Drugmaker Mylan gets boost from unlikely source — Coal
NEW YORK: Mylan N.V. is best known for producing EpiPen emergency allergy treatments and generic drugs.
But a non-pharmaceutical offering – refined coal – has quietly generated hundreds of millions of dollars of tax credits for the company over the last six years that have boosted its bottom line, according to a Reuters review of company filings.
Since 2011, Mylan has bought 99 per cent stakes in five companies across the US that own plants which process coal to reduce smog-causing emissions.
It then sells the coal at a loss to power plants to generate the real benefit for the drug company: credits that allow Mylan to lower its own tax bill.
These refined coal credits were approved by Congress in 2004 in order to incentivize companies to fund production of cleaner coal.
They are available to any company that is willing to invest the capital, and are set to expire after 2021.
Mylan is one of only a few public companies, and the only publicly-traded pharmaceutical maker, that uses these tax credits, a Reuters review of a compre- hensive database of filings with the US Securities and Exchange Commission found.
It is possible other companies receive an immaterial amount of the tax credits and decline to disclose them.
Future tax credits could prove valuable to Mylan, which has seen sales of its flagship EpiPen allergy treatment sag after consumer outrage over the allergy treatment’s US$600 list price.
The pricing issue, which has drawn scrutiny from members of Congress and the US Department of Justice, and Chairman Robert Coury’s nearly US$100 million pay package last year have caused a group of investors to launch an effort to vote down the company’s board at its annual meeting on Thursday.
Mylan already carries a low tax rate after moving its headquarters overseas in 2015.
The coal credits helped the company lower its effective tax rate further, to just over four per cent in 2014 and 7.4 per cent in 2015.
Last year, the company actually had a tax benefit of US$358 million, giving it an effective tax rate of negative 294 per cent.
Mylan confirmed Reuters’ calculations based on figures in the tax footnotes in the company’s annual reports. According to these calculations, Mylan used more than US$100 million of ‘clean energy and research’ tax credits in both 2016 and 2015, and around US$95 million in 2014.
A person familiar with the matter told Reuters these coal operations have increased Mylan’s net earnings by around US$40 million to US$50 million in each of the past two years.
That accounts for around 9 per cent of the company’s earnings last year and more than 5 per cent of its 2015 earnings. — Reuters