In conclusion, the precise conditions and agreements in the manufacturing contracts (toll, contract or other) determine the impact of VAT, both for the client and for the producing companies. Understanding the terms of the agreement could help your business optimize the VAT structure in a given jurisdiction. Bio/pharmaceutical companies have set up and occupied drug production capacities previously dedicated for development, only to cancel them in the event of product failure in Phase III clinical research; Cooperation with a CMO limits this financial risk. [6] [25] The contract itself may have consequences for VAT. What is toll production or tolling? Generally speaking, this means that the main company retains the right to the product throughout the manufacturing process. The main company will buy and hold the right to the raw material, but the raw materials will be shipped to the toll manufacturer. The toll producer provides processing services and imposes a toll charge on the main undertaking. The main company bears the risks associated with the management of raw materials and stocks of finished products. In a commissioned manufacturing model, the subcontractor owns facilities and equipment and purchases raw materials according to the standards agreed with the main company. The subcontractor also bears the risks associated with storage and its activities are generally considered to be supplies of goods for VAT purposes. In certain circumstances, this organization could benefit the main company.

For example, in many cases, the main business is a branch outside the jurisdiction of the producing company, i.e. outside the VAT area. Where an unde established contractor uses an order manufacturing model, local ownership of materials, inventory and other assets is transferred to the local production company and not to the main company. This could avoid a significant burden on the main obligation (e.g.B. budget representation) in several countries. A Contract Manufacturing Organization (CMO), sometimes referred to as the Contract Development and Manufacturing Organization (CDMO), is a company that serves contract services to other companies in the pharmaceutical industry to provide comprehensive services ranging from drug development to drug manufacturing. [1] This allows large pharmaceutical companies to outsource these aspects of the business, which can contribute to scalability or may allow the large company to focus instead on pharmaceutical research and drug marketing. CMOs are a response to international competition from the pharmaceutical market and the growing demand for outsourced services. [3] The best-positioned service providers focus on a particular technology or pharmaceutical form and promote end-to-end continuity and efficiency for their outsourcing customers. . .

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