obviously comparing my business as a consultant to a pharmaceutical company is like comparing a single raisin to a field of watermelons, but I am of the opinion based on reading that the benefits of spending money to reduce profits and taxes seems to be greater the larger the business, and thus that the principle must hold.
Business losses offset profit, rather than taxes owed, and though losses can be carried forward for years to offset taxes, a company does at some point need to turn a profit for the tax benefits of its losses to matter at all. The article mentions that the company took investor money for this, and it seems to be a fairly small pharma R&D company, so I doubt they have some pile of other successful drugs that they are offsetting these losses against.
But moreover, losing money for tax purposes only makes sense in a narrow window dictated by tax rate. Leaving aside tricky confounders like government R&D grants, if your corporate tax rate is say, 10%, and you have an investment opportunity that won’t turn a cash profit but will grow the value of your business by 95% of what you invest, it can make sense to make an unprofitable investment and lose 5% on it over realizing the profits, paying taxes, and losing 10% on it. But for this to make sense you have to have an investment opportunity that already very close to breakeven, corporate tax rates aren’t that high. And just throwing money away to count the losses on your taxes never makes sense.
>The article mentions that the company took investor money for this, and it seems to be a fairly small pharma R&D company, so I doubt they have some pile of other successful drugs that they are offsetting these losses against.
ok but it would seem to me that supposition sort of works against the supposition that they don't want to lower the price because then they would not be taken seriously in future negotiations, unless the company has some other sources of revenue to keep them going it would seem unlikely they would be available in that future.
in fact in the article it says
>In the 2 1/2 years it took to win EMA approval, AMT, which had no other products to sell and no revenue from Glybera, lost millions of dollars. The company was formally liquidated in 2012. Its assets were acquired by a new private company, uniQure.
from the quotes in the article there are 100s of millions invested in uniQure but I'm not sure if that investment was made because people were like 'whoa, they got this million dollar drug!', if so seems weird that investors would invest for that reason because if I heard a company was selling a million dollar drug my next question would be 'how many billionaires need that drug?'
