Mylan, which has a low tax rate by virtue of moving its base to the Netherlands in 2015, has found a way to cut its rate to 4% in 2014 and even gain a $358 million benefit last year: The company invests in refined coal plants.
An extensive review of the company’s financial filings by Reuters found that since 2011, the drugmaker has owned plants that process coal to reduce smog-causing emissions, winning clean energy and research credits that lower its tax bill and boost its earnings. It utilized $95 million worth of the credits in 2014, and $100 million worth of the credits in both 2015 and 2016.
The Reuters review found that Mylan, which has drawn public and political fallout from the pricing of its top-selling EpiPen, is the only drugmaker using the strategy based on the credits approved by Congress in 2004 and set to expire in 2022. While an acceptable tax benefit, the company has disclosed the investments and the tax credits only in the footnotes of its filings, Reuters reports, even though the benefits accounted for about 9% of its earnings last year.
“It does sound like they are being mindful of tax planning,” Lisa De Simone, professor of accounting at Stanford Graduate School of Business, told Reuters. “From the perspective of shareholder value, companies have all of the incentive in the world to try to reduce their tax payments, to increase net income and increase distributions to shareholders.”
Mylan spokeswoman Nina Devlin, who confirmed Reuters’ tax rate calculations, pointed out that the tax credits are available to any company that wants to utilize them.
The disclosures come just a day ahead of Mylan’s annual meeting, at which four investment funds are urging shareholders to vote against the Mylan board and vote down its proposed 2017 compensation packages. They are angered by the company’s payouts to top executives, particularly the $97 million paid to Mylan Chairman Robert Coury last year, making him the highest-paid executive in pharma last year.
Coury’s pay included a bonus at a time when price hikes on its EpiPen led to Congressional hearings and boosted interest in competing products. They also point to the fact that since the company fended off a 2015 buyout run by Teva, the company’s share price fell to less than half the $82 a share it hit when Teva offered to buy Mylan.
The company also is laying off about 3,500 employees after completing the $7.2 billion buyout of Swedish drugmaker Meda. Despite its challenges, Mylan turned in 18% growth last year to $11.1 billion in total sales.
One of those leading the board opposition is New York City Comptroller Scott Stringer, who oversees city pensions that are invested in the company. To him, the tax strategy was less good business than another example of poor stewardship by the board.
“From the EpiPen pricing debacle to embracing complex tax avoidance strategies, Mylan’s board appears more focused on financial engineering than on the company’s core business,” Stringer told Reuters.
By Eric Palmer
Source: Fierce Pharma
The Food and Drug Administration’s top scientist Namandjé Bumpus will assume the role of principal deputy commissioner when longtime agency leader Janet Woodcock retires from that role in early 2024, according to an announcement Thursday.
US biopharma AbbVie has agreed to acquire ImmunoGen in a deal which values the company at about $10.1 billion and gives AbbVie access to flagship cancer therapy Elahere (mirvetuximab soravtansine-gynx), a first-in-class antibody-drug conjugate (ADC) approved for platinum-resistant ovarian cancer (PROC), as well as a pipeline of promising next-generation ADCs.
EUROAPI today announced the appointment of David Seignolle as Chief Operating Officer, succeeding Eric Berger, and Marion Santin as Chief Legal, Compliance, and IP Officer, both joining the company’s Executive Committee. In his new role, David Seignolle will lead the transformation of the Industrial Operations organization.