Bio-Tech & Pharma

BioTech  Pharma

Malta and Cyprus have become interesting jurisdictions for Bio-Tech & Pharma firms looking to set up shop in Europe. With their strategic locations, EU and Eurozone Membership and advantageous tax system they encourage entrepreneurs to set up shop or a branch within their shores. Moreover, both jurisdictions have a strong legislative framework with regards to patent and trademark law which is a must for any successful Bio-Tech & Parma company to thrive in such a competitive and fast-paced industry. 

The Maltese Bio-Tech & Pharma Industry

Malta’s roots in the health care industry run very deep and can be traced back to the building of the Sacra Infermeria Hospital, built in 1574 by the Knights of St John, which was considered a state-of-the-art, and one of the most advanced hospitals of its time within Europe, and which retained its use till the end of the First World War. The Bio-Tech & Pharma industry has been experiencing a steady growth within Malta. Bio-Tech & Pharma firms which set up shop in Malta may enjoy a number of advantages in various aspects of the business. This makes Malta a jurisdiction of choice for Biotech & Pharma companies; in fact, Malta’s medical services have been dubbed as one of the best medical services within Europe.

Malta advantages for the Bio-Tech & Pharma Industry– Why Malta?

Malta’s Central Location

Malta’s central geographical position in the heart of the Mediterranean is considered as very advantageous by pharmaceutical firms who would favour the jurisdiction over other EU countries since it allows them to tap easily in the European and North African markets through the promotion or exportation of medicines developed and produced in Malta.

Malta as an EU Member State

Malta’s membership with the European union and its joining the Eurozone in 2004 and 2008 respectively has without doubt helped Malta to become a jurisdiction of choice for the establishment of companies. The EU regulatory framework ensures that essential products are not only efficient, but also safe. This gives increasing reputability for companies operating within the island.

Malta’s Pharmaceutical Regulation

Generally, the Maltese Medicines Authority, in agreement with the Medicines Act (Chapter 458) and the Medicines (Marketing Authorisation) Regulation  (Subsidiary legislation 458.34), requires Marketing Registration to be obtained when the medical products intended for human use are placed on the market in Malta. However, the Mutual Recognition Procedure employed in Malta ensures that Marketing Authorisation granted by the competent authority of an EU member state is to be “mutually recognised” by other EU member states. Thus, once Marketing Authorisation is obtained in Malta, it may be used to Market medicinals in other EU countries. Correspondingly, Bio-Tech & Pharma Companies established in an EU country who have Marketing Authorisation and want to set up shop in Malta need not obtain further authorisation from the Maltese Medicines Authorities. Moreover, the process of setting up a branch in Malta is further facilitated through the principle of freedom of establishment which is given great importance within the EU.

Malta’s Tax System

A Maltese Company may be a beneficial vehicle for entrepreneurs who wish to carry out activities in the Bio-Tech & Pharma sector in Malta. Maltese companies are subject to income tax on their chargeable income (income less deductable expenses) at the standard income tax rate for companies of 35%. However, upon receipt of a dividend from such company, shareholders are entitled to claim a refund of all or part of the Malta tax paid. The amount of refund to which the shareholders would be entitled would depend on the type and source of income received by the company. Where the company’s income is trading income, including for example income derived from the licensing or sub-licensing of trademarks and patents, the shareholders are eligible to claim a refund of six-sevenths of the Malta tax paid.

As an EU member state, Malta has adopted the Parent/Subsidiary Directive, the Interest and Royalties Directive and the Merger Directive.

In addition, a Malta company may benefit from Malta’s comprehensive double tax treaty network which currently stands at close to 60 Double Tax Agreements with a variety of developed and developing countries.

Moreover, there are a number of other incentives, including investment allowances, incentives administered by Malta Enterprise, investment aid incentives, research & development incentives, and other potential benefits and grants under the European Regional Development Fund (ERDF) and European Innovation Programme.

Malta’s Qualified Workforce

What Malta lacks in natural resources, it makes up for with its highly-qualified and multilingual workforce. Prospective employers can choose from a number university-educated chemistry graduates and highly-trained personnel who have experience with sophisticated and high-precision machinery.

Malta Pharmaceutical Patent Protection Regime

Choosing a sound location to seek patent protection for an invention is of paramount importance in the Bio-Tech & Pharma industry. Thus, legal considerations should take into consideration first and foremost the strength of the country’s patent law system.

The Maltese legislative framework provides proprietors with effective protection against third parties. Patents grant twenty years of exclusive protection to the patent holder as of the date of filing of the application.

Generic pharmaceutical manufacturers may seize the occasion and take advantage of Malta’s relatively small market and low number of patent registrations which translates into a multitude of possibilities ready to be exploited. Maltese law does not provide for retroactive patent registration, thus enabling pharmaceutical companies to set up shop in Malta and benefit from the advantage of being among the first to register their patents within a highly-competitive industry, where time is of the essence.

