TAX CUTS WOULD BOOST MEDICAL INNOVATIONS
Washington, D.C. (March 6, 2001) -- The Biotechnology Industry Organization (BIO) today issued the following statement following Senate introduction of a bill that would reduce taxes on profits earned from investment in entrepreneurial businesses, including the biotechnology industry:
“This legislation is highly positive for both investors and patients in need of medical discoveries for the most serious, life-threatening diseases,” said Carl B. Feldbaum, president of the Biotechnology Industry Organization (BIO). “The reduction of any earnings tax is a significant incentive for investors to provide capital to an industry dedicated to producing therapies for heart disease, cancer, diabetes, Alzheimer's and Parkinson's diseases.”
Senate bill 455, introduced last night by Senator Susan Collins (R-Maine), reduces the current 20 percent capital gains tax to five percent for individuals who maintain their investment for a minimum of three years in entrepreneurial biotech companies with a market cap of less than $50 million. A similar measure is expected to be introduced in the House next week, and would eliminate the tax entirely, and expand the eligibility to companies up to $500 million in market cap size. Current development costs for new biotechnology drugs can average up to $500 million and take up to 10 or more years.
“In 2000, the biotechnology industry experienced a recordinvestment of $40 billion through public and private equity fundings. This surge in capital was paralleled by an unprecedented number of approvals for new biotechnology drugs, vaccines and new indications for existing medicines from the U.S. Food and Drug Administration (FDA). BIO urges Congress to act to implement this legislation to continue such medical innovations,” Feldbaum added.
Co-sponsors of the bill include Senators John Breaux (D-La.), Max Cleland (D-Ga.), Wayne Allard (R-Colo.), Orrin Hatch (R-Utah), Mary Landrieu (D-La.), Tim Hutchinson (R-Ark.), Joseph Lieberman (D-Conn.), and Lincoln Chaffee (R-R.I.).
BIO represents more than 950 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states and more than 33 other nations. BIO members are involved in the research and development of health care, agricultural, industrial and environmental biotechnology products.