It can take a pharmaceutical company twenty years to develop a drug, test it and gain regulatory approval in order to bring it to the market place. In the wake of the untold millions spent in research and development comes the further huge cost of marketing and advertising, as well as setting up facilities for manufacture and distribution.
In order to recoup this huge outlay, the pharma company will seek to maximise its income by licensing out the manufacture and distribution of its range of branded drugs on a global basis. In so doing, it will enter into a number of standalone and interlocking agreements with third parties, often containing a number of key clauses that define the basis for royalty calculation, identify deductible costs and also define other factors that play a major role in determining the quantum of royalty income payable. No surprise, therefore, that errors of accounting, allocation, interpretation and recognition are commonplace. So it becomes an accepted part of corporate governance for the pharma company to audit its corresponding trading partners as a matter of standard practice.
We are well placed to carry out such audits on a global basis providing one line of communication for the purposes of management and control of the process and able to pinpoint and focus upon those areas likely to lead to quantified findings. Our reports are clear, concise and precise and clearly set out the basis of claims, together with supporting spreadsheets and calculations.
Our experience is that audit is an essential opportunity to “true-up” the royalty reporting and to maximise the revenue available to the pharma company during the drugs branded window.