Malta Roche Bolar Exemption

Malta has been a pioneer in fully embracing the nature of the so-called Bolar Provision which takes its name after the US case of Roche Products vs. Bolar Pharmaceuticals (733 F.2d 858 (Fed. Cir. 1984)). Malta took a very pro-active approach in this regard and implemented the Bolar Provision in 2003 before its EU accession which would have rendered such transposition mandatory by means of  the EU Directive 2004/27/EC.

The Bolar Provision typically defines circumstances in which the proprietors of a patent are precluded from preventing third parties from performing acts which are otherwise protected by patent law. It has been incorporated rather widely in the Maltese Patents and Designs Act, unlike several other EU Member States. Thus, through this exemption generic companies may carry out clinical trial and other commercial purposes before the expiration of the lifetime of the patent concerned.

Moreover, this exemption is not limited to a permit for use for purely experimental purposes and scientific research, but also extends to acts done privately and for non-commercial purposes and acts done for the development and presentation of information as required under Maltese or foreign legislation regulating the production, use or sale of medicinal or phytopharmaceutical products, as per article 27 of the Patents and Designs Act.

Through the Bolar Provision, a generic pharmaceutical company established in Malta may develop generic drugs and complete all the necessary preparatory work prior to the competitors’ products’ patent expiry. This gives generic companies the possibility to launch their product without undue delay as soon as the concerned patent expires.

Bearing in mind the competitive nature of the Bio-Tech & Pharma industry, Malta’s positive approach towards this expiration has granted Malta a compelling and competitive edge over other countries which are more restrictive in their approach.

Malta’s International Patent Protection Regime

The Maltese legislative framework has embraced all the obligations arising from the Patent Cooperation Treaty (PCT) and the European Patent Convention. Thus, protection of Maltese industrial property rights is not limited to Maltese territorial boundaries but by default extends to all other member or signatory foreign countries.

Cyprus’ Bio-Tech & Pharma Industry - Why Cyprus?

Cyprus has become an attractive jurisdiction for Bio-Tech & Pharma companies for a number of reasons. First and foremost, its geographically strategic position in the East Mediterranean gives entrepreneurs the possibility to tap into North African and Middle Eastern markets. Moreover, similarly to Malta, Cyprus can also prove to be an ideal jurisdiction to do business within Europe as well as it has been a member of the EU and the Eurozone since 2004 and 2008 respectively. This, along with the exceptionally advantageous Cypriot tax-regime, has attributed greatly to Cyprus’ attraction as a favourable jurisdiction for Bio-Tech & Pharma industries.

The Bio-Tech & Pharma Industry has experienced a consistent and steady growth in the Cypriot Islands since the 1980s move from the industrial development to the diversification into specialised markets. In order to adopt these changes legislative measures were introduced to protect the production of this industry.

Patent laws and directives work to protect the intellectual and commercial rights of a product that is probably created by an individual or organisation. Having this protection provides an incubation period for testing and marketing and provides a competitive advantage in the sector.

Chetcuti Cauchi has vast experience protecting patents, trademarks and intellectual property in this field. Its dedicated team keeps abreast of the changing legal horizon and uses specialised knowledge to help rights holders adapt to new changes, keep protective measures for their portfolio, representation on appeals, and registration for new types or newly eligible products and fields

Our Malta and Cyprus Bio-Tech & Pharma Industry Team

Throughout the years, Malta and Cyprus have worked to become prime jurisdictions with regard to the establishment of Bio-Tech & Pharma companies and the filing of patent applications. The Maltese Bio-Tech & Pharma industry has been and continues to prove itself as a private sector and the Cypriot Bio-Tech & Pharma Industry continues to experience a steady incline. We have seen a number of leading Bio-Tech & Pharma companies relocating to Malta and Cyprus because they have recognised the potential both jurisdictions have in offering multiple opportunities which can be exploited to their advantage.

At Chetcuti Cauchi we are well-equipped to provide all set up, legal and back office services to such companies setting up herein. Our Bio-Tech & Parma Industry team is composed of intellectual property, tax, and corporate lawyers and advisors that assist companies to set up in Malta and Cyprus and subsequently in all matters dealing with compliance of all regulatory, accounting and back offices procedures. We work closely with our tax team to ensure that all aspects of taxation and structuring are taken care of upon inception and with our IP team who ensure that all aspects related to patent protection, bolar exemption issues and even trademark law are studied, analysed and planned ab initio. We also assist clients in liaising with Malta Enterprise, in choosing the appropriate location for their enterprise, in recruiting appropriate stuff, entering contracts and other logistics and regulatory aspects.

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