Healthcare & Life Sciences

The highly experienced tax experts at FTI Consulting leverage a deep understanding of life sciences to provide a level of tax advisory beyond what’s available from accounting firms. Read on for detailed expertise and case study work:

Licensing. Our depth of experience in IP licensing is unrivalled. FTI Consulting has adopted a defined and proactive approach for identifying and addressing key areas of tax sensitivity for a proposed license. Following a brief review of the key components of the transaction at heads of terms, our objective is to rule out a number of potential issues, allowing focus to be applied to critical aspects at a point when negotiations are more fluid.

This defined approach ensures:

• Cost efficiency
• Best practice
• A greater level of assurance that key aspects will not be overlooked

Case Studies:

• Restructuring of a life sciences license led to a collaboration with an option, which saved USD$50 million in taxes on a USD$350 million deal.
• A different basis of full-time equivalent (“FTE”) reimbursement was recommended in a collaboration, which saved circa £1 million in R&D incentives.
• FTI Consulting was an expert witness in a case regarding the inclusion of indirect tax in a royalty clause, resulting in a settlement of USD$25 million.
• Our advisement on a positive HM Revenue & Customs (“HMRC”) clarification of a substantial option fee led to qualifying income for the patent box.

N-Site. N-Site is a portal for life sciences companies that offers a range of technical guidance notes and workshops on tax, legal, and patent and trademark matters that impact the industry. Established by FTI Consulting and developed in association with MedCity and the BioIndustry Association (BIA), N-Site is positioned to become an essential resource for expert guidance for life sciences. The aim of N-Site is to become the primary hub of expert guidance for UK-based life science companies — from embryonic start-ups to established multinationals.

N-Site provides key documents, guidance and workshops to life sciences businesses, ensuring that companies have the right information to help them make critical strategic decisions. The site’s relevant, insightful resources extend far beyond that which is currently available for free.

Research & Development Incentives. The Life Sciences Tax team at FTI Consulting has had consistent success in enhancing historic R&D tax claims, including favorably negotiating the treatment of expenditure in the pre-clinical and clinical supply chain. Our firm is the only one taking these points to HMRC. In more than 80% of cases in which companies are being advised by the major accounting firms, FTI Consulting is enhancing the qualifying cost base for historic claims and, more importantly, setting an enhanced precedent for future periods.

Our impressive track record of approving claims with HMRC with full disclosure is unparalleled. Our in-house specialists are well versed in understanding the level of evidence needed to support a claim, undertaking a forensic review to map these costs to qualifying expense categories.

Tax Compliance – BioScience Pro Forma. FTI Consulting is the first firm to challenge long-standing conventions for tax compliance. We have developed a pro forma BioScience tax computation, which has been presented to HMRC. This process is designed to eliminate several unnecessary steps while at the same time significantly improve the quality of the information presented. The principal area of focus remains the R&D tax credit, and our procedures ensure that this is optimised. Put simply, our unique process enables us to:

• Reduce cost and time
• Improve disclosure
• Focus on the inputs to the R&D claim and ensure qualifying costs are correctly identified as they are incurred
• Pre-empt HMRC concerns

Transfer Pricing. Thanks to our deep industry knowledge and the transfer pricing skills of more than 120 first-class economists, accountants and valuation specialists, our Tax team is uniquely positioned to address intellectual property challenges. In addition, we are part of the fifth largest international tax network of highly respected transfer pricing and international tax professionals. To assist clients in establishing robust transfer prices and licensing/royalty rates and sales values for IP assets, FTI Consulting uses extensive econometrics and benchmark analyses.

Our Economic Financial Consulting team has strong expertise in healthcare economics.

Team members have worked extensively in the field of healthcare financing, including pricing and contracting strategy; regulatory framework design; and economic and financial modelling, including cost benefit analysis. Recent clients include the World Health Organization and the National Treasury of South Africa.

The team is actively involved in research on South Africa’s healthcare sector, assisting clients in all areas of healthcare markets.

FTI Consulting experts have provided advice and testimony in a large number of complex competition matters, assisting clients with many of the high-profile competition cases of the past 20 years. When retained on matters in the healthcare sector, a combination of industrial organisation theory and sophisticated economic and econometric analyses is used to carefully examine the full set of competition issues, which include:

• Mergers & Acquisitions
• Abuse of Dominance
• Competition Damages
• Market Inquiries

Case Studies:

FTI Consulting experts have provided advice on single exit pricing to pharmaceutical manufacturers, wholesalers and retailers.

FTI Consulting experts have advised stakeholders across the healthcare industry on the economic impact of National Health Insurance (“NHI”). Our analyses covers the fiscal implications and potential macroeconomic impact of NHI and provides a critique of the National Department of Health’s socioeconomic impact assessment of the NHI Bill and the Medical Schemes Amendment Bill.

