LEO Pharma 1 st May 2013 Background 2 May 2013 p. 02 Group - - PowerPoint PPT Presentation

▶
leo pharma
SMART_READER_LITE
LIVE PREVIEW

LEO Pharma 1 st May 2013 Background 2 May 2013 p. 02 Group - - PowerPoint PPT Presentation

Mar 20, 2024 446 likes •692 views

2 May 2013 p. 01 R&D audit at LEO Pharma 1 st May 2013 Background 2 May 2013 p. 02 Group Danish parent company Research-based pharmaceutical company specialising in Dermatological and Thrombosis products Founded in 1908

slide-1
SLIDE 1

R&D audit at LEO Pharma

1st May 2013

  • p. 01

2 May 2013

slide-2
SLIDE 2

Background

Group

  • p. 02
  • Danish parent company
  • Research-based pharmaceutical company specialising in

Dermatological and Thrombosis products

  • Founded in 1908
  • No shareholders, owned by LEO Foundation

(independent private institution whose aim is to ensure the continuation of LEO Pharma and its affiliated companies as an independent pharmaceutical group)

  • Current focus is on dermatological products, expansion

into new markets and providing new patient solutions

2 May 2013

slide-3
SLIDE 3

t

LEO Pharma today

2 May 2013

  • p. 03

Around 4,800 employees in 61 countries Products sold in more than 100 countries

slide-4
SLIDE 4

t

Group Research & Development

2 May 2013

  • p. 04
  • More than 600 scientists and researchers work in

R&D and develop drugs and New Chemical Entities (NCE).

  • We develop drug products from discovery to

commercialisation

  • Our research focuses on dermatology.
  • We investigate and manage licensing activities

and agreements.

slide-5
SLIDE 5

t

Background

Ireland

  • Over 50 years in Ireland (440 employees) between Dublin and

Cork

  • Two separate legal entities reporting to Danish Parent company
  • Dublin plant – Finished Goods, Cork plant – API
  • Dublin site manufactures many of the Group’s strategic products
  • 2 of 6 Manufacturing sites of LEO Pharma based in Ireland

(others in Denmark, France and Australia)

  • Some Group functions being based out of Ireland in recent

years e.g. regulatory affairs, internal audit, QA Marketing and Affiliates Compliance

2 May 2013

  • p. 05
slide-6
SLIDE 6

LEO Ireland – Strategic focus

  • LEO Ireland’s importance within the LEO Group has grown significantly.
  • Critically now also involved with projects central to the Group’s development.
  • Ireland’s highly qualified workforce and management capabilities have secured

increased R&D work from the Group.

slide-7
SLIDE 7
  • Increased level of R&D work happening on site in Dublin

and Cork over the last number of years e.g. in Dublin FTEs in 2003 R&D base year at 5 vs 16 in 2009 R&D tax credit claim.

  • Strategy is to leverage from R&D initiatives to secure future

manufacturing.

  • Preserve and ultimately increase employment.

LEO Ireland – Strategic focus (cont’d)

2 May 2013 7

slide-8
SLIDE 8

Establishment of the Manufacturing Development Department (MDD) in late 1980s:

  • focusing on process development, technology transfer and technical support

Further expansion of MDD over the years:

  • Clinical Trial batches commenced being manufactured by MDD in 2003.
  • Department expanded - majority of development scientists Ph.D. level.
  • In addition to MDD, Project and Production Engineering involved in process design and

development.

  • 2008 - Commitment from LEO Denmark to utilise MDD expertise in R&D projects from

early stages of development

  • 2010 - MDD expand further to become the Manufacturing Development and New

Product Introduction Dept.

  • 2012 – Announcement of new Technology Centre to be based in LEO Dublin.
  • 2013 – Technology management based in Dublin

R&D Activities at LEO Dublin

2 May 2013 8

slide-9
SLIDE 9

t

Pre-Audit

  • R&D credit claims submitted for Dublin and Cork for each

year from 2004

  • Detailed claim reports prepared and documented in line with

Revenue requirements (TB 71)

  • Submitted on request to LCD case manager – no further

queries

  • In April 2011, reports for 2008 and 2009 for Dublin and Cork

were requested by new case manager.

