French drug firm eyes Dublin amid drive to cut tax
Flamel shareholders approve reincorporating Nasdaq-listed company in Ireland
Flamel Technologies said Ireland “offers corporate governance policies more akin to those in the US”.
French specialty drugs company Flamel Technologies is poised to relocate its headquarters to Dublin by the end of the year amid an effort to lower its effective tax rate which stood at 48 per cent last year.
Set up in Lyon in 1990, the company’s executive office has been based in Missouri since its acquisition in 2012 of a US company called Eclat. Flamel, whose products include a drug called Bloxiverz, which reverses the effects of muscle relaxants after surgery, is listed on the Nasdaq exchange in New York, with a market capitalisation of almost $540 million (€482 million).
Two years ago, the company moved all of its intangible intellectual property to Ireland from France. However, it received shareholder approval last week to reincorporate the group in this country by way of a merger with its wholly-owned subsidiary Avadel Pharmaceuticals. Avadel will become the group name from January 1st.
“Ireland is an ideal location to execute [the company’s] vision as it is quickly becoming a global pharma hub, and offers corporate governance policies more akin to those in the US,” said Mike Anderson, chief executive officer, in a statement.
Company executives also indicated to analysts on a conference call earlier this year that reincorporating in Ireland would help lower its effective tax rate, which was 48 per cent last year, a level they said they were “obviously not satisfied with”.
Last year’s tax charge was fuelled by the group’s “significant US operations at a higher statutory tax rate than the French statutory tax rate, and in 2015 are additionally unfavourably impacted by losses incurred at our Irish entity at a lower statutory tax rate,” according to its annual report.
Avadel was incorporated in Ireland last December and currently has one Irish-based director based in the company, Dhiren D’Silva, vice-president of the group’s Irish and European operations. Documents relating to the deal filed with the Companies Registration Office in Carlow last month said contracts of its French employees would be unaffected by the deal, and existing profit-sharing agreements would continue to apply.
The company is being advised on legal aspects of the deal by corporate law firm Arthur Cox in Dublin.
Ireland has become a hotspot for drug and medical technology companies seeking lower tax regimes. Medtronic, a US medical device group, gained a Dublin headquarters in 2015 through its $42.9 billion takeover of Covidien. Other so-called tax inversion deals in recent years involving US groups and Irish targets include Perrigo’s $8.6 billion purchase of Elan in 2013 and Jazz Pharmaceutical’s purchase of Azur Pharma.
Florida-based biotechnology company Immune Therapeutics highlighted the attractions of Ireland in its quarterly report on Tuesday. In 2014, the firm set up an Irish unit with an Irish address, Airmed Biopharma, and Airmed Holdings, an Irish company domiciled in Bermuda.
“The Irish companies were set up to benefit from incentives granted by the Irish government for the establishment of pharmaceutical companies (many of the world’s leading pharmaceutical companies have located in Ireland),” Immune Therapeutics said, also noting the country’s EU membership and the fact that Ireland’s 12.5 per cent tax rate is “one of the lowest in the world”.