Marcus Gould Hi Brian

Talking from a purely economic and business angle, I'd imagine the reason why a large number of medical device companies are headquartered within Europe is because of the relatively generous tax regime here in Europe. It is recognised that Europe has low corporate tax, and so a number of medical device companies (and companies in other industries) are moving their headquarters to Europe because of the attractive corporation tax. This so-called 'tax inversion' has been recognised as an issue by the American government and incentives are sometimes given (or penalties given) to American companies to stop them buying small, European based companies, in order to invert their tax payments. For example it is thought that Pfizer, an American company, wished to buy AstraZeneca, a UK based company, so they could invert their tax base to the UK, and so pay a lower corporation tax. The amount of corporation tax a US based company pays is 35%, however a UK based company pays 20%.

I even know of a UK based company who have moved their headquarters to Switzerland, where they now only pay 8.5% corporation tax, compared to a previous 20%.

Google and Starbucks are both well known to have their headquarters in Ireland where they enjoy 12.5% corporation tax.

I am sure there are other reasons why a company would wish to base their headquarters in Europe (such as employee skill set, locale to markets, suppliers etc) however, from what I have witnessed recently, the trend seems to be for tax inversion.

Marcus

Brian K. Buntz Thanks, Marcus. I've also heard that some companies like to be in Europe because most product introductions occur in Europe before they do elsewhere. Still, some companies like Medtronic are based in Ireland and also operate manufacturing facilities there as well. Still, the bulk of its operations continues to be in the US.

Bruce Youngman It will be interesting to see the impact (if any) of the MDD directives revision. I tend to agree though with Marcus that the financial aspects of Headquarters location trump regulatory complexity.

Those introductions are a result of more lax regulatory rules. I'm not sure how that plays into locating organizations.

The tax benefits and easier introduction of products in the EU is surely a great influence on these larger organizations decision to have a presence or corporate headquarters located there. Specific t tax benefits, you see similar trends in other industries, like Amazon and Skype with their locations in Luxembourg.

These are largely driven by the promise of corporate tax inversion, for which recent M&A activity has been shown to be a potential vehicle

To add to Marcus' point about tax inversion outside the MedTech sector: there's a very good reason why several very large American companies have Ireland or Luxembourg as their European or even International (tax) head office. Apple and Amazon comes to mind.

They are still far behind japs on reliability.

Leonel Graça Last time I managed my own company, it was based in a small Island where I only went on vacations. Merely because smaller VAT and several tax advantages. Proximity can be measured in miles, in time to arrival, or in cost to get there. HQ location is a mere formality bat can have a major impact on tax so if we save money, proximity might not matter, all the rest is pure speculation.

Not sure Medtronic really counts. They moved to reduce their corporate tax responsibility.

Michael A. Fisher The market values are dramatically different. Location of corporate HQ is a tax decision. Location of product revenues is a profitability decision. Product availability in the EU is typically sooner than in the US due to their simpler and quicker regulatory environment. However, US sales value tends to be far higher than in the EU.

Beside regulatory affairs most device manufacturers here in Europe having strong ties to US-market directly as well as for US-OEMs ,so they are developing globally, launching it in the U.S. first even process takes longer. Once a success in the U.S. this proof secures higher profits over here quite quickly.

SOP: clinical development and commercialization for emerging US medtech companies: First obtain CE marking and develop brand and sales in Europe, especially Germany and France.

Jerald Ostvig The mission for every for-profit company is to maximize shareholder wealth. Many former US companies that are "moving" to Europe are doing so in name only for two reasons- tax savings and demonstrating to the market that they are driven to cut expenses. It seems to me there is something wrong with our corporate tax system if companies are willing to take the bad publicity...the tax savings is enormous!

Stephane Morvan While the US market commands the highest margins, it is the one with the most expensive and complex regulatory roadmap.

Europe has a softer (for the time being) regulatory framework for medical devices, and the cultural spectrum helps field test products much more effectively.

In addition, manufacturing costs also play a role: more manufacturer = more suppliers = more bargaining power (also applies for finding qualified employees).