elan takeover?

More broadly,  as noted back in Biotechnology in Countries Starting with “I”  (Part 3  –  back in March 2013), Italy, and not Ireland, places third in the EU for biotech after the UK and Germany, as measured by the number of pure biotech companies. Italy’s corporate tax rate is nearly triple that of Ireland.

How does Ireland stack up in the EU looking –  beyond straight numbers of pure biotech companies?  According to the EU’s Innovation Scoreboard (2013), Ireland is the tenth (10th) most innovative market for biotechnology in Europe, falling short of the most successful biotech markets in the EU.

Using its own composite index including human resources, firm investment, strength of research systems, entrepreneurship intellectual assets and related economic impact, the EU’s top-4 picks are Denmark, Finland, Germany and Sweden.  Corporate tax rates play a limited role at best, in the biotechnology ecosystem.

Will we likely see similar transactions this year, where companies outside of Ireland acquire Irish assets and relocate to the Emerald Isle?  Possibly, given that M&A is again on the upswing and at least two Irish healthcare companies are rumored as attractive take-over targets.  There has to be more on the table than a more favorable tax rate to justify a term sheet, as one analyst has noted:

“A deal that is solely driven by tax purposes could be a slippery slope.” 

Susan K. Finston is President of Finston Consulting LLC, and, together with biotechnology pioneer Ananda Chakrabarty, is co-founder of Amrita Therapeutics Ltd., an emerging biopharmaceutical company based in India with cancer peptide drugs entering in vivoresearch. She is currently preparing to launch her first Crowd Funding campaign for Amrita Therapeutics first-ever therapeutic oncology medical device. For more information see AmritaTherapeutics.com or FinstonConsulting.com.

This guest post is from the BiotechBlog Intern,  Fintan Burke. Fintan is a student at the School of Biotechnology at Dublin City University. Do you have a response to Fintan’s post? Respond in the comments section below.

One of the more enduring financing trends in recent years has been to turn to public interest to help fund for research. As Susan Finston has noted on this blog before, the successes seen in other areas has more recently been translated into the biotech world, with such sites as Petridish.org and scifundchallenge.org forging ahead in public financing in the sciences.

For emerging technologies a new website promises to add an extra aspect to the crowdfunding framework; innovation in the technology itself. Marblar.com was recently established in order to facilitate crowd-orientated uses for new technologies developed by the patent holder.

Marblar cofounder Gabriel Mecklenburg explains new technologies have limited potential under the old system. “You typically have a physics technology and a professor comes down from tech transfer office, talks to their physics guy and those two people – [who] may be opposed to being thrown into the mix – will then have to come up with the best way of applying this technology. We figured ‘well that’s maybe not the best way of doing it.’ Science has become such a vast field now these days that maybe actually the physicist isn’t the best person to find that killer application for this piece of physics technology.”

“So we figured to really open up the sectoral process to a much much wider crowd and break down the technologies in a way that a non-expert could understand them and open it up to anyone around the world, be they neurologist, chemists, engineers, business people- get all these different perspectives together and create this kind of crowdsourcing platform where [what] we do is put each technology out as a competition and say ‘Okay, come up with the best new market application, the best new way of using this technology.’”

Marblar works by having the patent holder post their technology up on the website and having the community suggest potential applications. Those viewed as particularly innovative get voted on and discussed before entering a final shortlist. The community then continues to vote for what is deemed the best use of the new technology, which is finally selected by the technology holder and is rewarded with a cash prize and points towards their Marblar profile. “Ultimately it’s not a life changing amount of money. More importantly than that there is this community that we’ve built all working towards the same goal that I mentioned earlier; realising the promise of science and actually being in this community of really really bright, motivated people and working with them and collaborating in coming up with these ideas is actually hugely rewarding for a lot of these people, much more so than the money. It’s what drives actually self creativity, pretty senior people in some cases, very very qualified people spend a lot of time on the site and developing these ideas.”

In order to open up the doors for innovation as wide as possible, Gabriel and his team have put considerable effort to elucidate the technology. “We actually spend quite a lot of time digesting down the key features of the technology and presenting them in a way that makes them easily understandable to someone who’s coming cold to the technology. And one key feature of the platform itself is its open nature; that the inventors can interact in real time with the crowd. So the inventor can actually mould each idea with their feedback pack and that way – even if the original application wasn’t quite technically feasible – through this real time tech feedback between the crowd and the inventor the ideas are actually shaped into much more feasible incarnations. You do want the outsider’s perspective.”

As crowdfunding in science grows, the benefit of the outsider’s perspective is increasingly being recognised. As Jeanne Garbarino notes in her post at Nature.com, the growth in science-based crowdfunding has helped lead the way in a new era in connecting science to the general public. By opening their project funding (or even part thereof) to the public, there is an extra imperative to scientists to explain and engage with the public about their research, their methods and eventually their end goal. This potential for outreach-through-crowdfunding is being recognised by websites such as scifundchallenge.org which aim to not only raise funds for research, but also help researchers with outreach activities and help the public connect with the work being carried out. In one of the first papers to fully explore the psychology of crowdfunding from the individual’s perspective, Crowdfunding: Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms, Elizabeth Gerber et al found that as crowdfunding grows and becomes more common, people will tend to be more discerning about who they choose to fund, increasing the imperative for researchers who choose to crowdfund their research to illustrate its benefits. In the same paper, however, they noted that people who chose to undergo the crowdfunding route found added validation to their work, establish long-lasting professional connections and expand the awareness of their work to both the public and other like-minded professional bodies, thereby helping to increase their chances of getting funding through crowdsourcing in the future.

For Gabriel and the rest of the team at Marblar, having a simplified, accessible explanation for emerging technologies has already shown itself to be beneficial in reaching a wider-than-predicted range of people looking to be a part of the next big thing. “Where our last count it’s people from a hundred and thirteen countries and that’s really running the gamut all the way from a gang of high school students that are sneaking past the age limit all the way to emeritus professors kind of spicing up their retirement by having a go at some of the new science coming through some cutting edge discoveries.”

In a 2001 paper Belinda Clarke suggested that the best way to tackle the worsening lack of interaction between researchers and the public would be to create a forum where the two could interact in non-technical dialogue, away from issues of the media and interest groups acting as middle men and obscuring the message. With the financial appeal that crowdfunding offers and the relative ease in collaborating and explaining to the public about emerging technologies, researchers may yet realise the benefits to putting their mouth where the money is.

About the author:

Fintan Burke is a student at the School of Biotechnology at Dublin City University. His main fields of interest include biomedical therapies and recombinant organisms.  Fintan may be contacted at fintan.burke2@mail.dcu.ie .