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Perspectives

The supply chain DNA question for life sciences companies

What analysis may reveal about potential tax risks in an era of tax reform

Just as DNA research in the 1990s and 2000s drove major changes in health care, the longstanding supply chain strategies of life sciences companies may be due for a makeover. Supply chain structures designed years ago for competitive advantage and operational and tax efficiency may not be the best prescription going forward. Our questions can help you consider whether and when a supply chain makeover is due.

Tax reform is driving major changes in life sciences supply chains

In the wake of changes to the US tax code instituted by 2017 tax legislation, life sciences executives need to know whether the DNA of their global supply chains might contain tax risk factors that could impact the company’s competitive and financial health. If so, how can those risks be mitigated?

Professionals in life sciences organization’s supply chain, tax, and finance functions should collaborate closely to help their leaders understand the potential implications of the US and other international tax law changes for their current supply chain structures. In addition, they will need the ability to model the possible effects of various alternate structures going forward.

The answers to the following questions can help guide life sciences decision makers and other key stakeholders as they determine the path forward.

Charting your path forward post-tax reform

The following questions are a starting point for life sciences executives to determine if their supply chain DNA contains tax risk indicators that need to be addressed through planning and restructuring.

The supply chain DNA questions for life sciences companies

Answering the supply chain DNA question: Our take

Unlike the Human Genome Project that took 13 years to map human DNA, life sciences companies don’t have much time to map their supply chain DNA. Many already understood the fundamental need to analyze and optimize their supply chains for improved operational and tax efficiency. Many also have taken steps to provide the data and analytics foundations required for today’s complex tax and supply chain environment.

These elements now need to come together to align supply chain, economic, and tax structures. The new global tax landscape, including in the United States, requires new levels of sophistication in data management and quality, a comprehensive understanding of the interaction between new tax laws, the ability to analyze available data and model various outcomes, and the resources to implement changes across the supply chain. Life sciences companies that develop those capabilities—both strategic and tactical—can have a distinct competitive advantage.

Drops of water being added to vials

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