Whelan Pharmaceuticals: what tax issues are relevant in to this company and which site would be a favorable?

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THE ISSUES RELEVANT TO SITING AND MANUFACTURING RELEVENT TO WHELAN PHARMACEUTICALS
· Compliance with FDA guidelines for cGMP production of pharmaceuticals and related products for use in clinical trials, including requirements as they affect raw materials, in-process goods, packaging, labeling and finished goods as well as the manufacturing, testing, documentation and product release processes.
· Contract manufacturing of pharmaceuticals for clinical trials, including contracts that address clinical trial risks and allocate those risks appropriately among all parties involved in drug development and clinical manufacture.
· Documentation of all the legal requirements necessary for full scale production of pharmaceutical and biotechnology products, including:
· Validating for the FDA every aspect of the receiving, analysis, storage and handling of drug actives, excipients and other raw materials, the manufacture of the drug itself, and the storage, handling and packaging of the drug product for distribution, as well as the specified analyses that must be performed during each step of the process.
· Negotiating long-term contractual commitments between pharmaceutical companies and contract drug manufacturers to cover production capacity and take-or-pay agreements in light of the long timeframe required for regulatory approval.
· Ensuring compliance with various standards which may affect personnel and physical design of facilities as well as the painstaking documentation of the physical design, construction and equipping of the facilities and of the manufacturing processes.
TAX ISSUES RELEVANT TO WHELAN PHARMACEUTICALS
Research and Experimentation Credit

The credit for increasing research activities permits a credit against U.S. tax for incremental research and experimentation costs, over and above the taxpayer's historic levels, incurred in connection with the taxpayer's trade or business. The research and experimentation activities must take place in the United States for the expenses to be eligible for the credit. To qualify for the credit, the expenses must be incurred as part of a process of experimentation for a purpose of discovering information of a technological nature (i.e., information that relies on the physical or biological sciences, engineering or computer science) that would be useful in developing a new or improved business product, process, formula, technique or invention. Included as research and experimentation costs are all costs related to the development or improvement of the function, performance, reliability or quality of a product, including the costs of obtaining a patent. Given the incremental nature of the credit, firms that are initiating new or expanded research programs in particular may obtain significant benefits from the credit if they plan to use the results of the research in a future trade or business.

Orphan Drug Credit

The Orphan Drug Credit permits a credit against income taxes of 50% of "qualified clinical testing expenses" incurred with respect to any drug for a rare disease or condition. To the extent that a credit is not used in a taxable year, it may be carried back one year and ...