2 May 2013

  • p. 09
slide-10
SLIDE 10

t

Audit preparation – the basics

  • LEO Dublin 2009 R&D claim chosen for audit ; first such

audit for Dublin or Cork since credit system introduced

  • Immediate engagement with advisors and Revenue to

agree methodology

  • Agree expectations and relevant dates for all aspects of

audit (technical and financial)

  • Agree appropriateness of external technical expert
  • Formulate agenda in collaboration with Revenue case

manager

  • Ultimately four out of eight projects chosen (highest cost)

2 May 2013

  • p. 010
slide-11
SLIDE 11

t

Audit Timeline

Communications with Revenue

R&D reports requested for 2008 & 2009 E-mail from Revenue re R&D audit and Tech expert 1 Tech expert 2 Tech expert 3 Notification

  • f audit

letter received 2 day technical audit 1 day financial audit

2 May 2013

  • p. 011

April 2011 Sep 2011 Nov 2011 Feb 2012 Aug 2012 Sep 2012 Oct 2012

slide-12
SLIDE 12

t

Audit preparation - Technical

Sep 2011 – Sep 2012

  • Technical project leaders briefed
  • Self review undertaken by technical teams
  • Summary folders prepared – project plans, project

updates, development protocols, raw data from trials, reports

  • Plant tour planned to be specifically relevant to selected

projects

  • Focus on audience – transparent and open delivery

2 May 2013

  • p. 012
slide-13
SLIDE 13

t

Audit preparation - Financial

Sep 2011 – Sep 2012

  • Undertook detailed self review/consider voluntary disclosure

risk

  • Stress test undertaken in conjunction with tax advisors
  • Invoices/purchase orders/filenotes reviewed e.g. overheads,

capital allocations

  • Timesheets – made up circa 50% of claim
  • Third party 10% check
  • Some errors discovered requiring disclosure (some

amounts under claimed also)

2 May 2013

  • p. 013
slide-14
SLIDE 14

t

Audit preparation

Main challenges

  • Long projects spanning a no of years - some personnel involved in

R&D had since left therefore others needed to familiarise themselves with files

  • Varying potential interpretations of guidelines/legislation meant

grey areas for inclusion of certain costs

  • Difficulty in documenting some areas of spend e.g. energy
  • Not all development failures documented (particularly engineering)
  • Some documents off site due to legal proceedings
  • Base year (2003) information – difficulties in preparing due to

passage of time, how to prove no other R&D spend

2 May 2013

  • p. 014
slide-15
SLIDE 15

t

Audit participants

Preparations and Audit days

  • Project leaders
  • Heads of departments (R&D and Engineering)
  • Finance
  • Tax advisors

2 May 2013

  • p. 015
slide-16
SLIDE 16

t

Technical Audit

20/21 September – Day 1

  • Revenue Case Manager and Technical Expert
  • Disclosure letter given and payment made to

Revenue

  • Introductory presentation from M.D.
  • Reflects importance of R&D to LEO’s vision for

Ireland

2 May 2013

  • p. 016
slide-17
SLIDE 17

t

Technical Audit

Day 1 (cont’d)

  • Presentation from each of project leaders, samples

shown, video clips for increased understanding

  • Plant tour focused on claim activities
  • Detailed project documentation provided, auditors

reviewed alone

  • Questions to LEO

2 May 2013

  • p. 017
slide-18
SLIDE 18

t

Technical Audit

20/21 September – Day 2

  • Technical expert asked to speak to certain individuals

involved in the projects, focus on one large project (highest spend, longest no. of years)

  • Focus on:
  • Third party development partners – understanding their level
  • f involvement
  • Proof from documentation and interviews that LEO personnel

identified in claim were carrying out the R&D

  • Start and end dates of projects

2 May 2013

  • p. 018
slide-19
SLIDE 19

t

Financial Audit

24 October

  • E-mail from Revenue on 10 October outlining areas of focus

for financial audit

  • Revenue case manager LCD + junior colleague
  • Requested further detail on disclosures
  • Systematic checks, back-up examined, copies of

documents taken and requested

  • A lot covered, efficient day with pre-warning of areas

2 May 2013

  • p. 019
slide-20
SLIDE 20

t

Audit Result

Where we are now

  • Technical report received confirming all four

projects examined qualified as R&D

  • No official letter from Revenue yet post financial

audit

  • Informal communications that there are no

significant issues for follow-up

2 May 2013

  • p. 020
slide-21
SLIDE 21

t

Audit Learnings

What we will change

  • Ensure Finance team and R&D technical team are on the

same page

  • Consistency
  • Timesheets – qualifying activities better defined to make
  • verall qualitative decisions easier
  • Identify specific projects and start work on R&D claims

during the year in question (live process)

  • Filtering process – when has uncertainty been resolved?

2 May 2013

  • p. 021
slide-22
SLIDE 22

Audit learnings (cont’d)

  • More potential R&D within LEO Ireland?
  • Documentation management - be more audit ready (real-

time documentation), inclusion of bibliography in claim doc

  • Improve the actual claim document – user friendly (i.e.

Revenue)

  • Technical personnel spent a lot of time in preparations -

communication on difference between Revenue audit and

  • ther audits
  • Maintain contact and relationship with Revenue
slide-23
SLIDE 23