Malta boasts of a long history in the health care industry, dating back to the hospital Sacra Infermeria built in 1574 by the Knights of St John, which was considered as one of the most advanced hospitals of its time within Europe and which was used as a hospital until the end of the First World War. Malta’s dedication to the Pharmaceutical & Biotech industry has been ever on the increase, resulting in Malta being dubbed as a provider of one of the best medical services within Europe.
Pharmaceutical & Biotech firms setting up shop in Malta may benefit from several advantages under various aspects.
Malta Advantages for the Pharmaceutical & Biotech Industry
Malta’s central geographical position in the Mediterranean makes it a favourable jurisdiction in the run up between various EU. Its strategic position between Southern Europe and Northern Africa provides companies located in Malta with an opportunity to penetrating both markets with ease through the promotion or exportation of medicines developed and produced in Malta.
- Malta as an EU Member State
Accession to the European Union (EU) in 2004 and the Eurozone in 2008 has undoubtedly helped Malta to become a sought-after jurisdiction for the establishment of Pharmaceutical & Biotech companies. The EU regulatory framework ensures that essential products are not only efficacious, but also safe, thus providing increased reputability to companies operating within the island.
As a general rule, the Maltese Medicines Authority, in accordance with the Medicines Act and the Medicines (Marketing Authorisation) Regulations, requires Marketing Authorisation to be obtained in the case where medicinal products intended for human use are to be placed on the market in Malta. Having said this, the Mutual Recognition Procedure employed in Malta ensures that Marketing Authorisation granted by the competent authority of one Member State within the EU shall be “mutually recognised” by other Member States. Therefore, Marketing Authorisation obtained in Malta may be used to market medicinals in other EU countries.
Similarly, pharmaceutical & biotech companies established in an EU Member State seeking to set-up shop in Malta may also benefit from this mutual recognition of marketing authorisations, in that they need not obtain further authorisation from the Maltese Medicines Authority. The setting-up of a branch in Malta is further facilitated through the principle of freedom of establishment, which is given high importance within the EU.
Entrepreneurs who wish to carry out activities in the pharmaceutical & biotech sector in Malta may benefit from the use of the Maltese Company. Maltese companies are subject to income tax on their chargeable income (income less deductible expenses) at the standard income tax rate for companies of 35%. However, upon receipt of a dividend from such company, shareholders are entitled to claim a refund of all or part of the Malta tax paid. The amount of refund to which the shareholders would be entitled to would depend on the type and source of income received by the company. Where the company’s income is trading income, including for example income derived from the licensing or sub-licensing of trademarks and patents, the shareholders are eligible to claim a refund of six-sevenths of the Malta tax paid.
As a member of the European Union, Malta has adopted Parent/Subsidiary Directive, the Interest and Royalties Directive and the Merger Directive. Moreover, a Malta company may benefit from Malta’s comprehensive double tax treaty network which currently stands at over 70 Double Tax Agreements with both developed and developing countries.
Malta also offers various other incentives including investment allowances, incentives administered by Malta Enterprise, investment aid incentives, research & development incentives, and other potential benefits and grants under the European Regional Development Fund and European Innovation Programme.
Compensating for the Island’s relative lack of natural resources is a highly-qualified, multilingual workforce. With a stream of university-educated chemistry graduates and a selection of highly-trained personnel experienced in using sophisticated and high-precision machinery, a supply of human resources is constantly readily available for pharmaceutical & biotech companies located in Malta.
Malta Pharmaceutical Patent Protection Regime
When patent protection is sought on an invention, an issue of fundamental importance arises, namely, the location where application for a patent is filed. When choosing the most appropriate jurisdiction, legal considerations should centre first and foremost on the strength of the country’s patent law system.
The Maltese legal framework provides effective protection to proprietors of a patent against third parties. Patents grant twenty years of exclusive protection to the patent holder as from the date of the filing of the application.
The rather trivial size of the domestic market has resulted in a relatively low number of patent registrations in Malta, hence providing an array of possibilities waiting to be exploited by generic pharmaceutical manufacturers. Retroactive patent registration is not allowed under Maltese law hence enabling pharmaceutical & biotech companies to establish themselves in Malta and benefit from the advantage of being among the first to register their patents within a highly-competitive industry where time is of the essence.
Malta Roche Bolar Exemption
Furthermore, Malta is one of the few EU countries to fully embrace the nature of the so-called Bolar Provision, which takes its name after the US case of Roche Products vs. Bolar Pharmaceuticals. Malta has been very pro-active in this regard. The Bolar Provision was implemented into Maltese law in 2003, even before its accession to the EU which would have rendered such transposition mandatory by means of the EU Directive 2004/27/EC.
The Bolar Provision typically defines circumstances in which the proprietors of a patent are precluded from preventing third parties from performing acts which are otherwise protected by patent law. The Maltese Patent and Designs Act has adopted this exemption in a rather wide manner, unlike several other EU Member States. It allows generic companies to carry out clinical trials and commercial testing for the purposes of obtaining regulatory approval or other commercial purposes prior to the expiration of the lifetime of the patent concerned.
This exemption does not only permit use for purely experimental purposes and scientific research but also extends to acts done privately and for non-commercial purposes and acts done for the development and presentation of information as required under Maltese or foreign legislation regulating the production, use or sale of medicinal or phytopharmaceutical product (Article 27 of the PDA).
By making use of the Bolar Provision, a generic pharmaceutical company established in Malta may develop generic drugs, and complete all the necessary preparatory work prior to the competitors’ products’ patent expiry. Upon the expiration of the patent concerned, generic companies may put their products on the market without undue delay.
In the light of the highly competitive nature of the pharmaceutical & biotech industry, Malta’s positive approach towards this exemption has granted the jurisdiction a significantly competitive edge over other countries which opted for a more restrictive approach.
Malta’s International Patent Protection Regime
Maltese legislation incorporates all obligations arising from the Patent Cooperation Treaty (PCT) and the European Patent Convention. This implies that the protection of Maltese industrial property rights is not limited to the Maltese territorial boundaries but automatically extends to other member or signatory countries abroad.
Our Malta Pharmaceutical & Biotech Industry Team
Over the years Malta has paved its way to becoming an important jurisdiction with regard to the establishment of pharmaceutical & biotech companies and the filing of patent applications. The Maltese pharmaceutical & biotech industry has been and continues to prove itself as a thriving sector. Several leading pharmaceutical & biotech companies have relocated to Malta because they have identified a vast array of opportunities which they could exploit to their advantage.
Our firm is well equipped to provide all set up, legal and back office services to such companies setting up herein. Our pharmaceuticals & biotech industry team is made up of intellectual property, tax and corporate lawyers and advisors that assist companies to set up in Malta and later on comply with all regulatory, accounting and back office procedures necessary. We work hand in hand with our tax team to ensure that all aspects of taxation and structuring are taken care of upon inception. Our IP team also assists in ensuring that all aspects related to patent protection, bolar exemption issues and even trademark law, are studied, analysed and planned ab initio. We also assist clients in liaising with Malta Enterprise, in choosing an appropriate location for their enterprise, in recruiting appropriate staff, entering contracts and other logistics and regulatory aspects.