Case Studies:

Medicine Pricing. FTI Consulting experts advised a client in the midst of the regulatory processes regarding pricing in the pharmaceutical value chain, specifically as it related to single exit pricing regulations.

Competition - Market Inquiries

An FTI Consulting team provided ongoing economic support to one of the largest hospital groups, Medi-Clinic, during the Competition Commission’s Health Market Inquiry (“HMI”). The provisional recommendations of the health market inquiry included interventionist measures such as divestiture of hospitals to reach target levels of market shares and potential price regulation. We provided expert economic evidence before the panel, and the final report contained more market-oriented policy proposals, with no need for divestment of private hospitals. Our team members also acted as quantitative experts in all four extensive data room processes conducted by the HMI; these data room processes have informed numerous and extensive submissions to the HMI by the FTI Consulting South Africa Team from 2013 to 2019.

Economic Regulation

Our experts advise regulators, boards and investors in countries across Europe, the Middle East and Africa on a wide range of strategic regulatory issues that include:

• Price Controls
• Efficiency Analysis & Benchmarking
• Regulatory Framework & Tariff Design
• Cost of Capital

Strategic Consulting, Public Policy & Trade

Strategy Development
FTI Consulting guides clients through the strategy development process step-by-step — structuring problems, evaluating solution options and undertaking analysis and modelling to inform decision-making.

Sector Studies
In conducting in-depth research studies on particular industry sectors, both in South Africa and other countries, FTI Consulting provides context for strategic decision-making — including pricing, investment and divestment decisions — and informs engagement with government.

CASE STUDY

Strategic Consulting - Impact Assessment

The Health Promotion Levy (“HPL”) was introduced in South Africa in April 2018, with the primary aim of reducing harm related to excessive sugar consumption. FTI Consulting experts appointed by Coca-Cola Africa had to assess the impacts of the HPL since its introduction. The goal was to quantify the effects of the HPL on the beverage supply chain to date and compare these with the intended policy objectives and expected outcomes.

FTI Consulting’s Corporate Finance M&A team helps clients in the healthcare sector maximise value throughout the deal life cycle.

Corporate Finance. FTI Consulting’s Corporate Finance M&A team helps clients in the healthcare sector maximise value throughout the deal life cycle. From origination to exit, our knowledge-based skill and experience focused on critical financial, commercial and operational opportunities helps create and enhance shareholder value.

Execution and project management of M&A transactions
Providing bespoke solutions to both buyers and sellers, our team manages the transaction from origination through to completion — from understanding the rationale for our client’s strategic objective, whether testing the investment thesis or target searching and screening, to a successful conclusion of the transaction.

Valuation, Structuring, Negotiation Support and Diligence Coordination
Our M&A team works closely with clients, using their experience and expertise to ensure the right price. Our clients are in full control of the negotiation process, and our strategy includes working together with their other advisors to ensure a watertight sale and conclusion of the purchase agreement.

Market testing, leveraging our strong networks
Our local teams have strong relationships within the private equity and strategic buyer universe, supported by the networks of our international colleagues across six continents. Through these networks, the most suitable and appropriate potential buyers for each unique transaction can be accessed.

When facing investigations or litigation, healthcare organisations and their legal counsel engage our integrated team — featuring experts in healthcare-related fraud investigations, data analytics and computer forensics — to strengthen operations and protect assets and reputations.

Our healthcare expertise in South Africa includes public and private healthcare sectors across medical schemes; funders and regulatory bodies within the private healthcare sector; and managing in-house forensic healthcare teams.

FTI Consulting has built a comprehensive, global strategic communications offering for life sciences and healthcare companies. In taking a holistic view, our clients can build and defend their reputations with all stakeholders.

Our teams are attuned to the needs of all client stakeholder groups, so they get comprehensive advice that caters to everyone who matters — not piecemeal guidance from individual groups of advisors.

FTI Consulting works with companies and their boards to protect or defend their reputations and ensure the right message reaches the desired audience, whether that is the company’s employees, investors, partners, peers, healthcare professionals, key opinion leaders or policy-makers.

Our areas of expertise include:

Corporate reputation

• Media campaigns
• CEO strategy launch
• Events and conferences
• Thought leadership
• Issues management

People and change

• Employee buy-in for change
• Employee surveys
• Training and coaching
• Job losses and restructurings
• Disposals/M&A

Crisis communications

• Post-crisis recovery and campaigns
• Crisis preparedness
• Crisis response and simulation

Capital markets communications

• Financial calendar support
• Analyst recruitment and feedback
• M&A and IPO
• Investor relations
• Profit warnings
• Disposals
• Restructuring
• Strategy change

Digital strategy and research

• Analytics
• Campaigns
• Leaders’ digital engagement
• Issues management

Public affairs

• Influencer campaigns
• Policy-maker relations
• Union protests
• Select committee hearings
• Issues management
• Campaigns to defend position