Eight Out of Ten Spanish Companies in the Biotech Sector Increase R&D Investment

84% of Spanish companies in the health and biotechnology sectors say that in 2024 they have increased their research and development (R&D) budget compared to 12% that have maintained it and 4% that have cut it.

These are data from the V International Barometer of Innovation of the consulting firm Ayming, resulting from a survey of one thousand R&D and innovation directors, financial directors and executive directors of companies in 17 countries . Of these, a quarter correspond to Spanish companies.

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R&D financing channels are followed by debt and equity and tax deductions

The most recurrent sources of financing among those surveyed are public aid from state and regional administrations and self-financing, both with 58% . These R&D financing channels are followed by debt and equity and tax deductions (50% each) and international subsidies (23%).

The weight of financing via public aid grows 14 percentage points compared to the previous barometer, when these represented 44%, and tax deductions 17 points compared to 2023. According to the general director of Ayming in Spain, this is due to strategic projects to economic recovery and transformation (Perte) such as Vanguardia Health, designed specifically for the development of R&D in this area.

But financing through tax deductions is not free of obstacles related to the limit of 50% of the full quota for deductions for R&D activities established in the corporate tax law .

Cristina Cortés, grants manager at Ayming: “Having a very high deduction for research and development and a low fee generates an excess of tax deduction ,” she maintains. This occurs especially in the health and biotechnology sectors, says Cortés, because many companies in that field either have a reduced quota or a directly negative quota when they are in the investment or expansion phase. “This produces a small income minus expenses ratio, so the ability to apply deductions is less than in other sectors,” she concluded.

Emerging companies have difficulties in benefiting from tax tools such as cashbacks

Also in the monetization of deductions or cashbacks, the most emerging segments of the health and biotechnology sectors may be harmed. This is a tax tool that guarantees the recovery of 80% of the amount of the deduction for R&D that establishes some requirements. One of them is to maintain the investment in R&D for at least two years from the request for the deduction, which does not represent a problem for the sectors studied by the report, and the other is the maintenance of the workforce dedicated to this area for three years.

It is this second requirement that presents the most complications in start-up or scale-up companies, which tend to develop their R&D jointly with public institutions or public-private centers.

Regarding the priorities of the Spanish health and biotechnology industries, first is the implementation of new tools and technologies, followed by the promotion of the culture of experimentation, researching and understanding customer needs, optimizing and streamlining processes and improve sustainability.

This last area is encouraged by the legislative tightening of the European Union (EU) in the face of the challenges of the climate emergency. EU regulations are increasingly demanding and this is forcing companies to get ahead and develop solutions that allow them to comply with these regulations, said Cristina Cortés.

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(Featured image by Marek Studzinski via Unsplash)

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First published in PlantaDoce. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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