Guest blog by Sarah Picken, Director of S&W Group
Sarah has over a decade of experience in supporting businesses fund their innovation through R&D and Patent Box incentives. She leverages her corporate tax background to take a holistic and future looking approach to incentives claim management.
Biotech businesses are built on innovation. Whether you’re developing a novel therapeutic, advancing diagnostics, refining manufacturing processes or commercialising cutting-edge research, your intellectual property and R&D activities are often your most valuable assets. Yet many growing businesses focus so heavily on the science that they overlook opportunities to protect their innovation, strengthen their commercial position and unlock valuable funding and tax incentives.
Here are seven key areas every biotech SME should be considering:
1. Have you identified what actually makes your business valuable?
Many founders assume intellectual property simply means patents. In reality, valuable IP can include know-how, proprietary processes, software, data, formulations, trademarks and trade secrets. Understanding exactly what creates your competitive advantage is the first step in protecting it.
The question every biotech business should ask is: if a competitor copied what we’re doing tomorrow, what would cause us the most concern?
2. Are you protecting your innovation before talking about it?
Collaboration is essential in biotech. Investors, potential customers, universities and research partners all need to understand your technology. However, disclosing innovative ideas before considering an IP strategy can create significant risks and may limit future patent opportunities. Many businesses only discover this after discussions have already taken place.
Before sharing your innovation, it’s worth understanding what protection may be available and when it should be secured.
3. Could you be missing out on R&D tax relief?
Many innovative businesses recognise R&D tax relief exists, but fewer understand what activities may qualify. Scientific and technological uncertainty arises in more places than many businesses expect, particularly during product development, scale-up activities and process improvement. For start-ups, accessing available incentives can provide valuable cash flow at a time when funding is often critical.
The key is understanding what qualifies and ensuring the appropriate records are maintained from the outset.
4. Are you creating an IP strategy that supports investment?
Investors increasingly look beyond exciting science. They want confidence that innovation has been properly identified, protected and commercialised. A strong IP position can demonstrate barriers to entry, strengthen valuation and give investors confidence that future returns can be defended.
Waiting until a funding round to think about IP is often far more expensive than planning ahead.
5. Have you considered the Patent Box regime?
Many innovative businesses are familiar with R&D tax incentives but have never explored Patent Box. The regime can provide a reduced 10% rate of corporation tax on qualifying profits generated from patented innovations (down from 25% for non-patent box profits). When combined with effective patent and commercial planning, this can create a powerful mechanism for increasing the after-tax return on innovation.
Things to consider include which company will own the IP, will any IP be purchased, which company will do the R&D, and how are you expecting to generate income from that IP (sale of product, licensing of the IP, sale of the IP etc).
Where IP is moved, or the business is not set up with patent box in mind, it’s easy to miss out on maximising future tax relief when you turn profitable.
6. Are your scientists, founders and employees creating hidden risks?
Innovative businesses move quickly, often relying on specialist employees, academic collaborations and external partners. Without the right agreements in place, ownership of valuable intellectual property can become unclear. Questions around who owns inventions, improvements and know-how can become particularly important during investment, licensing discussions or acquisition activity.
Taking a proactive approach can help avoid costly disputes later.
7. Do you have a joined-up innovation strategy?
The most successful biotech businesses don’t view IP, tax incentives and commercialisation as separate topics. They develop an integrated strategy that considers protection, funding, growth and future profitability together. A decision made today about R&D activities or patent protection could have implications for investment opportunities, future tax savings and long-term business value.
The earlier these conversations happen, the more options businesses typically have available.
Bringing the theory to life
Sarah, along with Gurpreet Solanki of Avidity IP, will be joining us on Tuesday 15 September, 10-12, for an interactive session exploring intellectual property, R&D tax incentives and Patent Box for biotech SMEs. They’ll walk through a biotech start-up case study, highlighting the critical questions founders and leadership teams should be asking:
- Is our innovation properly protected?
- Are we structuring our R&D activities in the most effective way?
- Could we be missing out on valuable tax incentives?
- What decisions today could impact our future commercial success?
- What should we be considering now if we want to sell our business or IP in the future?
If you’re investing heavily in innovation, make sure you’re getting the maximum benefit from it.
To register, please email Business Innovation Lead Ruxandra Jianu using the button below, with your company name.
Places will be reserved on a first-come, first-served basis. If the session is oversubscribed, we may need to operate a waiting list.
